Update on Minera IRL and Ollachea

Those who have followed the trials and tribulations surrounding Peruvian junior gold miner, Minera IRL, which owns the existing Corihuarmi gold mine in Peru and the hugely prospective Ollachea gold project in the same country will be thankful that the ongoing saga may be coming to a successful end for the company.  The company is now now led by Diego Benavides – a long time director and champion of the company and who has an excellent relationship with the community around the Ollachea project whose goodwill will be an important factor in the development of a mine there.

Minera IRL is focused primarily on gold. The shares of the company are listed on the Lima Stock Exchange in Peru ( Bolsa de Valores Lima) (BVL:MIRL) and the Canadian Securities Exchange. (CSE:MIRL). The Company is in discussion with a London-based financial adviser, to help explore the options for re-listing the company in London and then advising and assisting with the listing process. (Minera IRL used to have an LSE AIM listing until it got mired in some seemingly unsavoury moves to try and wrest control by some Canadian/Peruvian individuals following the untimely death of company co-founder and driving force, Courtney Chamberlain.

Now, Minera IRL is led by a tightly knit team of experienced mining executives, engineers and geologists.

The company operates the Corihuarmi gold mine in the high Andes of central Peru, which has been in continuous production since the first quarter of 2008 but is eking out its final days as reserves are depleted, but is still producing a little over 5,000 ounces of gold a year.

Minera IRL’s flagship project is Ollachea, an advanced gold development project with high potential for reserve and resource expansion located in southern Peru. An Optimization Study to the 2012 Definitive Feasibility Study was completed in the second quarter of 2014, which outlined the presence of a robust underground mining operation. A drilling program of approximately 5,200 meters has been completed in the Minapampa Far East zone.

The company has been granted all of the significant environmental, social and construction approvals needed to build the Ollachea Gold Mine.  However the decisions necessary to move ahead were stymied by an ongoing dispute with Peruvian bank COFIDE which now seems to have ended in Minera IRL’s favour which would allow it to go ahead with the Ollachea development at last.

I am indebted to blog site Inca Kola News for keeping me up to date with the latest developments in reporting as follows:

“On Friday at 11:27pm the tribunal arbitrating on the case between Minera IRL (MIRL.cse) and quasi-State bank COFIDE over the fate of the Ollachea project and the U$70m bridge loan forwarded by COFIDE to the mining company published its verdict on the case. You can read it here. The need-to-know is:
  • The tribunal has found in favour of Minera IRL and against COFIDE
  • COFIDE has been ordered to pay U$18.75m in damages, plus another U$13.96m in loss of earnings. 
  • The tribunal also struck off all interest payments due on the U$70m bridge loan due as from July 17th, which I believe comes to around U$16m. 
  • Along with another small award, the total award package comes to just over U$50m
This is a massive win for Minera IRL, be in no doubt. Just the U$32m cash award is around U$0.14 per share (C$0.17). The whole package is worth around USD 22c/share with the interest write-off included. Plus of course IRL can now get on, fund and build its mine.” 
The Ollachea Project

Minera IRL acquired an option for the Ollachea project and began exploration fieldwork in 2008. The project is located in Peru‘s southern Puno district about 250 kilometers north of Lake Titicaca, on the eastern escarpment of the Andes.

Studies demonstrated the feasibility of a low-cost underground mining operation and Minera IRL is advancing with engineering studies. A large reserve base has been delineated and on-going drilling continues to produce promising results.

Logistically, the project benefits from easy access via the new Interoceanic Highway and it has a guaranteed electricity source from the nearby San Gaban hydroelectric station. There is abundant water. The Peruvian government has approved the project‘s environmental impact study and permits for construction.

The project has strong support from local communities, in both the direct and indirect areas of influence. The Ollachea mine project is expected to become an important source of employment in the area.

The company also signed an unprecedented 30-year surface rights agreement in 2012 and as part of that long-term agreement, the Community of Ollachea will earn a 5% participation interest in the mine once it begins commercial production.

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