Vancouver —
Pacific Rim considers Andacollo a non-core holding and intends to use the proceeds of the sale to advance its El Dorado gold project in El Salvador and explore various other gold properties.
The junior acquired Andacollo when it merged with Dayton Mining two years ago. The open-pit, heap-leach mine operated from late 1995 until late 2002, when mining was suspended owing to weak metal prices and lower-than-expected production.
MCK will pay a total of US$5 million and issue 4 million of its shares to acquire the mine project. The company plans to restart operations later this year, based on a previous 5-year mine plan that will be brought into compliance with NI 43-101 standards.
The operating plan is based on previously reported reserves (based on a US$325-per-oz. gold price) of 17.8 million tonnes grading 0.88 gram gold per tonne, at a 1.8-to-1 waste-to-ore stripping ratio. This historic estimate was prepared before NI 43-101 was adopted, and remains subject to verification by MCK.
John Purkis, president of MCK Gold, says the acquisition will establish MCK Gold as an operating company “with positive cash flows after mid-2005.” The company intends to use Andacollo as a springboard to pursue other opportunities in Chile and South America.
Pacific Rim, meanwhile, is advancing its projects in Latin America, particularly now that the 49%-held Denton-Rawhide gold-silver mine in Nevada is slated for closure. Gold production at Denton-Rawhide will continue through this year and into 2005, albeit at reduced levels as inventories decline.
Pacific Rim’s flagship El Dorado project is 65 km from the capital city of San Salvador. A preliminary feasibility study will be launched in the coming months, incorporating results from recent drilling campaigns aimed at expanding resources and testing new targets.
An important focus will be testing strike extensions north and south of the Minita vein deposit, which contains a measured and indicated resource of 1.6 million tonnes grading 11.4 grams gold and 70.3 grams silver per tonne, or about 585,000 contained ounces gold and 3.6 million oz. silver. Other priority targets include veins parallel, related, or proximal, to Minita.
Pacific Rim is also testing an epithermal vein system at its La Calera project, 8 km west of El Dorado. The company’s goal here is to outline resources within the parallel Rosa and Rosa West structures, which are thought to continue under post-mineral cover that obscures their surface expression to the north.
Geophysical programs are under way and will be followed by a reverse-circulation drill program to test newly identified targets and potentially expand previously known mineralized areas.
The width and continuity of the mineralization at the Rosa and Rosa West structures indicate a potentially bulk-minable deposit at La Calera.
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