An independent study on the Vueltas del Rio gold deposit in northwestern Honduras has determined the project’s feasibility at a gold price of US$300 per oz.
Reno, Nev.-based Kappes Cassiday & Associates carried out the study for
The study concluded that the project is capable of yielding 60,000 oz. per year by treating 1.1 million tonnes. The mine life is pegged at five years, with construction scheduled to begin in January 1999, followed by the first gold pour in December.
Open-pit mining methods and heap-leach technology will be employed, and life-of-mine stripping ratios are expected to average 3.4-to-1, with minimal prestripping required. Also, minimal drilling and blasting will be required to a depth of 40 metres, owing to the heavily weathered nature of the ore.
Reserves are pegged at 5.1 million tonnes averaging 2.51 grams gold per tonne, equivalent to 409,142 oz. gold. These are contained within a total measured and indicated resource of 29.7 million tonnes averaging 0.7 gram gold.
About 64% of the reserves are oxidized, with the remainder in transitional and primary material. An internal cutoff grade of 0.35 gram was used for the oxides, with 0.5 gram applied for the transitional and unoxidized ore.
Gold recovery rates after 180 days of leaching are 88% for oxides, 81% for transitional material and 59% for primary ore, for a weighted average of 74%.
The operation will consist of a 2-stage crushing process, followed by drum-agglomeration with cement prior to placement on the leach pad using a conveyor-stacking system. Cash costs over the mine life are expected to average US$169 per oz., or US$10.13 on a per-tonne basis, including lease payments for the mine fleet and maintenance costs.
Capital costs are pegged at US$14.4 million, of which $1.5 million will be set aside for contingencies. The US$15-million loan facility is subject to a due diligence review and the arrangement of a gold-hedging position amounting to 200,000 oz. spread out over 2000 and 2003.
Geomaque expects to lock in its production at US$315-320 per oz.
The study concludes that the mine would generate a 25% rate of return, which could increase a further 5% if the country’s mining law is restructured, as has been proposed. Payback is expected within 29 months.
The current pit outline extends to a maximum average depth of 70 metres below surface, based on results from 300 diamond drill holes collared on 20-to-30-metre centres. Only a limited amount of drilling has tested the deposit beyond a depth of 100 metres, and Geomaque expects additional mineralization will be outlined below that level, as well as along strike.
“We still see lots of upside and expect to extend the mine life,” says John Patterson, president of Geomaque. “But we wanted to get the thing running to use cash flow from operations to expand the reserves, similar to what we did at the San Francisco mine.”
Situated in Mexico’s Sonora state, San Francisco is Geomaque’s sole producing mine, having churned out 17,295 oz. gold in the third quarter, up one-third from the second quarter. At the start of the year, the mine hosted reserves of 21.5 million tonnes averaging 1.02 grams gold, and, by Sept. 30, about 2.3 million tonnes of that had been placed on the leach pad.
Once producing, Vueltas del Rio will expand Geomaque’s annual gold production to an estimated 130,000 oz. Cash costs from both mines are expected to average US$213 per oz. (San Francisco averaged US$265 per oz. in the third quarter, with its total costs rising to US$320 per oz.). Drilling at Vueltas del Rio is ongoing.
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