Minera IRL has announced the results of post-definitive feasibility study (DFS) mine optimization studies of its Ollachea underground gold project in southern Peru. Highlights include 100,000 oz/y of average gold production over an initial nine-year mine life. Life-of-mine gold production is estimated at 930,000 oz.

Assuming financing and necessary permits are in place, Minera IRL anticipates that construction at Ollachea will begin in the third quarter of 2014, with production starting in the second quarter of 2016.

Initial capital cost to develop the Ollachea project is estimated at $164.7 million. Average total cash cost of production is estimated at $587/oz.

Minera IRL Executive Chairman Courtney Chamberlain said, “The impact of the better defined geological model at Ollachea has exceeded our expectations. The resulting optimized underground mine design and production schedule carried out by international consultancy, Mining Plus, has allowed us to bring forward considerable gold production. This, along with $9.5 million of deferred capital, has enhanced the project’s financial projections. The company is confident it will soon receive the construction permit and continues its focus on the debt restructuring and project financing.”

Ollachea project costs are still based on 2012 DFS capital-cost estimates. However, the company believes that potential cost reductions for equipment and services are likely to offset potential cost increases. Additionally, discussions with equipment suppliers have confirmed certain opportunities to lease finance a substantial portion of the mining equipment.

Probable mineral reserves at Ollachea are now estimated at 9.2 million mt grading 3.4 g/mt gold at a 2.1-g/mt cut-off, for just more than 1 million contained oz. The reserves are all located in the project’s Minapampa zone. The updated estimate is based on a significantly smaller mining-panel size and more constrained search ellipsoids.

Minera IRL anticipates that more work could lead to an expanded mineral reserve and increased mine life at Ollachea. The Concurayoc zone to the west of Minapampa contains an inferred resource of 900,000 oz, and, additionally, positive results were obtained from 2013 underground exploration drilling along the eastern strike extent of Minapampa. Finally, the Ollachea mineralized zone remains open-ended and undrilled along strike and at depth.