Queenstake ups Magistral resource

Vancouver — Drilling by Queenstake Resources (QRL-T) has increase the grade and tonnage of the La Prieta zone in the Samaniego Hill area of its 50%-owned Magistral property in Mexico’s Sinaloa state.

A resource calculation by Denver-based Pincock Allen & Holt has boosted resources by 21% and reserves by 26%. Using a cutoff grade of 0.4 gram gold per tonne, the proven and probable reserves stand at 7 million tonnes grading 2.07 grams gold. This is a marked improvement from the 6.2 million tonnes averaging 1.86 grams gold tabled in the 2000 feasibility study.

“We are delighted by the increase in reserves,” says Queenstake President Chris Davie. “The increase in grade and decrease in stripping ratio at Samaniego will dramatically improve the overall economics of the project.”

Total resources stand at 11.8 million tonnes grading 1.48 grams gold, of which 9.1 million tonnes grading 1.69 grams gold are in the measured category and 2.7 million tonnes at 1.4 grams gold are indicated.

Construction is to be completed in late July, and startup is planned for October at the latest. The facility is being built to treat 1 million tonnes of ore per year, resulting in annual production of 40,000 oz. at a life-of-mine cash cost of US$180 per oz. The mine life is projected at 6.5 years. Based on current reserves and a gold price of US$300 per oz., the project should generate US$24 million in net revenue after preproduction capital expenditures. The stripping ratio comes in at 5.6-to-1, with recoveries averaging 73%. The ore will be mined from four discrete pits known as San Rafael, Samaniego Hill, Sagrado Corazon and Lupita.

Adds Davie: “Significant exploration potential remains in possible extensions of the La Prieta zone, as well as in additional identified, but as yet not drilled, exploration targets on this 10,000-hectare property.”