Greenstone to boost capacity at San Andres

Consistently encouraging drill results have prompted Greenstone Resources (GRE-T) to double its projected gold production capacity at the San Andres heap-leach operation in western Honduras.

The property hosts two gold deposits: Water Tank Hill, which is now under construction, and a new discovery, Twin Hills, 1 km to the southeast. The former will be mined as an open pit at stripping ratios of 0.3-to-1, beginning in mid-1998. The latter, which is in the advanced stages of drilling, is estimated to contain at least 1 million oz. gold. Both deposits are oxidized and therefore amenable to heap-leaching.

The original feasibility study, which took into account only Water Tank Hill, projected annual production of 85,000 oz. gold from 2.1 million tonnes of ore at a gold recovery rate of 85%. At this rate, the deposit’s reserves of 18.3 million tonnes grading 1.44 grams gold per tonne would be depleted in roughly nine years.

But following the discovery of Twin Hills, the company decided to increase the yearly production rate to 4.5 million tonnes. At this rate, annual gold output would approach 180,000 oz. gold over a reduced mine life of 4.5 years.

The decision was based on results from 12 of the latest 14 holes drilled at Twin Hills. These results indicate the size of the deposit is comparable to Water Tank Hill.

“Twin Hills will be at least a million ounces — and maybe quite a bit more, because it is open to the north, east and west.” says Hugh Snyder, chairman of Greenstone.

Twin Hills measures 750 by 300 metres, and the mineralization is hosted by oxi-

dized, silicified, rhyolite rock. Drilling has intersected at least one zone that returned greater than a quarter of a gram of gold over a minimum 6-metre width. Roughly half the 30 holes drilled intersected multiple zones.

Highlights from the latest 14 holes include: hole 18, which intersected 21.4 metres (from 27.4 to 48.8 metres) grading 2 grams gold; hole 27, which cut 33.5 metres (from 22.9 to 56.4 metres) of 0.64 gram, 6.1 metres (from 70.1 to 76.2 metres) of 0.65 gram, and 9.2 metres (from 85.3 to 94.5 metres) of 1.32 grams; hole 30, which returned 67.1 metres (from 1.5 to 68.6 metres) averaging 0.79 gram, including 33.6 metres (from 3 to 36.6 metres) grading 1.05 grams; and hole 28, which yielded 12.2 metres (from surface) of 0.91 gram, and 36.6 metres (from 33.5 to 70.1 metres) of 1.07 grams.

Drilling will resume at Twin Hills next month in a program consisting of delineation and infill work.

The cost of expanding production is estimated at $8 million, bringing total capital costs to $30.9 million. Most of the extra costs are associated with larger-sized equipment, which is needed to mine the extra tonnage resulting from Twin Hills.

Cash operating costs associated with mining Water Tank Hill are expected to average $106 per oz., while preliminary estimates for Twin Hills are set at $175 per oz.