Construction and Development at the Serra Pelada Project
As announced on December 31, 2012, the Company reached mineralization in its secondary development and the bulk sample collection process is ongoing with all material being assayed and sorted on surface on the stockpile pad. Geologic controls and assaying of material continue to guide the bulk sampling process. Ground conditions and ground water flow into the mine remain manageable. Development of this secondary access will continue and management expects extraction and sampling of the bulk sample to be complete in the first quarter. The Company is progressing cautiously and prudently, as the bulk sample process is also being used to collect comprehensive geotechnical information and to test different extraction methods. Geotechnical assessment and monitoring indicates that full scale mining operations will be sustainable at planned rates of production.
Underground development is now ramping up and focusing on the development of infrastructure necessary to support initial production early in the second half of 2013. In addition to developing the main decline while developing the bulk access drive, a number of infrastructure projects are well underway or completed. Two new drill bays have been established in the bulk-sample access drive, allowing the Company to drill much shorter holes (maximum total length of 150 metres) resulting in better targeting of the areas the Company plans to include in its first resource/reserve estimate at the beginning of the second quarter of 2013. These drill bays are also being used to gather geotechnical information which will be used in the development of the Company's mine plan.
Former drill bays have now been converted into permanent underground infrastructure to support mining operations. The first underground drill bay has been converted into an electrical substation and a former sump has been converted into a second electrical substation. The second underground drill bay has been converted into a refuge station which was commissioned in January 2013. Work continues on the refurbishment of an artisanal shaft which will be used to provide underground ventilation. This shaft will be enlarged in the second quarter of 2013 and the ventilation system will be upgraded to support expansion of mining operations.
The Company also continues to develop its mine plan. While the geological and geotechnical information gathered during the collection of the bulk sample is yet to be incorporated, the Company believes its ramp-up plans are conservative and achievable. The Company is currently planning an additional 600 metres of development between now and the end of June in order to start initial production at 250 tpd in the second half of the year. This estimate assumes a development rate of three metres per day per development crew. During 2012, the Company achieved improvements in rates of advance as additional equipment and more experienced underground mine personnel were mobilized to site. Development rates for the period from January to July 2012 were two metres per day however an average of three metres per day was consistently achieved during the period from August 2012 to January 2013.
In February and March, the Company will have one development crew and will ramp to two in April once ventilation upgrades have been made and additional mining equipment, scheduled for March delivery, arrives on site. Initial production will begin from two active mining faces and the Company anticipates having a 10,000 tonne stockpile once production begins in the second half of 2013. Ramp-up activities will continue throughout the remainder of 2013 as the Company anticipates having four development crews by August and expects to be at 500 tpd by the fourth quarter of 2013 and 1,000 tpd by the end of the first quarter of 2014. The current plan envisages two active mining faces for 250 tpd of production, three to five mining faces for 500 tpd of production and six to nine mining faces for 1,000 tpd of production. Geotechnical information gathered during the bulk sample process suggests that these production rates may be achievable with less active mining faces than currently planned and the Company is in the process of testing different extraction methods in the bulk sample access drive prior to incorporating these results into its preliminary mine plan.
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