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Peru's Minera IRL to start Peru, Argentina project construction in 2014

Bnamericas Published: Friday, November 15, 2013

Lima-based gold producer Minera IRL (TSX: IRL; AIM, Lima: MIRL) aims to begin construction work on two gold mines in Peru and Argentina next year, CEO Courtney Chamberlain said.

IRL expects to line up the construction permit and debt financing for the US$156mn Ollachea project in the Puno region in the first quarter of 2014, Chamberlain said Thursday on a conference call to discuss third-quarter results.

Construction is slated to start in the second half of 2014, with production to commence in the fourth quarter of 2015, he said. Ollachea, which received government approval of its Environmental Impact Assessment in September, is expected to produce 117,000oz/y gold on average over a nine-year mine life.

Australia's Macquarrie Bank is conducting due diligence at Olachea to approve US$120mn in financing, he said. IRL is holding talks with engineering companies to design surface facilities at the property, he said.

"As soon as the construction permits are in place, we want to hit the deck running pretty hard," Chamberlain said. "2014 will be a turning point."

Construction work is also slated to begin at the US$100mn Don Nicolás gold-silver project in Argentina in the first quarter of 2014, with production expected at the end of 2014, Chamberlain said. Don Nicolás, a joint venture with Argentina's Compañía Inversora en Minas, will produce 52,000oz/y of gold and 56,000oz/y of silver.

IRL, which has identified three new vein systems at Don Nicolás, plans to restart exploration work to boost reserves and extend mine-life once production is underway, Chamberlain said. A study is also underway for a heap leach plant to treat low-grade mineral from the mine, he said.

The Corihuarmi gold mine in Peru's Junin region, in operation since 2007, may beat the company's 2013 production target of 24,000oz, Chamberlain said.

The company, which broke off takeover talks with Singapore-based Lion Gold (SGX: LGC) in October, continues to hold discussions with other potential investors, he said.

"In terms of the M&A situation, we always have discussions as all companies do. It did inspire quite a bit of interest," Chamberlain said. "But there's nothing that we have at the moment that looks like we're going to do a deal tomorrow."

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