LONDON (ResourceInvestor.com) -- Toronto listed Tiger International Resources (TSX-V: TGR) is ready to engineer the resurgence of its fortunes following its triumphant emergence from a bout of costly litigation that was instigated spuriously by another corporation. Tiger is now preparing to enter the development phase at its Esperanza gold project in the Philippines, as well as considering project acquisitions in Malaysia, Nevada and New Mexico.
According to Tiger's President Patric Barry, the Esperanza project offers the potential for delineation of a 1moz gold resource, exploitable with very robust project economics. A resource of 300,000oz gold has already been outlined by the company, and a gold resource of 1moz is thought to be achievable as part of a bankable feasibility study and reserve definition programme that will soon be conducted at the project.
A ten year mine life is envisaged for the Esperanza project, which would result in an annual output of around 100,000oz gold. Capital expenditure is preliminarily estimated at $30m, and roughly a year is now required for completion of the bankable feasibility study that will finalise project economics and incorporate some trial production, both for its commercial and empirical value, and after which construction can begin.
Construction of a mine would probably take around a year, and would encompass a simple crush and heap leach processing array. The project would be centred on a small valley, the natural creation of which has over time exposed on its slopes multiple veins of gold oxide mineralisation. The ore is clean, and grades within the veins reportedly run at an average of 9-10g/t gold, with much higher grades also encountered.
Although lower grades of disseminated extra venous mineralisation are also apparent, the mining scheme will sensibly focus on exploiting exclusively the rich veins. As an illustration of the Esperanza project's potential viability, it was first conceived and believed to be economic when the price of gold was still languishing at $225/oz.
The Esperanza project almost fell foul of the prohibition under Philippine law of mining within a watershed, but Tiger has managed to secure an exemption from this restriction with the assistance of the project's vendor, Pan Asia Exploration Services.
Environmental concerns are also eased by the relatively small amount of tailings that will be produced from an underground as opposed to open cast operation, and by constraints that are imposed upon the mining operation regarding road rehabilitation and tree felling. However, Barry is confident that these constraints will not prove onerous.
The reformulation of the relevant legal agreements between Tiger and Pan Asia covering the Esperanza project necessary to place them fully in accordance with Philippine law is currently underway, after which routine permitting can take place and work on the bankable feasibility study can begin. The equity of the project is to be 90% owned by Tiger, with a 10% carried interest for Pan Asia.
The recent discovery of a network of pre Second World War mining tunnels and the venous, largely accessible nature of the mineralisation means that trenching and underground sampling can mostly be substituted for drilling during the bankable feasibility study, hence somewhat lowering its cost.
Tiger intends to try and increase its land holding in the valley where the Esperanza mine will be situated, and will look to buy out two other locally owned mining operations whose owners are not committed to the mining business and are looking to diversify. This would increase the resources available to the Esperanza mine once it is constructed, as associated mineralisation continues along the valley.
Tiger's President is very positive on the outlook for the Philippines as a mining nation, citing relative peace and stability and favourable, well considered mining laws. Though a problem with Islamic terrorism has recently emerged, this affliction is relatively minor and confined to the south of the country, whereas Esperanza is located in the north, close to the city of Baguio.
To facilitate the acquisition of a prospecting licence in Malaysia, Tiger has recently incorporated a domestic company in that country, and Barry will be visiting the country in the next few weeks to further negotiations regarding the licence. Barry rightly feels that Malaysia offers similar benefits as a mining location to those of the Philippines, indeed the former is if anything more politically and economically stable than the latter.
Tiger's acquisition strategy is only to consider projects of defined economic mineralisation that can be advanced relatively quickly to feasibility and then production, hence the company will not engage in primary exploration at the green field stage. Potential projects that meet these criteria in the states of Nevada and New Mexico are currently under evaluation.
Tiger also benefits from a minor participation stake in an oil well being completed shortly in Saskatchewan by Warburg Resources, and this licence may yet yield further wells from leads defined by recent seismic surveying. This interest should provide Tiger with a steady revenue stream as it pushes its development of Esperanza forward, and may lead on to other involvement in the oil & gas arena.
The Esperanza project, while not enormous in terms of absolute size, is nevertheless quite a compelling one, offering ease of exploitation, a stable political environment conducive to mining, and favourable economics. As such it seems likely to provide a solid basis for Tiger as a corporation to recover from the legal travails that have dogged it in the recent past and get on with the business of mining.