Cambridge Mineral Resources’ Quintana gold project in Colombia could make £2.8 million a year, says an economic feasibility study.

Company sources suggest AIM-quoted Cambridge could be encouraged by the Quintana study to float off its European interests, including potential uranium prospects in Bulgaria, in a separate vehicle. That would enable the company to focus on South America, where the Quintana study, undertaken by various independent consultants, suggests an initial resource of more than 86,000 oz with a mine life of five and a half years.

The study estimates cash operating costs of $131 an ounce, against today’s $653 market price, and a capital cost of £2.3 million, with a ‘payback period of 19 months’. The total resource of nearly 110,000 tonnes at the high grade of 24.58 grammes of gold per tonne of ore includes "JORC" industry standard proven and probable reserves of a lesser 24,740 tonnes at 7.33 grammes of gold a tonne, plus potential inferred resources of 87,600 tonnes at 21 grammes a tonne.

Colin Andrews, Cambridge’s managing director, says the company, which recently arranged a small equity placing, now expects Quintana to be ‘a major profit contributor over a long period’. He adds that Cambridge is advancing funding discussions for Quintana and other mines.

Floated at 16p ten years ago under different management, Cambridge shares had fallen all the way to 2p by last October. Today, they are 0.75p up at 3.88p, valuing the company at £8.1 million, and should rally further.