Tahoe Pays $1.35 Billion for Gold Mine in Peru
March 02 2015 - 9:30AM
By Financial Press
In the biggest gold take-over in 10 months, Tahoe Resources has
agreed to buy Rio Alto's La Arena gold mine in Peru for C$1.35
billion. Peru's 'political discount' is evaporating and fortunes
are being made in the Amazon jungle while the Bay Street analysts
flutz with their calculators.
Peru is currently one of the world's top producers of gold, with
substantial production coming from artisanal miners who now need
government-permitted milling facilities to process their ore.
Inca One (TSX-V:I0) (OTC:INCAF) is a Canadian-based ore
processing company with a gold milling facility in Peru servicing
small-scale miners. Construction of Inca One's 100 tonne per day
milling plant is complete. The company is generating cash as it
ramps up to full capacity.
"We are currently processing up to 60 tons per day," states
President and CEO Edward Kelly in an exclusive interview with
Financial Press, "When you're dealing with high grade ore,
operational protocols are critical to achieve high recoveries. We
are still optimizing our mill. Currently recovery is at about 90%.
A few percent here or there can make a big difference to the bottom
line."
Kelly and his operations team are steadily increasing production
to the 100 tonne per day target. Full production is anticipated by
the end of Q1 to early Q2, 2015.
"We forecasted the ore grade would be about half an ounce per
tonne," stated Kelly, "However the trucks are arriving at with an
average grade of .9 of an ounce – which means a longer processing
time. Higher grade equals higher profits so it's a nice problem to
have."
Kelly wants Inca One to be known as the gold processing company
that pays fairly and quickly.
"In our business, prompt payment is critical," confirms Kelly,
"The Peruvian miners have labour intensive operations. They have a
lot of people to pay – and their livelihood is tied up in an
inventory of rocks. So we take the customer-service part of our
business very seriously."
Last week Inca One had five customers show up at the same time
with 20-tonne trucks loaded with ore. Kelly cites this as part of
the teething process with the new facility.
"The five loaded trucks caused a bottleneck of ore at the cone
crusher," explains Kelly, "And guess what? Miners are just like
anyone else. They don't like lining up. So to avoid delaying the
trucks, we upgraded our cone crusher."
At 60 tonnes per day Inca One is breaking even and starting to
make money. But Kelly states that it is not in the company's DNA to
tread water at 100 tonnes capacity. Inca One has formed an
evaluation committee looking for expansion projects - including
purchasing and upgrading existing gold mills and building new
ones.
In the 34 days from December 3, 2014 to January 7, 2015 Inca One
recovered 521 ounces of gold and 557 ounces of silver from 753
tonnes of material at its start-up operations at the Chala One
plant. Total current value of the metal is $686,000. Kelly
anticipates the next gold recovery will be about 50% higher.
"The biggest surprise is that Peru is such a straight forward
place to do business," states Kelly, "We are in daily contact with
regional and national authorities on a variety of issues including
business expansion and permitting for a new tailings pond. The key
to success is to have experienced trustworthy local people in
place."
On February 18, 2015 Inca One announced an agreement to purchase
400 tonnes per month of ore with an anticipated grade of 30 grams
per tonne gold from an additional mine in Peru. The company also
closed a $500,000 financing to fund the purchase of mill feed
materials for its Chala Plant. The financing was arranged by SC
Strategy.
"The European and Swiss investors have been very pleased with
the work performed by Inca One," stated SC Strategy CEO Bjorn
Paffrath, "Our focus is on sustainable projects with sincere
partners who deliver on their promises. Ed Kelly and his team have
so far exceeded our expectations in every aspect."
"We will continue to add dollars to our balance sheet," stated
Kelly, "But we are a growth company which means we require
infusions of capital to fund expansion."
The new mining legislation in Peru has created a perfect storm
of opportunity for Inca One. The company does not stake land, run
seismic or drill. The risks are metallurgical, not geological – and
therefore easier to control.
"The rules in Peru create something of a captive market for Inca
One," confirms influential Gold Newsletter Publisher Brien Lundin
in the summer 2014 issue.
Dynacor Mines also has a gold ore-processing business in Peru.
Its plant has maximum capacity of 250 tonnes per day. Dynacor's
share price has risen from .17 to $1.90 in the last 5 years – an
increase of 1,100%. DNG'S current market cap is $68 million.
Inca One, with its 100-tonne per day capacity, is currently
trading at .23 with a market cap of $15.7 million.
Legal Disclaimer/Disclosure: This document is not and should not
be construed as an offer to sell or the solicitation of an offer to
purchase or subscribe for any investment. Financial Press makes no
guarantee, representation or warranty and a fee has been paid for
the production and distribution of this Report.
CONTACT: Kin Communications Inc.
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