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| Send Page To a Friend | Thursday November 20, 2008 |
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(Part II): Corporate Overview Petaquilla Minerals Ltd. (TSX: PTQ) (NASD OTC BB: PTQMF) owns a 19% stake (22.189 million shares) of Petaquilla Copper. In turn, the latter owns a 52% interest in a huge primary copper mine in-the-making in Other significant metals present at the still-expanding Petaquilla Minera Deposit include an estimated several million ounces of gold, as well as very significant amounts of silver and molybdenum. (Please refer to Part I of the Petaquilla Corporate Assessment for more on this story).
However, Petaquilla ( www.petaquilla.com ) is already well on its way towards establishing its credentials as a revenue generating hard rock miner. This involves the imminent commercialization of a prospectively very lucrative gold-silver mine near to
The pouring of the Molejon Mine’s first gold bars is anticipated as early as this summer. Once in full production, an impressive annual output of 120,000 ounces of gold, alone, is in the offing.
Such a coming-of-age milestone achievement bears testament to Petaquilla’s tenacity, patience and shrewd business instincts. Indeed, the Company has spent over a decade carefully nurturing and developing a richly mineralized cluster of deposits and prospects in the Panamanian jungles. All of which now collectively offer enough “blue sky” potential to continue to power the upward trajectory of Petaquilla’s share price for many years to come.
All told, Petaquilla has outright ownership of at least three stand-alone gold-silver deposits, each with one-million-ounce-plus potential for gold. Other co-existing metals, including silver, constitute a valuable added sweetener. The most advanced of these gold projects is the Molejon Deposit, which already benefits from a drill-inferred resource gold base of nearly a million ounces of gold and plenty of scope for expansion.
The Molejon Deposit – Readying for Imminent Production The Molejon Deposit hosts an estimated resource base of 447,879 ounces of measured resources, 161,379 ounces of indicated resources and 506,294 ounces of inferred resources at the Molejon gold deposit. This adds up to a total of 1,115,552 ounces of contained gold. These were the findings of an independent engineering firm, AAT Mining Services, which announced this National Instrument 43-101 compliant mineral inventory as recently as April of this year. AAT Mining Services has also estimated that 179,934 ounces of the measured and indicated ounces contained in the low-grade material have potential for blending with the high grade to achieve an optimum mill feed without loss of resources. Moreover, drilling has confirmed the high-grade area of 1,667,000 tonnes grading five grams per tonne at a cut-off grade of 2.5 grams per tonne. Accordingly, an extremely cost-efficient open pit mine (a quarry-like operation) is scheduled to begin producing this summer. This latest validation of the Molejon’s commercial viability is a key milestone development for Petaquilla.
It also attests to a better understanding of the deposit’s size, scope and overall grade than was the case ten years earlier when a previous resource calculation revealed over a third less gold.
This enhanced gold inventory is mostly the result of extensive drilling and trenching that was undertaken in 2006 to provide in-fill and extension development of the central and southern parts of the deposit.
Similarly, the drilling was used to corroborate and build upon an earlier a feasibility study which also attested to a preponderance of robust economics in favour of a commercially viable open pit mine. This multi-million dollar feasibility study was funded by Teck Cominco (which has since relinquished its ownership rights to the deposit).
The initial focus of the mine will be on high-grade near-surface mineralization that is amenable to open pit mining. This is expected to deliver a two-year payback with a 35% internal rate of return (IRR) – an especially favourable percentage. Hence, an output of 500,000 tonnes of very high-grade 7.7 g/t gold is expected to be realized during the mine’s inaugural year, translating into 120,000 ounces of gold. Expansive Drilling is Expected to Boost Molejon’s Inventory Beyond One Million Gold Ounces The deposit is made up primarily of the Main Zone, the Central Zone and the Northwest Zone. However, two new mineralized zones or trends were discovered following a 42-hole Phase II drill program in 2006. This 5,000-metre drill program was conducted with a view to mine planning (resource/reserve calculations), including in-fill drilling and step-out exploratory drilling. However, the mine’s expansion plans is ramping up significantly this year by way of a 40,000-metre drill program that is already underway involving no les than six drill rigs. This drilling is expected to increase Molejon’s resource base beyond a million ounces of gold with a particular focus on the two new gold zones. It will also be aimed at aggressively exploring a 20-kilometre mineralized trend that spans the Molejon, Mestizo and Botija Abajo gold-silver deposits. For the sake of clarification, all of these proximal gold-silver deposits surround the Company’s jointly owned jewel in the crown — the Minera Petaquilla primary copper project (which encompasses a 135 square-kilometre area).
These important gold-silver mineral assets are located on what is known as the Petaquilla Project Lands — which are now 100% owned by Petaquilla Minerals. Notably, the Petaquilla Project Lands involve a district-scale, virtually unexplored territory that spans no less than 795 square kilometres and shares much of the same geological characteristics as the core mining camp where Petaquilla’s epic copper/gold/silver/molybdenum find and its several satellite gold-silver deposits are congregated.
In fact, all of the clustered deposits and other key prospects are seated along a very favorable mineralized corridor or regional structural trend that has yet to be systematically explored. Importantly, it traverses much of the length and breadth of the Company’s wholly owned mineral concessions.
Most significantly, the vast majority of Petaquilla’s expansive land concessions have not yet been exposed to sophisticated, district-scale exploration techniques. More on this later. Again, it should be pointed out that Petaquilla has yet to delineate the full potential of all three of its gold-silver deposits, though the Molejon Deposit is starting to measure up to its one-million-ounce-plus potential. In fact, these three emerging deposits make up for their lack of prolific size with the potential for each of them to host stand-alone open-pittable precious metal resources. And preliminary indications suggest that the Botijo Abajo deposit already offers especially good potential for hosting a significant gold-silver inventory. Moreover, this deposit is located a mere two kilometers northwest of the Molejon discovery. This is a major logistical advantage in the eventuality that both deposits become producers and are therefore able to share a mill located on the Molejon project site. Petaquilla’s Other Regional Prospects Offer Considerable Lustre Exploration can also be undertaken on a year-round basis throughout the entire region. This allows Petaquilla ample opportunity to follow-up on a number of epithermal gold targets where there is an abundance of mineralized showings. On this note, a regional sampling program has identified numerous geochemical anomalies in river drainage systems that have never been tested.
All told, the Company’s exploration team has barely just “scratched the surface” across great virgin swathes of richly mineralized lands. And the presence of near-surface mineralization suggests that modern exploration techniques such as airborne geophysical surveying and regional geochemical sampling will quickly and cost-efficiently identify the most geologically prospective targets.
Priority exploration targets on the gold concession lands involve the Mestizo and Brazo/Botija/Abajo trends. Highlights to date include 12.29 g/t gold over 1.5 metres at the Mestizo deposit, which is only 1,000 metres east of Molejon. Also, a 1.0-plus g/t gold soil anomaly has been found over a three-square-kilometre area at Mestizo East. At Botija Abajo, 2.44 g/t assay result has been reported over 18.5 metres, including 3.13 g/t over 4.6 metres. This target area is three kilometres northeast of Molejon. Diplomacy — Not Deep Pockets — Rewards Petaquilla with Clear Title to the Molejon Gold Deposit and its Satellite Gold-Silver Deposits As previously mentioned, Teck Cominco has voluntarily awarded its stake in the Molejon Deposit to Petaquilla. Likewise for Inmet. This agreement also extends to any other gold-silver deposits within the geologically fertile 135-square-kilometre core project area, all subject to royalties. This sweetheart deal for Petaquilla is indeed a rich and well-deserved reward for the Company’s successful diplomatic efforts in convincing the Panamanian federal government to safeguard the Minera Petaquilla copper project’s future. This is no overnight coup for Petaquilla. In fact, the Company has carefully nurtured an excellent rapport with all levels of the Panamanian government over the last decade or more. These relationships have even included very productive face-to-face meetings with Indeed, the highest levels of the Panamanian government approved in mid 2005 the development of the Molejon Deposit as the first phase of a multi-phase mine development timeline that should lead to the commercialization of the epic Minera Petaquilla copper-gold-silver-molybdenum deposit. Investment Summary (Please refer to Part I of this Corporate Assessment for a more in-depth investment summary). In essence, the imminent launch of the Molejon gold-silver mine will offer shareholders leveraged exposure to an especially buoyant bull market for both bullion and silver prices. Moreover, the advent of the future development of Petaquilla’s two other proximal gold-silver deposits promises to exponentially ramp up the Company’s gold-silver inventory. Also worthy of further consideration are the excellent “blue sky” opportunities for further discoveries within Petaquilla’s expansive, geologically fertile land holdings. All of these key value drivers should therefore help ensure a very bright future for Petaquilla Minerals as an emerging gold-silver producer with multi-million gold ounce potential from its existing deposits and future prospects. As an added sweetener, Petaquilla Minerals is even inheriting a 19% stake (22,189,434 shares) of the new spin-off sister company, Petaquilla Copper Ltd. |
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