Marengo still positive about Yandera

EXPLORER Marengo Mining insists it remains positive about the mineral potential at the Yandera copper project in Papua New Guinea despite questions over the economic viability of the development.

CEO Pieter Britz said global resource markets, the falling copper price, a decrease in exploration and development and escalating capital and operating costs had brought into question the economic viability of the development of Yandera's 2012 resource.

"During this quarter, the new management team completed a comprehensive review of all aspects of the feasibility work, and concluded that, although progress had been made, and further optimisation of the resource and development options had been considered, the project would not currently yield the economics desired and therefore, the feasibility work would not be completed at this time," Britz said in the company's June quarterly.

"However, during inspection of the 2012 resource, and further drilling, mapping and survey programs completed since, management remains positive about the mineral potential at Yandera," he added.

"As part of the comprehensive review of the known resource, it is emerging that a new structural model that controls mineralisation is becoming evident. This new understanding is being used to predict where new discoveries and an increase of grade are likely to occur.

"This new model has been used to great effect recently and has resulted in new discoveries of potentially higher grade outcrops at what is being called Rima Block.

"Extensive mapping and sampling in this new area has revealed potential wide zones of mineralisation and alteration that exhibit abundant bornite and chalcopyrite within both potassic and phyllic alteration zones.

"These new discoveries have given management confidence that new and potentially higher-grade mineralisation can be found and brought into additional resources through the implementation of an intensive geologic work program."

The company's quarterly report confirmed its corporate move to Toronto, with the Perth and Port Moresby offices closed and Madang now the primary PNG office.

Marengo said it had completed a company restructuring and comprehensive review of feasibility work during the quarter, with a capital injection finalised.

Britz said Marengo's new management team would implement a three-year plan, with the initial focus on training, comprehensive data and field reviews, mapping and sampling of new areas, and potentially exploratory drilling.

Year two will follow with a larger scale mapping and sampling program to continue to define new drill targets. New targets will be prioritized and drilled after completing drilling and field studies.

Year three is intended to be used for proving up new resources and completing an updated resource model and potentially finalising an updated feasibility study.

At quarter end, the company had available cash and term deposits of about $US421,000 prior to the completion of a $10 million financing with major shareholder Sentient Executive, with funds to be used for ongoing exploration and working capital.

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