Partners improve Cerro San Pedro

An updated feasibility study at the Cerro San Pedro gold-silver deposit in Mexico has bumped up reserves for partners Cambior (CBJ-X) and Metallica Resources (MR-T).

The study indicates that the deposit contains 1.3 million oz. gold and 50 million oz. silver in proven and probable reserves of 64 million tonnes grading 0.62 gram gold and 24.5 grams silver per tonne. The new calculation represents a 50% increase over the previous estimate, reported in December 1998.

Additional underground drilling in the southwestern part of the deposit was included in the study. In all, the recalculation incorporated 16,180 metres of core drilling, 42,000 metres of reverse-circulation work and 2,150 underground channel samples.

Reserves improved as a result of a silver re-assaying program. The study also included oxide-sulphide transitional material, which, according to metallurgical tests, is amenable to heap leaching.

In the new calculation, Cambior and Metallica assumed gold and silver prices of US$300 and US$5.50 per oz., respectively. The stripping ratio is projected to be 1.6-to-1, with pit walls sloping at 4.

The study calls for mining of 8 million tonnes annually, or 22,000 tonnes per day. The material would be heap-leached, with recoveries pegged at 71% for gold and 43% for silver.

Annual production is expected to total 110,000 oz. gold and 2.6 million oz. silver, or about 160,000 oz. gold-equivalent.

Total cash operating costs are estimated to be US$190 per oz. gold-equivalent, including royalties, whereas constructed costs are pegged at US$70 million. This translates into a return on investment of 15% on an equity basis.

Cambior is earning a half-interest in the project, situated 20 km east of San Luis Potosi, by spending US$20 million. Of this, the company expects to have spent US$16 million by year-end.

Cambior also agreed to provide project loans of up to US$60 million and hedging contracts for at least 150,000 oz. gold.

In the meantime, the partners are seeking permits and acquiring surface and water rights. In March, they received environmental permits, and remaining permits are expected to be issued by year-end.

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