Owing to lower-than-expected gold and silver production, Reno-based
After restarting underground mining at the site earlier this year, the company failed to reduce costs and optimize production to ensure future positive cash flow. Ore had been processed on site at a recently refurbished, 350-ton-per-day carbon-in-leach mill.
Production for the quarter ended June 30, 2004, was a disappointing 5,898 oz. gold and 33,460 oz. silver. During this period, Metallic spent $6 million on exploration at Esmeralda, $500,000 on drilling at its Converse project in Nevada, and $500,000 on exploration permitting and environmental assessment expenditures at the Goldfield project in Nevada.
“We could not allow the current negative cash flow situation at Esmeralda to continue and potentially threaten our ability to fund development of our Converse and Goldfield projects,” says Metallic Ventures Chairman Jeffrey Ward. “We continue to have no debt, and our current cash balance of approximately US$18 million is sufficient to fund the development of both of these projects.”
On a brighter note, the company reports that total measured and indicated resources at Converse have more than doubled to 263 million tons grading 0.015 oz. gold per ton (239 million tonnes grading 0.51 gram gold per tonne), or 3.9 million oz. gold. The inferred resource is pegged at 35 million tons at a similar grade. The figures are based on 155 drill holes, spaced mostly on 400-ft. centres, totalling 103,979 ft.
“Given this increase, we have decided to move Converse to the feasibility stage and allocate more of our resources to this project,” says Ward.
Metallic will carry out condemnation drilling and additional exploration drilling to define the exterior limits and structural trends of the deposit. Metallurgical tests are also under way.
The 11-sq.-mile Converse property is 30 miles southeast of Winnemucca, Nev., at the southern end of the prolific Battle Mountain trend.
Metallic acquired a quarter-interest in Converse in March 2001 through the acquisition of
In November 2002, Metallic acquired the remaining 75% interest in Converse for US$750,000. Since peaking at C$9.60 last December, Metallic’s share price had slowly declined to the C$5 mark by July, when it began a nosedive to just C$1.45 in mid-September. The stock responded favourably on Sept. 27, the first day of trading following the announcement of Esmeralda’s closure: shares jumped more than 15% to C$1.85 — small comfort, however, to anyone who invested in Metallic’s initial public offering at C$3 a share in late 2002.
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