La Demajagua Gold/Silver Project

The La Demajagua mineral deposit incorporates the dormant Delita Mine. It has been assessed by Western Australian mining consultants Cube Consulting to have a conceptual and approximate Exploration Target in the range between:

Tonnes Grade (Au g/t) oz Au Grade (ag g/t) oz Ag
Lower 17,000,000 2.2 1,183,000 17 8,745,000
Upper 21,000,000 2.5 1,736,000 25 14,789,000

To establish resources for the planned Stage One open pit mine, Cube Consulting have designed a 25,000m drilling program to add to existing data from 50,000m of historic drilling. (Link: See ASX Announcement 30 October, 2020)

A Preliminary Feasibility Study for Stage One, including the drilling program, is expected to be completed by September 2021.

Cuban-registered Minera La Victoria SA (MLV) – 49% owned by Antilles Gold – is currently carrying out feasibility studies for developing an 800,000tpa open pit mine at La Demajagua. The mine is projected to produce approximately 60,000tpa of refractory concentrate.

The planned 6-year mine life is expected to be followed by a 10-year underground operation at a reduced production rate.

The Cuban Government’s mining company, GeoMinera SA, holds 51% of MLV.      

As part of its due diligence process before entering into the La Demajagua Joint Venture, Antilles Gold had access to data from 50,000m of historical drilling undertaken primarily by reputable Canadian mining companies. Cube Consulting used the data to establish non-JORC compliant resources within a basic mine plan for Stage One.

Las Lagunas Flotation Circuit  

The Company has undertaken a Preliminary Economic Assessment (PEA) of the capital and operating costs to produce 60,000tpa of refractory concentrate. The PEA indicated attractive commercial results.

Based on test work by a major Canadian metallurgical research group, the grade of the La Demajagua concentrate is expected to be in the order of 48g/t Au and 380g/t Ag with a relatively high arsenic content.

For the purposes of the assessment it was assumed the La Demajagua concentrate will have a value similar to that advised by a Chinese smelting company permitted to import and process concentrate with high arsenic content.

The PEA indicated a total capital cost for developing the planned Stage One open pit mine, concentrator and power station to be approximately US$73 million, including the cost of feasibility studies, project management and administration, and interest during construction.

Projections of profitability and the estimated NPV for the project cannot be reported prior to establishing JORC-compliant Indicated Resources.

The Definitive Feasibility Study (DFS) for the project is expected to be published in September 2022 with construction completion and commissioning targeted for the end of 2023.

Antilles Gold will contribute US$13.0 million of equity to the Joint Venture company during 2021/2022 for its 49% shareholding of the Stage One open pit operation. Of this amount, approximately US$7.0 million will be spent on feasibility studies, project management and administration, with the balance on mine infrastructure.

Antilles Gold is responsible for arranging approximately US$60.0 million in financing for the project. It is anticipated that around half of this amount will be provided by credit from suppliers of mining plant and concentrator equipment.

The History of the Delita Mine

The La Demajagua gold/silver project on the Isle of Youth, approximately 60km south of mainland Cuba, incorporates the historic workings of the Delita mine.

Cuba has a history of mining dating back to at least the days of Columbus and the Spanish settlement that followed. The geology is varied, giving rise to different types of mineral deposits scattered across the island. During the past century, a number of metal mining centres have been developed to exploit these deposits.

Cuba has some of the world’s largest deposits of nickel, cobalt, manganese and chromium. The US Bureau of Mines estimates that the nation hosts 40% of the world’s nickel resources.

Over the past 30 years, Cuba has, with COMECON assistance, conducted regional exploration across the country for a wide variety of minerals, identifying substantial deposits of copper, gold, lead, zinc and other minerals, some of which are being exploited.

The Isle of Youth

Sherritt Gordon of Canada has maintained a nickel refining operation in Cuba for over twenty-five years.

In 2017/18, the EMINCAR joint venture between Trafigura and the Government’s mining company GeoMinera, commissioned the US$275 million Castellanos base metals mine.

International mining companies are increasingly interested in Cuba’s emerging mining sector, with a number of mining and exploration joint venture agreements signed in the past three years.

Site Location

The dormant Delita mine and associated gold deposit is located on the Isle of Youth and is accessible from the port town of Nueva Gerona by 40km of paved two-lane highway. The property is about 4km inland from tidewater on the west side of the island.

The property, which is 20m above sea level, lies in a gently rolling landscape with no major relief.

The Delita deposit was discovered around 1900 but received only cursory attention until the 1920s, when a North American company acquired the concession. However, production was minimal until after World War ll.

Past Mining Operations

Between 1947 and 1950, approximately 60,000–70,000 t of ore were mined underground at Delita. As mining progressed in depth, the material changed from shallow, oxide-zone material, to sulphidic arsenic mineralization. Some reports suggest that 60,000 t were mined at a recovered grade of 14 g/t gold. A 40 tpd beneficiation plant was constructed to drive off arsenic and sulphur, and concentrates were shipped offshore to a smelter for processing. The property was abandoned in 1958 when the concentrator ceased operating.

During the 1970s and 1980s, regional exploration, mapping and geophysical surveys were conducted, and from 1977 to 1980, trenching and drilling were conducted on the Delita property. This work expanded resources considerably.

Following a 1980 study, a new shaft was sunk and a flotation and gravity process plant constructed, with approximately 80,000 t of ore processed through the plant. High recoveries of gold and silver – reporting to flotation and gravity concentrates – were achieved in the plant, which had a nominal 60-80 tpd capacity. However, the inability to process the refractory concentrates prevented operations from being expanded to full-scale production.

A 1,000 t experimental block was mined in 1984 to test mining conditions and provide material for metallurgical testing. An auriferous arsenopyrite concentrate was produced but the operators were not able to market or process this material.

Concentrate product at the mine site effectively amounted to about 5000 t of 30-60 g/t Au.

All work ceased on Delita in 1989 with the withdrawal of the USSR from the Cuban economy.

Pre-Feasibility Studies

Boliden Contech, working under a technical assistance program for Cuba, prepared a Pre-Feasibility Study of the Delita deposit in June 1990. It was concluded that the project was not viable at gold prices prevailing at that time, primarily because the metallurgical treatment was likely to be expensive and a costly undercut-and-fill method was proposed for underground mining.

The Proposed Albion/CIL Plant

Antilles Gold, in association with an Australian engineering group, intends to design and construct a 100,000 tpa Albion/CIL process plant. It will be located at La Demajagua or possibly Las Lagunas in the Dominican Republic, depending on the outcome of feasibility studies, ongoing US sanctions against Cuba, and the availability of project finance for each location.

The second-generation design will incorporate modifications that were found to be necessary at the Group’s first Albion/CIL project at Las Lagunas. These modifications were incorporated in the plant later installed at Ararat in Armenia by the Albion patent holder Glencore Technology, which recovers 95% of gold from a clean arsenopyrite concentrate similar to that which will be produced at La Demajagua.

Overview of the Las Lagunas site.

Selected plant and equipment – including a sophisticated and well-maintained oxygen plant from the Group’s completed Las Lagunas tailings retreatment project – could be incorporated in the new facility.

The PEA undertaken by Antilles Gold for a 100,000 tpa Albion/CIL processing plant was based on a ten-year project life, with 60,000 tpa of concentrate being supplied initially from the La Demajagua mine and 40,000 tpa by an international metal trader with an average grade of approximately 40 g/t Au and 220 g/t Ag.

The estimated development cost of the proposed plant is approximately US$60.0 million, including the value of existing equipment. The resultant and attractive NPV for the processing plant is expected to be confirmed by feasibility studies over the next two years.