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Mandalay Resources happy with reserves replacement efforts

The totals refer to the company's Costerfield, Cerro Bayo and Björkdal properties.
Mandalay Resources happy with reserves replacement efforts
Mandalay’s aggregate end- 2015 mineral resource and reserve position is nearly unchanged y-o-y

Mandalay Resources (TSE:MND) said its exploration efforts last year were largely successful in replacing depleted resources and reserves.

In the proved and probable reserves category, also known as 2P, contained gold (Au) decreased by around 1%, while contained silver (Ag) fell by around 13% and contained antimony (Sb) declined by 21%.

In the measured and indicated resource category, contained Au decreased by around 1%, contained Ag decreased by 5%, and Sb increased by 6%.

The totals refer to the company's Costerfield, Cerro Bayo and Björkdal properties.

“Mandalay’s aggregate end-of-year 2015 mineral resource and reserve position is nearly unchanged from year-end 2014. Our 2015 investment in mine exploration generated a total of 184,000 ounces of gold equivalent (‘oz Au eq.’) in reserve additions for a 2015 exploration cost of $8.9 million—a discovery cost of $49/oz Au eq. This excludes any revisions to the Björkdal underground Reserves, which will be reported later this year,” said Brad Mills, chief executive of Mandalay.

At Costerfeld, the economic parameters for conversion to Mineral Reserves were improved due to more favourable US dollar: Aussie dollar exchange rates, lower operating costs and the minimal capital required for the remaining life-of-mine plan, Mills explained.

This resulted in an addition of around 125,000 oz Au eq. to reserves, replacing 2015 production and adding an additional full year of life.

Mills said the company also obtained excellent drill intercepts in at least three structures below the King Cobra fault (under current workings) that could develop into significant further resource additions in 2016. Additional drilling is continuing to evaluate these structures.

“At Cerro Bayo, we completed significant infill and extensional drilling under Laguna Verde; however, given the time and cost to complete each long drill hole and the difficulty in precisely targeting ore zones under the lake, we were not able to replace more than approximately one half of the year’s depletion.

“We believe there are potentially significant resource additions to be achieved in the veins under the centre of the lake, but drilling them effectively must wait until we develop drill platforms from an access drift closer to the targets. Meanwhile we are shifting our exploration efforts at Cerro Bayo to focus on new targets in the Brilliantes, Cerro Bayo Hill and Laguna Verde Norte areas,” Mills said.

At Björkdal, the calculation of open pit resources and reserves was relatively straight-forward, but getting a handle on the underground reserves and resources has been a completely different kettle of fish.

“Given the large number of wire-framed veins to be updated, including a significant number of new veins discovered in 2015, and the need for a new mine design to extract these reserves and resources, we were not able to complete the work in time for this annual resource and reserve update. Therefore, we have estimated our 2015 year-end underground resources and reserves by depleting the 2014 estimates for production, not including any of the new 2015 underground drilling data. Our intention is to complete an entirely new underground mineral resource and reserve estimate with a new mine extraction plan later this year,” Mills revealed.

No additional drilling was undertaken in 2015 at Challacollo, so the mineral resource estimate remains unchanged.


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