Silver Mines secures $20m investment from Lundin, Rule-led fund
The company's flagship project hosts the largest known undeveloped silver resource in Australia.
Since its shares began trading on the Venture exchange in May, Castle Mountain Mining (TSX.V: CMM) has been working to fast track its namesake project back to a production-ready stage.
The company completed its first major milestone Thursday, releasing a maiden National Instrument (NI) 43-101 compliant resource estimate.
The mineral resource, which incorporated over 360,000 meters of historic data and 8,300 meters of recently completed drilling, outlined 3.15 million ounces of gold at an average grade of 0.6 g/t in the Indicated category. An additional 1.06 million ounces were placed into the Inferred category.
“We are very pleased with these results, which show that the Castle Mountain deposit is much larger than we had anticipated,” said company President and CEO Gordon McCreary. “Not only is the overall size of the project impressive, the exceptional gold grade is a particularly important reflection of the high quality of the Castle Mountain deposit.”
The Castle Mountain Mine is defined as a low-sulphidation epithermal vein deposit with an oxide ore body amenable to heap leaching. Gold occurs as electrum and native gold in quartz stockwork veins and disseminated sediments.
Mining operations between 1991 and 2001 produced approximately 1.2 million ounces of gold and 400,000 ounces of silver. Cash costs during that time ranged between $150 and $300 per ounce. Operations were suspended in 2001 due to depressed metal prices but tailings were processed until 2004.
The Castle Mountain management team plans to conduct a second phase of drilling and complete a Preliminary Economic Assessment (PEA) in 2014. A Pre-Feasiblity Study (PFS) could be released by late 2014.
In order to acquire a 100% undivided interest, Castle Mountain must issue $3 million in cash or shares before August 2015 to Sprott Lending Corporation. An additional $5 million payment in cash or shares is due upon a production decision to be made by August 2017.
Much like the Soledad Mountain Project, which is being developed by Golden Queen Mining (TSX: GQM) in neighboring Kern County, Castle Mountain is positioned to fast track permitting should a production decision be made.
In July the Castle Mountain Mine was granted a five-year extension to the existing Mining Conditional Use Permit and Reclamation Plan, making it valid until 2025 and significantly reducing the permitting process timeline.
Added Castle Mountain Chairman Robert Buchan: “The combination of size, grade, pervasive oxidation and a full mining permit position Castle Mountain amongst the very best development assets in North America. The asset is further differentiated by our expectation to deliver scalable production in a short period of time, at expected low capital and operating costs.”
Shares of Castle Mountain are traded on the TSX Venture under the ticker symbol CMM. The company has 53.6 million shares outstanding and 62 million shares on a fully diluted basis. Shares of Castle Mountain touched a 52-week high on Thursday and closed the market session with a market cap of $34 million.
