MINING IN MEXICO — Eldorado puts down roots in Mexico

During the next five years, Eldorado (TSE) aims to increase its annual gold production to 100,000 oz. by developing several medium-sized operations in Mexico.

To make the grade, the mines must have low capital and production costs, provide substantial economic and social benefits to the local community, and be close to existing infrastructure.

The first project to fit this bill, La Colorada, entered production early this year and was officially opened in May. Eldorado has a 70% interest in the heap-leach operation, with Campbell Resources (TSE) holding the remainder. Previous operators focused on high-grade vein systems at La Colorada, which is near the northwestern town of Hermosillo in Sonora state. However, Eldorado directed its efforts towards defining larger, but lower-grade, deposits amenable to open-pit mining and heap leaching.

Production during the first year of operation is projected to be 22,000-24,000 oz., with life-of-mine operating costs estimated at US$153 per oz. Exploration efforts are continuing on the mine property, with considerable success.

At startup, the deposit known as El Creston hosted 2.3 million tons grading 0.048 oz. gold per ton (110,400 oz.). By mid-September, this had increased to 4.7 million tons grading 0.04 oz. (188,000 oz.).

Since startup, the Gran Central deposit has expanded to 2.8 million tons (probable and minable) grading 0.036 oz. (100,800 oz.) from 1.9 million tons grading 0.032 oz. (60,800 oz.). The updated, combined reserve for the property is 305,000 oz., taking into account 15,000 oz. in two small pits. Gran Central is currently undergoing production-scale engineering and final pit design, and Eldorado plans to bring the project into production before year-end.

In neighboring Sinaloa state, Eldorado has advanced its La Trinidad gold project to the feasibility stage. Once the study is completed, the company will earn a 51% interest from Almaden Resources (VSE). Work is focused on the Taunas and Colinas zones, which are estimated to contain a minable resource of 2.8 million tons grading 0.062 oz., with a waste-to-ore ratio of 1.5-to-1. La Trinidad resembles La Colorada in that both are open-pittable and oxidized. However, the material is not run-of-mine and will have to be crushed prior to processing. Also, La Trinidad contains areas of high-grade mineralization. For example, within the Taunas zone, a high-grade section with a strike length of 160 ft. and a true thickness of 13-16 ft. grades 0.34 oz.

Meanwhile, Eldorado is exploring El Encuentro, another property in Sinaloa, in which it can earn a 60% interest from Almaden. This early-stage project is being explored for its potential for hosting gold resources amenable to heap leaching.

Having established roots in Mexico, Eldorado is spreading its wings to other parts of Latin America. The bulk of this effort is focused on Argentina, which the company believes has excellent potential for sizable gold deposits.