Greenstone, Boliden prepare to drill Panama gold deposit

A 60,000-ft. drilling program is scheduled to begin this fall on a Panamanian gold property acquired recently by joint venture partners Greenstone Resources (TSE) and Boliden International Mining, a unit of the Trelleborg group of Sweden. The joint venture, owned 51% by Boliden and 49% by Greenstone recently bought the Santa Rosa gold property along with adjacent exploration concessions from Freeport- McMoRan (NYSE) of New Orleans for an undisclosed amount of cash.

The Santa Rosa project consists of two mining concessions covering about 6,300 acres in central Panama, about 25 miles from Santiago. Previous work by Freeport on the concessions defined preliminary reserves of 12.4 million tons grading 0.061 oz. gold per ton in two near-surface deposits minable by open pit methods.

Also included in the sale to Greenstone and Boliden was a 136-square-mile exploration concession adjoining Santa Rosa, as well as five other exploration concessions totalling 295 square miles.

This fall, the companies plan to conduct a major drilling program at Santa Rosa to expand its reserves and provide data for a mine feasibility study.

The Santa Rosa project is the most significant acquisition ever made by Greenstone, and it also represents the largest gold development in Panama.

“We’ve barely scratched the surface at Santa Rosa,” said Jim Anthony, chairman of Toronto-based Greenstone. “I think you’re going to hear a lot more about this project in the future,” he added.

According to Anthony, the capital cost for developing a 100,000- oz.-per-year gold mine at the Santa Rosa site would be about US$25 million. He said Panama has no withholding taxes and uses the U.S. dollar as its currency. Another plus is the project’s ideal location near a paved highway and hydro powerline. Boliden will eventually become operator of the Santa Rosa mine, and Greenstone will conduct exploration on the surrounding concessions. Boliden has considerable international mining expertise as well as the ability to finance the project to production.

The deposit, which lies along the rim of a large extinct volcano, has been 20% developed to date. The remaining 80% has evidence of additional mineralization, according to Greenstone.

Exploratory drilling south of the Santa Rosa deposits has outlined a new area of disseminated gold mineralization, the company said. In the Cerro Otero area, about half a mile to the southwest, Freeport intersected 40 ft. grading 0.074 oz. gold.

Recent sampling work in the Las Huacas area, three miles south of Santa Rosa, has outlined a series of old underground tunnels where a limited amount of gold production was achieved more than 100 years ago. Sampling is under way to confirm continuity and grade in the tunnels, the company said.

The joint venture partners first announced their plan to acquire the Panamanian assets of Freeport back in May. That was about six months after several thousand U.S. soldiers invaded Panama to oust military dictator Manuel Noreiga.

Greenstone is a junior mining wing of the Montreal-based Bronfman group which provides its financial backing and holds a 28.3% stake in the company’s shares.

Mining at Santa Rosa will be by open pit, heap leach methods with a potential mining rate of about two million tons per year based on current reserves. Cash production costs are currently estimated by Greenstone to be about US$235 per oz.

Greenstone is the operator until a production decision is made. The company expects its feasibility study to be complete within the next 12-18 months. Production could begin as early as one year of a positive feasibility study.