Sep 10 2014
Marlin Gold Mining Ltd. is pleased to announce that it has received Mexican federal government approval of its Environmental Impact Statement (MIA) at the El Compas project in Zacatecas, Mexico.
The MIA was approved on September 2, 2014. The state-level change of land use permit (CUS) from the State of Zacatecas was issued in 2013. In addition to Marlin's flagship La Trinidad mine, El Compas is now the second project Marlin has permitted in Mexico over the last two years.
The El Compas property consists of approximately 2,740 hectares of land in the heart of one of the world's most prolific silver mining districts which has yielded nearly 750 million ounces of cumulative silver production. The property abuts Capstone Mining Corp.'s Cozamin mine and is directly south of Mag Silver Corp. and Fresnillo PLC's Juanicipio Joint Venture.
The current resource was estimated solely on two near surface N-S trending veins (El Compas and El Orito). In December 2010, using a 2 g/t gold equivalent cut-off, SRK Consulting estimated the resource at 524kt grading an average of 4.38 g/t gold and 65.53 g/t silver classified as Indicated mineral resources with an additional 419 kt grading an average of 3.98 g/t gold and 47.57 g/t silver classified as Inferred mineral resources for a combined 155koz of gold equivalents.(1) The resource remains open in several directions.
Additionally, the property holds approximately 22,000 meters of NW trending veins, which are considered to be the most prolific orientation of mineralization in this district. To date, only two drill holes (out of over 150) have tested these NW trending veins for economic mineralization.
The El Compas vein was previously mined by underground ramp from about 2002 until 2007 and the material was processed and recovered at a nearby mill.
"In a similar manner to the permitting at the La Trinidad mine, the El Compas change of land use and MIA were applied for once we generated sufficient data that we believe could ultimately support mine development. By taking this approach to permitting, we significantly reduced the capital required to fully explore these highly prospective land packages, reducing the risk of the project while maintaining all of the geological upside," said John Brownlie, CEO of Marlin.
Now that permits are in place, it is management's intent to maximize the value of this asset for Marlin's shareholders through additional resource development related work while simultaneously investigating the monetization of this asset where discussions have already begun with potential acquirers and/or joint venture partners.
(1) Further information on the El Compas Property is available in the NI 43‐101 compliant technical report entitled "NI 43‐101 Updated Technical Report on Resources, El Compas Property, Mineral Resource Estimation, Zacatecas State, Mexico" with an effective date of December 23, 2010 and dated January 30, 2011 (the "El Compas Report"), copies of which are filed under Marlin Gold Mining's profile on SEDAR at www.sedar.com.
La Trinidad Update
In August, despite 380mm of rain accumulation, the mine continues to ramp up. The crusher averaged 2,500 tonnes per day, with one day operating at 5,464 tonnes, significantly above rated capacity. We loaded approximately 1,350 gold ounces to carbon during the month and have averaged approximately 50 ounces per day since.
Gold Bullion is Accumulating
To date we have loaded approximately 4,900 ounces to carbon, shipped approximately 4,200 ounces of gold and have transferred 3,439 ounces to our gold accounts. For the foreseeable future, Marlin has decided to sell only enough gold to realize $1,150 per ounce to fund mining and development costs with the remainder being held in our bullion account as reserve. Currently we have approximately 300 ounces of gold in inventory with 25% of this for the account of Marlin's subsidiary, Sailfish Royalty Corp. We expect this gold reserve to rise significantly as gold sales ramp up.
Marlin's Balance Sheet is put to Work
As of quarter end June 2014, Marlin announced a non-cash working capital balance of over $9 million including over US$3 million in refundable value added tax (IVA) receivables. While we were pleasantly surprised at how quickly we were getting these receivables repaid from the Mexican government last year, repayment schedules have since slowed, which seems to be a common theme amongst our Mexican mining peers.
Given the multitude of high return projects that Marlin can currently invest in, it makes no sense to keep such a high non-cash working capital balance on our balance sheet. Entities controlled by Wexford Capital, Marlin's controlling shareholder, have agreed to enter into a US$3 million unsecured facility with Marlin which will be repaid through the receipt of the first US$3 million of IVA repayments. The facility will be issued at a 7.5% discount to face value, and IVA repayments are expected to be received prior to the initial six-month maturity date of the facility. All waivers and consents necessary to complete this facility have been received from Marlin's senior lender, Sprott Resource Lending Partnership.
Wexford Capital is an "insider" (as defined in applicable securities laws) of the Company. Pursuant to Multilateral Instrument 61-101, the facility is considered a "related party transaction". The facility is exempt from the requirements to obtain a formal valuation or minority shareholder approval, as the fair market value of the facility represents less than 25% of the Company's market capitalization. The facility was considered and approved by the board of directors of the Company, other than the directors of the Company who are also affiliated with Wexford, who abstained from such approval. There was no materially contrary view or abstention by any director approving the facility.