Dundee research coverage Gleichen Resources, ( Torex Gold Resources )
Gleichen Resources Ltd., (GRL-V) burst into the limelight in August 2009 when it announced that it had entered into an agreement to acquire 78.8% of the 3.9 million ounce Morelos Gold project, located in Guerrero, Mexico. Since then the company successfully completed an C$241.5 million equity financing, closed the deal and just last week announced that it intends to exercise its right of first refusal to acquire the remaining 21.2% for not less than C$52 million. Armed with a new management team and Board, Gleichen intends on completing a 24,000 metre combined exploration and in-fill drill campaign starting in 2010 and plans to complete a pre-feasibility assessment of the economics to develop either an open pit or combined open pit underground gold mine. We estimate that production could commence as early as calendar 2014, following a US$340 million capital investment to construct the mine. Based on our model, we estimate Morelos could produce on average 206,000 ounces of gold at total cash costs of US$340 per ounce. The current resource would support an 11-year mine life, but the potential to add to the resource and consequently extend the mine life is believed to be excellent.
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