In a move that many will consider should have happened some time ago, Diego Benavides - who has headed up the Minera IRL Peruvian operating company for some years - has been accepted onto the parent company board and will be the company’s new Chief Executive. Benavides will have been seen by the company’s Peruvian shareholders in particular as the saviour of the company in protecting the operating company’s gold mining revenues from the alleged predations of the Hodges Board, keeping the Ollachea community onside and being primarily responsible for negotiating the Ollachea financing deal with COFIDE.
In an announcement today, Benavides and three others, were welcomed to the Board by the company’s sole remaining director following the recent AGM. At the AGM three of the previous five directors did not offer themselves for re-election and a fourth, the Chairman and CEO, Frank O’Kelly was voted off the Board after a hard-hitting anti-Board campaign by Latin American focused blog, Inca Kola News who felt that some of the AGM proposals were designed to be for the benefit of Board members rather than the shareholders. While much of the anti-Board focus was aimed at the three Board members who stood down, O’Kelly was also voted off although his downfall was perhaps the perception that he did not exert sufficient control and guidance and that his choice of fellow directors was misguided. O’Kelly had been a long time consultant to Minera IRL dating back to the days of company founder - the late Courtney Chamberlain - and thus a long time associate of company co-founder Benavides. It was notable that in the announcement of the new Board, the remaining director from the old Board and Independent Chairman, Gerardo Perez, paid a tribute to O’Kelly thus: “I wish to extend my sincere thanks to Frank O´Kelly for his outstanding support in the management of our Company. It has been a pleasure to have worked closely with Frank.”
Now we hope that Minera IRL will be able to get on with the development of its flagship Ollachea mine where development is already well in progress. As O’Kelly himself pointed out prior to his being voted off the board of the company with which he had been involved for many years, Minera IRL has an operating gold mine in Peru in Corihuarmi, which is close to the end of its operating life. But its flagship project is the major advanced new gold mine development, Ollachea, located in Puno in the South of Peru. This project is fully funded by a Peruvian State Development Bank ($240 million facility of which $70 million has been advanced). The mine is fully permitted and has subscribed a 30 year social license with the local community. The mineral resource exceeds 2.40 million ounces Au and M+I reserves of 1 million ounces, which will sustain a production of 100,000 ounces of gold per annum for a decade. The company is presently drilling off an already constructed 1.2 km access tunnel with a target of adding an additional 600,000 ounces to the resource. The down dip extension which is currently being drilled reports intersections up to 20 m with grades from the only 3 holes for which so far have assays reporting 5 g/t Au, some 40% better grade than the main ore body which was delineated with 82,000 m of drilling. AMEC has filed a NI 43-101 compliant feasibility study.
In anticipation of production by the end of 2018 the company has negotiated a fixed price turnkey EPC contract with Peru’s largest mine construction company, Graña y Montero, and is currently assembling what it describes as a first class owner’s management team. MIRL is in the process of commencing detailed design and placing orders for long lead capital items of equipment.
The company reckons that there are only a handful of advanced gold projects in the world in the condition of Ollachea and there should be enthusiastic acceptance from investors.
This is a situation where prior controversy has depressed the share price to levels of an order of magnitude of what other less advanced gold project are commanding. There is a capacity for a very substantial increase in the share price reckoned O’Kelly.
He went on to note that companies like Dalradian command a market cap ten times that of MIRL, whilst possessing comparable resources but still have permitting and financing challenges ahead. Meanwhile MIRL has a producing gold mine, a fully funded project with all the permits in place, a 1.2 km access tunnel, an EPC fixed price contract with Peru’s largest mine construction company and a 30 year social license for the local community. One can count on one hand, he says, the number of gold projects as advanced as Ollachea.