Ian Graham, CEO of Montan Mining, and Luis Zapata, Executive Chairman, at the Molleahaca Plant, Peru (MNY photo)

Ian Graham, CEO of Montan Mining, and Luis Zapata, Executive Chairman, at the Mollehuaca Plant, Peru (MNY photo)

Montan Mining (MNY.v) is a small junior miner in the process of acquiring the Mollehuaca Gold Processing Plant in Peru for US $3.3 million.

The Plant will allow Montan to process ore for Peru’s formalized small-scale miners, and potentially make a profit in good and bad metals markets.

This morning, Montan announced it had secured 60-90 tonnes per day (TPD) of mill feed for the Mollehuaca Plant with Intigold Mining, a private Peruvian miner. Montan expects its first ore shipments tomorrow and to be in production this weekend. The contract has an option to renew October 31, 2015.

Montan is expecting USD $220,000 in monthly revenues from the contract, which puts a big dent in the company’s roughly USD $200,000 in monthly operating costs in Peru. Montan co-founder and Executive Chairman Luis Zapata tells CEO.CA by phone the deal allows Montan to re-start the plant and cut its operational teeth without stressing its balance sheet. Net-30 day payment terms mean Montan does not have to pay up front for the material, but rather after it is processed.

In May, mining engineer and CEO.CA contributor Jamie Keech visited several toll millers in Peru and produced a compressive report on the sector, available here. Mr. Keech believes Peru’s toll-millers need at least 150 tonnes per day of production to cover operating costs and corporate overhead of running a public company. Plus, a big challenge for them is securing reliable feed (ore purchase contracts) and the processing issues involved with working with different ore types.

The good news for Montan is the Mollehuaca Plant has 150 TPD capacity and 60-90 TPD is a great start. The company thinks it will be able to cash flow twice its current approx C $3 million market cap annually at full production.

Montan owes US $750,000 and 8 million shares to the Mollehuaca vendor on closing (October), plus US $1.5 million on the 15 month anniversary of closing as part of the $3.3 million deal. The Plant also came with two prospective Peruvian gold properties, including the Eladium mine and nearby Saulito property. The Mollehuaca Plant cost over US $4 million to permit and build, according to Montan.

Montan announced the acquisition of the plant on June 11, when they also took over its operations. Since, Montan has built out its Peruvian operational team with a new plant manager, plant metallurgist, accounting staff in the Lima office and a VP, Operations. The bulk of the new hires have direct experience in Peru's toll milling industry and have been working together for the past 45 days to get ready for this weekend's re-start of operations.

Mr. Zapata says to expect further news regarding updated financing plans and team in the coming weeks.

Here’s a link to today’s news release and Montan’s corporate presentation.

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Montan To Acquire Operating Toll Mill in Peru with 150 TPD Capacity and Mine from Bighouse Productions on Vimeo.

 

This article may contain errors and contains forward looking statements which may not come true. See Montan Mining's profile on SEDAR.com for important risk disclosures. Author has no direct or indirect financial conflicts with Montan. Always do your own due diligence and consult a licensed investment advisor prior to making any investment decision. Junior miners such as Montan are very risky speculative investments. It's your money and your responsibility.