My first thought reading this is that this is all very narrow intersections that are deep and so, probably not economical. However, they write that they only reported results of 5g/t or more of gold. I am no expert on vein mining so cannot comment on how good or bad these results are from an economical point of view. However, the average grade reported here and this is uncut is 31.5g/t which is pretty strong but the average width is quite low at 0.45m average. I believe 3m to be the minimum mining width for undergroud mining.

From these results, the company has decided to spend 20M dollars for 80k meters of drilling. The current resource estimate available in the last presentation for the whole Segovia area is only 652k ounces of gold plus silver credits. This resource estimate did not include this drilling and a new resource estimate is due out in early February.

In the new presentation, they are now calling for 200k ounces per year of production, starting in 2014 with a 15 year LOM. That is 3M ounces. Obviously, their resource estimate will need to climb significantly for that to happen.

They also declared in that last investor presentation that cash cost in Q4 was $1100 per ounce. That is a big drop from Q3 where they produced at a cash cost of $1536. They now predict that starting in 2014, their cash cost for Segovia will be under $900 per ounce. In 2012&2013, they predict cost to come in between $900 and $1000 for Segovia.

It will be interesting to see how the market reacts to these results. However, it may take a few days and some calls to the company for the big boys to decide how they will proceed. The next item on the news front should be the Bank loan followed by the resource estimate.

Glorieux