General Minerals extends Atocha mineralization (March 04, 2002)

Surface channel sampling by General Minerals (GNM-T) along strike from the A10 test mine site at the high-grade Atocha silver project in central Bolivia has extended mineralization over a strike length of 10 km.

The channel sampling targeted high-grade silver mineralization hosted by a sandstone unit. Continuous channel samples of the weathered and leached sandstone were taken across the unit at 1.5-km intervals, depending on rock exposure. The mineralization was previously identified by underground drilling and test mining.

Three channels were cut 2.7 km north of the test mine site; they returned between 17.5 and 20.8 grams silver per tonne over widths of 2.4-6.1 metres.

Some 1.9 km south of the test site, four channels yielded 17.9-54.6 grams silver, with widths ranging from 1 to 2.3 metres.

Another two trenches, 4.6 km south of the test site, surrendered 10.2 grams silver over 1.1 metres and 25.6 grams sliver over 3.4 metres.

Finally, a single channel situated 2.4 km to the south cut 18.2 grams silver over 6.1 metres.

The company says the longer intervals (6.1 metres) are substantially greater than the average 2.3-metre width test mined at A10, and the thicknesses occur at surface.

Previous sampling at the test mine and 1.4 km north at Condor Iquina indicated that low-grade surface-leached material may represent much higher grades at a depth of a few metres. Sampling in tunnels at Condor Iquina yielded up to 1,800 grams silver over 1.5 metres. Previous channel sampling at the test mine site returned grades of between 20 and 15,448 grams silver. Typically, silver values were around 500 grams silver over 1.5-2.5 metres.

In 2000, the company completed an internal positive feasibility study at Atocha. The study was based on a selective mining operation capable of producing 400 tonnes per day at an average grade of 600 grams silver.

Annual production from a mine-and-mill facility was pegged at 1.1 million oz. silver initally, and then at 2.2 million oz. as additional reserves and resources are drilled out. Total capital costs, including construction, working capital and a contingency, were pinned at US$4.8 million; operating costs, at US$2.50 per oz.

At a silver price of US$5 per oz. and projecting a 3.5-year mine life, the project would have an annual cash flow of about US$5.1 million. The internal rate of return was pegged at 81%, with a payback period of one year.

In the boardroom, Tina Woodside, outside legal counsel for the company since 1994, will replace the recently resigned David Wahl, a board member since 1998.