Herencia Resources says feasibility study is close to completion

Mining group Herencia Resources said Tuesday the feasibility study on its 70 per cent owned Paguanta flagship project is close to completion.

The company anticipates that the project will begin with an open pit operation (up to a three year mine life), transitioning to an underground operation (up to a five year mine life) providing an overall mine life of approximately eight years.

The deposit, a high grade silver-zinc-lead deposit located in northern Chile, is now close to being ready to begin operations, with work on key project parameters now either complete or nearing completion.

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The feasibility study has also identified numerous high-grade drill targets within the limits of the existing Patricia Resource and potential extensions to known lodes outside of the resource. The group has multiple drill targets currently available for testing, all of which could add significantly to the current resource and potentially the feasibility mine plan.

Herencia's Managing Director, Graeme Sloan, said: "It is a great pleasure to report that we remain on track to receive the draft report from Golder by the end of March.

"I am very encouraged by the fact that as we have progressed through the study it has become clear just how much of the mineral resource at Patricia remains open in all three directions, providing numerous areas in which to expand the project scale and mine life.

A combination of open pit and underground mining will provide a number of project benefits, previously outlined, including earlier access to ore and a smoother capital spend profile. We see an eight year mine life as just the start of a long life operation at Paguanta, and we are looking to leverage off the forecast strength in zinc pricing from 2015 onward to achieve strong cash flows early in the project life."

The company is not required to make an immediate investment decision on the project given the scheduled permitting period, meaning it has time to identify and lock-in project funding opportunities, whilst monitoring the commodity price regime and completing a number of detailed project engineering and design programmes, such as detailed engineering drawings for eventual tendering/construction purposes.

NR