Patagonia Gold has two operating assets – Lomada de Leiva which is nearing the end of its life and Cap-Oeste, the company’s flagship project which has just been brought into production. Production at Lomada totalled 81,614 ozs over its four year life and production at Cap-Oeste is forecast to be 82,000 ozs over its two year life.

The Lomada Mine produced 21,521 ounces of gold in 2015 with annual sales of 22,227 and a gross revenue of US$26.13 million. All-in costs for the Lomada project were US$1,196/oz. 2016 has seen a dramatic improvement in cash costs and production from the Lomada project with 17,862 ounces produced to the end of July at a cash cost of US$572/oz.

2015 represented a very poor year for Lomada owing to targeted materials movements not being achieved which resulted in production being negatively affected and costs increasing dramatically on a dollar per ounce basis. The first seven months of 2016 have seen a dramatic improvement in machine availability as a result of improvements in onsite maintenance and management and a reduction in importation restrictions together with controls which have facilitated importing of spares for machinery.

Operations at Lomada have been suspended as of May with the entire mining fleet moved to the Cap-Oeste project where earth movement has already commenced.

The heap leach pad at Lomada will continue to operate at full capacity, although gold production from Lomada will drop considerably from August through to mid-2017. At the present time guidance on the final estimated production cannot be provided. The performance of the pad will be evaluated as irrigation reaches the full design throughput of 2m3/t of ore and forecasts will be provided on a regular basis moving forward. Currently the main heap leach pad has received 85% of its design irrigation quota.

Exploration on the 40,000 hectare La Paloma block is ongoing and detailed ground magnetics together with a geochemical, trenching and drilling programme will continue throughout 2016. The objective is to replenish and expand the 30,000 ounces of production per annum and explore the previously under-explored La Paloma block. Drilling is currently under way on targets close to the existing pit along strike and down dip of the Lomada mineralisation at the Breccia Sofia target.

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