The anti-mining platform ‘Defensa de Corcoesto’ seems to become increasingly desperate in their attempts to prevent mining from happening at Edgewater Exploration’s (EDW.V) Corcoesto gold project in Galicia, Spain.

In a letter to Barclays and Credit Suisse, the two lenders who were appointed to provide debt financing for the construction phase, the anti-mining platform says it has serious questions regarding the resource categories and cut-off grade.

First of all, they claim the resource is highly speculative, as 78% of the resources are in the inferred category. Whilst this is obviously true, the platform ignores the fact Edgewater will release an updated resource estimate within the next few weeks, and we’re confident over 50% of the resources will be in the measured and indicated category. Thus within two weeks, this claim will become completely invalid.

Secondly, the anti-mining platform says a cut-off grade of 0.65g/t isn’t conservative enough. We would like to point out that an applied cut-off grade of 0.65g/t is very reasonable for an open pit mining operation. As Edgewater used a gold price of $1300/oz as base case scenario, the 0.65g/t cut-off grade is very fair. At the current gold price of in excess of $1600/oz, even a cut-off grade of 0.45-0.5g/t would be reasonable. The updated resource estimate will be compiled by Tetra Tech (NASDAQ:TTEK), a highly reputable firm in the sector. If they sign off on a 0.65g/t cut-off grade, we can be pretty sure the deposit is viable.

Long story short, within the next few weeks both claims from the environmentalists will be rebuffed and we’re pretty sure the Barclays and Credit Suisse guys will have had a good laugh.

Disclosure: The author holds a long position in Edgewater Exploration Ltd. Please see our disclaimer for current positions.

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