Development at Pilar continued in the quarter with production expected to begin in the first quarter of 2013. Exploration confirmed mineralization along a 2.6 kilometre down dip extension of the current mineral resource. Northwest of the known Jordino deposit, lies the Ogo deposit: a hole drilled at depth confirmed mineralization below the previously interpreted footwall, significantly expanding potential in the 2.2 kilometres of untested strike length to the North. Additional exploration drilling suggests that growth in mineral reserves and mineral resources should continue in 2011.
The Pilar project is being built at a capacity level that is 30% higher than that contemplated in the feasibility study. The Company expects to utilize the increased capacity beginning in 2014. The Company expects to utilize the increased capacity beginning in 2014. Discovery of new resources along with the decision to advance Caiamar, a deposit located 38 kilometres from Pilar, to pre-feasibility assuming that ore would be processed at Pilar, is expected to support the higher capacity level. Studies have been completed confirming the processing plant at Pilar is suitable to process the Caiamar ore and the higher grades can offset the costs of transporting the ore. Resource development work has started at Caiamar, which could positively impact Pilar production rates as early as 2015.
Development at C1
continued in the quarter with the completion of all the engineering studies and construction start up. The project is planned initially as a conventional open pit with processing to be done through a carbon-in-leach ("CIL") floatation circuit, which is on track to commence production in late-2012. Average annual production is expected to be approximately 100,000 ounces with production in each of the first two years expected to be approximately 130,000 ounces per year.
Construction at Ernesto/Pau-a-Pique commenced in the first quarter advancing the project as expected. Ernesto/Pau-a-Pique is planned as an underground and open pit operation with conventional processing through a gravity and CIL circuit. Annual production of approximately 100,000 ounces is expected to commence in late 2012. Exploration drilling has been initiated at Lavrinha, an adjacent area to Ernesto, targeted to increase mineable resources and the project mine life.