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IRL won an arbitration proceeding against Cofide in September 2019 and a US$34.2 million payout after the bank failed to structure an agreed long-term credit facility to enable Minera to repay a $70 million bridge loan, which was part of a senior project credit finance facility to fund construction of Ollachea gold project. The company is still waiting to collect on the award.

To reduce the initial capex required and accelerate the development of Ollachea, which has reserves of 1 million ounces and 1.4Moz of resources, a company official told Mining Journal it is looking at a phased and modular development with an initial throughout of 1,500 tonnes per day rather than the previous 3,000tpd. This would enable the company to produce about 70,000oz a year for the first three years and then subsequently expand 100,000oz/y production following the expansion not 3,000tpd.

Initial capex is around $80 million, with the company also looking to raise funds to repay the Cofide bridge loan, and the increase in the gold price has spurred interest from many financial institutions to fund the project, CEO Diego benavides told Mining Journal.

"$80 million is enough to build a 1,500tpd plant in Peru and with $47 million required to pay out Cofide and with a contingency as well, we are looking for $140 million in funding," he said.

Benavides said the company is looking at a variety of funding options from bank debt to streaming and supplier finance to fund the shovel-ready project.

The project may also benefit from any measures the government may implement to help boost investment in mining to boost economic activity and mitigate the impacts of the COVID-19 pandemic. The government formed a commission in March to identify projects which can be brought on-stream quickly and which may be eligible for any incentives it provides.

"With the government paying out so much money to mitigate the COVID-19 impact its policy is to activate projects like outs which can activate the economy and have income," he said.

 

The Ollachea project had secured its social licence by providing local communities with a 5% interest in the project

Elsewhere in Peru, the company's Corihuarmi gold mine is on track to produce 22,500oz this year.

Shares in Minera IRL are trading at C15c, valuing the company at $35 million.