Minefinders eyes up to $10 million for Dolores

Minefinders (MFL-T) has entered into an agreement with a syndicate of agents led by BMO Nesbitt Burns for a private placement of up to 4.4 million shares at $2.30 apiece.

The deal is subject to regulatory approval and is expected to close by March 27, 2002.

Minefinders plans to use the potential proceeds of more than $10.1 million to expand and bring its Dolores gold-silver deposit in Mexico to the final feasibility stage.

Last year, re-analysis of low-to-mid-grade core samples from Dolores resulted in a higher overall grade for the deposit, and a consequent increase in the total resource. Minefinders hopes this will translate into higher production, better stripping ratios, lower production costs and greater cash flow.

The second look at core samples also significantly increased the potential of the satellite targets in the Dolores district. Silver grades jumped an average of 111% at the Norte zone, 358% at the North Dome, 185% in the East Dike area and 350% in the Southwest zone. The zones are not included in the latest resource calculation for Dolores’ Main zone.

Situated in Chihuahua state, the Dolores project is Minefinders’ chief asset. An updated model of the Dolores open pit, based on gold and silver prices of US$300 and US$5 per oz., respectively, points to a resource of 67.2 million tonnes grading 0.96 gram gold and 53.6 grams silver per tonne. The stripping ratio is projected to be 4.2-to-1.

The higher-grade mineralization consists of 23.4 million tonnes at 2.09 grams gold and 124.5 grams silver per tonne, and Minefinders intends to process this material (which represents 35% of the open-pit resource) in a mill grinding circuit. The residual pulp would then be agglomerated with lower-grade material for standard heap-leach processing. Metallurgical tests project overall recoveries of 86-89% for gold and 57-65% for silver.

The mine life is pegged at 13 years, during which time annual production would average 138,359 oz. gold and 6.3 million oz. silver, or 242,900 oz. gold-equivalent, at an estimated cash cost of US$149 per oz. and a total cost of US$184 per oz. gold-equivalent. Capital costs are pegged at US$77 million.