Glencairn takes a better view of Bellavista

Assured that the government of Costa Rica will support development of the Bellavista gold project, Glencairn Gold (GLJ-V), formerly Glencairn Explorations, has once again agreed to purchase the low-grade deposit from Wheaton River Minerals (WRM-T).

Under the new deal, Glencairn will acquire all of the outstanding shares of Wheaton River Holdings, which owns the Bellavista property and its permits. The price tag rings in at US$250,000 in cash plus 750,000 shares. It still requires regulatory approval.

Last June, Glencairn backed out of a deal to buy Bellavista after a presidential decree banning open-pit mining in the tropical country.

At first, Glencairn said the decree did not appear to affect the deposit and that it would confirm that rights to the mine would be maintained before concluding the deal. The company changed its mind a week later, ostensibly because the Bellavista project was included after all.

Bellavista is categorized as an epithermal gold-silver deposit, and hosts 11.2 million tonnes grading 1.54 grams gold per tonne. The resource can support annual production rates of 60,000 oz. for more than seven years.

Total operating costs are pegged at US$179 per oz. and capital costs at US$28 million. At a gold price of US$325 per oz. the project has a pre-tax internal rate of return of 19%, and a net present value of US$20.2 million, at a discount rate of 5%.

The project received all necessary environmental approvals in February 2001.

Glencairn is looking at several financing alternatives for the project. The company is also considering contracting out mining and crushing to reduce capital costs. Glencairn is also in talks with a potential Costa Rican company interested in a minority stake.

On the exploration front, the 40-sq.-km property overlies a 10-km portion of the Liz fault, and is home to two large geophysical and geochemical anomalies centred over extensions of historical mines. Both targets lie within 1 km of the proposed mine.