Condor Gold: New Resource and Production Options

Condor Gold’s (CNR) longer-term target is to define the potential of the La India land package, which currently has 2.4Moz at 4.6g/t. However, the important short-term objective is now to establish over 1.0Moz high-grade Indicated category open-pit gold resources, which could support a +110,000oz pa low-cost initial production schedule. This has strong cost advantages and a new resource statement, due in October 2013, should support the objective and be incorporated in the ongoing feasibility process.

Initial open-pit project should support development
The PEA (March 2013) was based on gold production over 13 years of 1.46Moz grading 3.8g/t split 50:50 between open-pit and underground mining. Exploration has since defined the ‘shape’ of the mineralised structures to suggest development of near-surface resources along the 1.6km La India Vein Set zone through a series of open pits. This should involve higher margins and significantly lower start-up capital costs without compromising the long-term potential of the La India district.

A new resource statement due in October 2013
The work programmes were not affected by the gold market downturn and the company has completed a 23.6km drilling since November 2012, which will support a new La India Vein Set resource statement, plus further definition of the America Vein Set and the Central Breccia resources. A geophysical survey over the entire 280km2 La India Project land package has also been completed, from which new longer-term resource targets could add an extra dimension to the regional potential.

A busy schedule ahead should be newsworthy
In addition to drilling results and the new resource and production options, an expanding technical team will be reporting on geotechnical drill results and metallurgical testing, plus Environmental and Social Impact Assessment studies and other supportive requirements for the initial preliminary feasibility study (PFS). Planned work programmes are funded to mid-2014.

Valuation: Currency and debt-adjusted value at 593p
We value Condor at 593p based on the March 2013 PEA (against 614p previously), but this still underlines the quality of the resource. The market continues to rate Condor purely as an early-stage exploration company, but we expect recognition of the initial open-pit strategy will be shown in the new La India Vein resource numbers and the subsequent PFS will underpin an enhanced market rating.

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