Companies: MIRL   

Miner and explorer Minera IRL is looking for possible deals after starting gold production at Corihuarmi in Peru.

The Jersey-based company, which raised £11.4 million at 45p with its AIM float last year, lost an almost trebled £5 million last year, as it spent to develop several precious metals projects in South America. Executive chairman Courtney Chamberlain says most of the float money went on Colihuarmi, where Minera started production in March this year and increased the grade from an expected 1.97 grammes of gold per tonne of ore to 2.63 grammes a tonne.

This is comparatively low, but Chamberlain says estimated operating costs, before capital expenses, are below $300 an ounce, against a current $900-plus market price, and argues the grade increase will help the company exceed its budgeted gold output for 2008 above 35,000 oz. Corihuarmi’s initial reserve estimate was143,000 oz of gold, but further exploration could increase this.

Minera is poised to start drilling at another ‘highly prized’ Peruvian project, Ollachea, bought from Rio Tinto in 2006. The company sounds optimistic about a joint venture at the neighbouring Huaquirca project with another company, Minera Alturas, but has withdrawn from other, disappointing projects at Cushiro, Trish in Peru and Jaguelito in Argentina.

Noting the present lack of stock market support for pure exploration companies, Chamberlain suggests Minera’s new status as a producer makes it ‘poised to take advantage’ of those companies’ predicament and places the company ‘in a much stronger position for possible corporate transactions’. At 71.5p, up from last September’s 17p low, some profit-taking might be prudent, but the shares should outperform some others in the sector.

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Minera IRL	AIM	£31.56m	51.00p	0.50p
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