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Minera IRL (MIRL.cse) news

This is the link to the report on IRL in Peru's newspaper of record, El Comercio, yesterday afternoon. This is the translation:

Minera IRL Reduces the Cost of Ollachea
Minera IRL sees light at the end of the tunnel for Ollachea. The gold producer expects to put its mine project into production before 2020, despite the financial difficulties derived from the decision of Cofide to cease its financing of the development.

Gerardo Pérez, chairman of the board of directors of Minera IRL, explains the reasons for this as the arbitration process (between IRL and Cofide) begins at the Lima Chamber of Commerce (CCL)

Arbitration at CCL
"We consider this tribunal as the right location, not only because we can get a resolution from the arbitration committee but also because it will open dialogue with Cofide", said Pérez.

In 2015, the mining company was granted a U$70m bridge loan from Goldman Sachs, with an expiry date in June 2017, structured and financed by by the State entity Cofide, in which Cofide also committed to structure a full financing for U$240m.

Cofide has made it clear, however, that it will not continue in this service and demands repayment of its U$70m in order to comply with its social mandate. The State financing entity considers that the financing of Minera IRL is outside of what should be its policy line and has even said that there is the potential of corruption in its original granting.

Under this scenario, the gold mining company has been left without the capital to finance the U$165m that the Ollachea project needs. However, it has taken measures to revert the situation.

Re-design the project
The most important advance has been the re-designing of the project to a smaller scale, in order to reduce capital costs and increase its attractiveness to investors. "The optimization (process) is almost complete and will allow us to reduce capex by 50%, from U$165m to around U$80m", said Pérez.

The new optimized feasibility study recommends the construction of a smaller mine, of 1,500 tonnes per day, which is scalable to 3,000 tonnes per day (as per the original design) in the fourth year of operations. This will allow construction in just seven months, instead of the 18 months estimated previously. "Another big advantage of Ollachea is that it has its EIA approved and all its permits in order to start operations", Pérez added.

The gold mining company has also been in contact with investors interested in financing the project and is currently in negotiations with two investment funds.