New numbers for Angostura fail to give Greystar a lift

Now on a firmer environmental footing, Greystar Resources (GSL-T, GSL-L) is pushing ahead with the development of its Angostura gold and silver project in Colombia.

It was only at the end of April when the government of Colombia threw the future of the project into doubt by revoking its environmental impact assessment.

The EIA was rescinded because of the projects alleged infringement on the high-altitude and sensitive Paramo ecosystem. News of the decision nearly halved to company’s share price as it went down to the mid $3 range after trading north of $6.

Good news, however, arrived at the end of May with word that the company’s appeal of the decision was successful and the EIA had been re-instated. Greystar’s share price responded accordingly, climbing 65% from its low of $3.28 to reach $5.43.

With things looking brighter the company got busy getting the project ready for development.

Part of that process included updating the resource calculation for the deposit which lies in Colombia’s northeastern California district.

On releasing those new numbers, however, Greystar shares actually fell 6% or 24¢ to $4.03 on 178,000 shares traded in Toronto on July 15.

Part of the reason for that fall may be found in the fact that in outlining open pit and underground resources for the first time the overall numbers in the resource estimate that investors had previously known shrunk.

Open pit measured and indicated resources came in at 359 million tonnes grading 0.78 grams gold and 5 grams silver for of 8.9 million ounces gold and 59.6 million oz. of silver. Inferred resources for the same area came in at 26 million tonnes grading 1.07 grams gold and 6 grams silver for 903,000 oz. of gold and 4.7 million oz. of silver

Underground measured and indicated resources are now 6 million tonnes grading 4.28 grams gold and 19 grams silver for 831,000 oz. gold and 3.8 million oz. of silver. Additional inferred resource of 437,000 oz. of gold and 2.0 million oz. of silver

Together the new underground and open pit mines yield a total of 9.7 million oz. of gold in the measured and indicated category.

Greystar’s previous measured and indicated resource for the project, which was broken down into the broader categories of oxides and sulfides, came in at 330.9 million tonnes grading 1.09 grams gold and 6 grams silver for 11.55 million oz. of gold and 61 million oz. of silver.

Inferred resources were at 90.7 million tonnes grading 1.19 grams gold and 6 grams silver for 3.4 million oz. of gold and 18 million oz. of silver.

The latest resource study is based on 179,813 core assays from 938 drill holes representing 302,834 metres, and 1,768 muck samples from exploration tunnels.

Greystar says it has also started to evaluate underground resources that lie outside of the pit boundary but within proximity. It believes such rock could be mined either during or after completing the open pit operation.

The company is in the midst of completing a feasibility study on the project which it expects to have finished by the second half of 2010.

A prefeasibility study done in March of last year outlined average annual production of 511,000 oz. of gold and 2.3 million oz. of silver over a 15 year mine life.