Glencairn breaks ground at Bellavista

Glencairn Gold (GGG-T) has begun the initial phase of construction of its Bellavista gold mine in Costa Rica.

Under the supervision of lead contractor Sococo de Costa Rica the first phase of construction includes roadwork, installation of liners for leach pads, process and sedimentation ponds, and ground preparation for the mill, gold recovery plant, and administration building.

In all, construction is expected to last about a year and carries a price tag of US$26 million.

In November, Glencairn raised around US$8 million for the first phase of construction via an equity financing involving some 13.5 million units (T.N.M., Nov. 26 – Dec 2/03). Negotiations for the remaining capital requirements are ongoing.

The first gold pour at Bellavista is expected before the end of 2004. At full steam, the operation is expected to churn out 60,000 oz. of gold per year over a 7-year mine life. Cash operating costs are estimated at US$163 per ounce. The plan is based on reserves totalling 11.2 million tonnes running 1.54 grams gold per tonne. Total costs, including all royalties, are projected at US$177 per ounce.

A similar plan tabled by previous owner Wheaton River Minerals (WRM-T) in 1999 generated US$62 million in net cash flow, excluding pre-production and financing costs, an internal rate of return of 33.2% and a payback period of 3.7 years. The net present value is US$11.3 million at a 15% discount rate. The estimates are based on a gold price of US$350 per oz.

Shares in Glencairn were 7, or 6.5%, higher at $1.14 in afternoon trading in Toronto on Dec. 12.