Geomaque Explorations (CDN) can earn a 100% interest, subject to a 3% net smelter return, in the San Francisco heap-leach property, 120 km south of Nogales, Mexico. An option agreement to this effect was signed between Geomaque and Compania Fresnillo, S.A. de C.V.
Fresnillo is owned 60% by Industrias Penoles, S.A. de C.V., one of the largest mining companies in Mexico, and 40% by Amax (NYSE).
Under the agreement, Geomaque must complete a US$100,000 feasibility study within four months of signing and pay Fresnillo US$200,000 within two months of completing the study. Geomaque has also agreed to buy a fire assay lab from Fresnillo for US$100,000. Geomaque then has two years (from the signing date) to put the property into production.
From 1984 to 1991, Fresnillo spent US$2.5 million exploring the 2,663-hectare property. After drilling 381 holes and collecting a 3,000-ton bulk sample, Fresnillo calculated open-pit reserves to be 4.4 million tons grading 0.05 oz. gold per ton with a cutoff of 0.015 oz. and a strip ratio of 4-to-1. Column leach tests by an independent laboratory indicated recoveries in the 75% range. Operating costs are estimated at US$8.48 per ton or US$215 per oz. gold.
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