Excellent update today from MUN. Goodluck all longs!
Recent exploration has continued to focus on this zone to develop a better understanding of the region, the distribution of the
gold mineralisation and the geometry of the structures.
Recent analysis has confirmed a strong correlation between soil sampling and RAB drilling, which demonstrates the importance of this exploration technique as a pathfinder for gold mineralisation in the region. The most recent assay result received from diamond drilling the central zone has yielded further encouraging results of 0.6m at 16.7 g/t Au between 3.00 metres and 3.60 metres and 1 metre grading 6.8 g/t Au from 16.70 metres to 17.70 metres from TCD 07-16 located in the central anomaly.
As part of our original joint venture agreement, we were required to reduce our tenement area after completing the initial earn-in from 180,000 hectares to 60,000 hectares. We have now selected this initial joint venture area, which includes the tenements covering the Conceição discovery. Significantly, we have also recently entered into a second joint venture with Gamaleira Ltda on the remaining 120,000 hectares of tenements not included in the initial joint venture.
This second joint venture has been concluded on similar terms, giving us the right to earn an initial 51% interest for US$2 million and then increasing our equity to 80% by taking any resource discovered through to bank feasibility stage. This will enable us to retain exposure to the broader Tocantins tenement portfolio, which we believe is extremely prospective for additional discoveries. In addition, we have negotiated the right to explore for base metals on any of the tenements included within both joint ventures.
Our exploration team at Tocantins, which has recently been expanded with the establishment of the second joint venture, has the significant advantage of having access to a newly established assay laboratory at the Engenho Project. The establishment of this facility gives us a significant strategic advantage in terms of turnaround of assay results – which is currently one of the most significant challenges facing exploration companies.
SUMMARY
In the context of our broader corporate plan, Mundo Minerals has a medium term strategy of developing a sustainable annual production base of around 250,000 ounces of gold. We expect to generate 50-60,000 ounces per annum from Engenho (which will be driven largely from the existing mine and anticipated exploration potential from the tenements); 50-70,000 ounces per annum from Torrecillas, subject to completion of a positive Feasibility Study, and and we hope to deliver about 110,000 ounces per annum from Tocantins in Brazil, which is a major greenstone belt.
We need to undertake a strong exploration program and achieve further success, but the early results from all of our assets suggest that we can achieve these targets. I am pleased to report that we have so far either met or exceeded all of our goals and I firmly believe that this approach will continue to yield positive results for shareholders, and that the targets we have set have very solid foundations based on the exploration results we are seeing.
The Board has approved an exploration budget for calendar 2008 of approximately A$7.8 million. This includes 10,200 metres of diamond drilling and 8,150 metres of RAB drilling to be undertaken in Brazil and 3,750 metres of diamond drilling to be undertaken in Peru. The focus on drilling in Peru is less than Brazil due to the fact that most of the exploration focus on Peru during 2008 will be undertaken via development of exploration declines.
With gold production commencing next month, no debt and no hedging, we are in a very strong position to fund this aggressive exploration and development. At the end of the December 2007 Quarter, we had cash reserves of just over A$19 million; we anticipate that our cash position will be approximately A$8.0 million following plant commissioning at Engenho in April. With the mine budgeted to generate EBITDA of A$12.8 million for 2008, we are exceptionally well placed to achieve our growth objectives.
I am confident that the future for Mundo Minerals is extremely bright, and I look forward to keeping you informed of our
progress, which can also be monitored by visiting our web site at
www.mundominerals.com.
John Langford
Chief Executive Officer
Diamond Drilling, Tocantins