Bluestone secures US$30M, names Jack Lundin CEO

Bluestone Resources (TSXV: BSR; US-OTC: BBSRF) has entered into a US$30 million credit facility led by the French financial services firm Natixis.

“We were very pleased to receive support from Natixis and the Lundin family,” says Darren Klinck, Bluestone’s president. “The credit facility is the first stage of financing and represents a strong endorsement of the Cerro Blanco gold project.”

Natixis is one of several banks behind the debt financing package, with the proceeds from the facility to be used to start detailed optimization, design, and engineering and to initiate development work at the Cerro Blanco gold project in Guatemala.

Located 160 km east of southeast of Guatemala City, Cerro Blanco is a high-grade undeveloped gold project fully permitted for production. Entre Mares de Guatemala S.A, a wholly-owned subsidiary of Bluestone, based in Jutiapa, Guatemala, has been contracted to develop the mine.

“We are now working with a group of international banks and multinational development institutions to finalize a senior debt financing package,” Klinck says in an interview.

Bluestone has also announced the appointment of Jack Lundin as its new CEO, with Klinck retaining the role of president.

“I’m very excited to welcome Jack to the team. We will be working closely together on the Cerro Blanco gold project,” says Klinck. “We are particularly fortunate to have strong shareholder support for the project, as well, with the Lundin Family involved in the initial purchase of the mine and a principal sponsor and supporter of not only the project but of me since the creation of Bluestone.”

“We look forward to building on our relationship with the Lundin Group and leveraging their technical and development expertise.”

Bluestone was formed in 2017 with the purchase of the Cerro Blanco and Mita geothermal projects from Goldcorp. The Lundin family is now the major shareholder in the company, holding 34% of its shares.

“I bring my experience of working on the Lundin Fruta del Norte gold mine in southern Ecuador over the past four years to help advance the Cerro Blanco project,” says Lundin. “We’re already off to a great start, and I look forward to working with Darren and the team.”

Bluestone Resources president Darren Klinck at Cerro Blanco. Credit: Bluestone Resources.

Previously, Lundin has worked in field technician roles within the Lundin Group, as an analyst in the commercial department for Lundin Norway, and more recently as a project superintendent on Lundin Gold’s (TSX: LUG) Fruta del Norte (FDN) gold mine.

Lundin’s expertise closely aligns with Bluestone’s strategy for developing Cerro Blanco, and his mine development experience will help to strengthen the project’s technical and financial capabilities.

He holds a Bachelor of Science degree in Business Administration from Chapman University and a Master of Engineering degree in mineral resource engineering from the University of Arizona. He also sits on the board of directors of Josemaria Resources (TSX: JOSE) and Denison Mines (TSX: DML).

A feasibility study in January 2019 revealed two separate high-grade veins, demarcated into North and South Zones, and projected life-of-mine production of 902,000 oz. gold over an 8-year mine life, with annual production of 146,000 oz. gold in the first three years. The study was based on proven and probable reserves of 3.4 million tonnes grading 8.5 grams gold per tonne and 32.2 grams silver per tonne for 940,000 oz. gold and 3.6 million oz. silver.

Average life-of-mine sustaining costs were estimated at US$579 per oz., which would put the project at the bottom end of the lowest quartile of the global cost curve. The study used a gold price of US$1,250 per oz. gold and US$18 per oz. silver, and outlined an after-tax net present value of US$241 million and internal rate of return of 34%. Initial capital required is forecast to run to US$196 million with an after-tax payback period of just over two years.

“The feasibility study was very well received and demonstrated a very robust project with great production potential,” says Klinck. “The previous owners had invested heavily in the project, which gave us a great headstart.”

In an updated NI 43-101, released last November, the company reported an 18% increase in measured and indicated resources to 4.3 million tonnes grading 10.3 grams gold per tonne and 36.8 grams silver per tonne for 1.4 million contained oz. gold and 5.1 million contained oz. silver. The upgraded estimate followed a nine-month infill drill program, mainly in the North Zone of the deposit. Inferred resources stand at 466,218 tonnes averaging 7.1 grams gold per tonne and 16.6 grams silver per tonne for 107,215 oz. gold and 248,488 oz. silver.

Bluestone Resources’ Cerro Blanco gold project in Guatemala. Credit: Bluestone Resources.

Results from recent channel sampling returned 22.4 grams gold per tonne and 122 grams silver per tonne over 22 metres along a vein in the South Zone. The company has now initiated a similar infill program to assess the deposit’s grade, orientation, and other geological features. Valuable information gleaned from the program will help to inform the choice of mining methods.

“Currently, our hit rate is around 100% in terms of where we are drilling and when we are hitting the vein, so we’ve got an excellent feel for the deposit,” says Klinck. “There’s some follow-up work to be completed in the North Zone, but our primary focus for the next four to five months will be on drilling in the South Zone.”

The project also benefits from the favourable economic and political conditions in Guatemala, the company says. The Guatemalan economy ranks in the top half of countries globally, with a projected growth of 4% per annum until 2027, which is higher than growth estimates for its Latin and South American neighbours, as well as Canada, America, and Britain.

“Guatemala has always had a right-of-centre, pro-business approach to its economy and development,” says Klinck. “The country has run a tight ship when it comes to fiscal policy and has had one of the most stable currencies in Latin America over the past ten years.”

Recently elected President Alejandro Giammattei, who ran on a pro-business platform, has also signalled his intent to advance the untapped potential of the mining and minerals sector, an encouraging sign for the successful development of the Cerro Blanco project.