MINING IN MEXICO — Campbell producing gold at pair of Sonora

Having been active in Sonora state for some 30 years, it should come as no surprise that Campbell Resources (TSE) holds interests in a pair of Mexican gold mines.

Last July, the company bought its second gold mine, Santa Gertrudis, situated 110 miles northwest of Hermosillo.

Included in the acquisition were a diesel plant and a maintenance shop, as well as office, medical and residential buildings for 275 employees. The value of these facilities is estimated at US$30 million. To finance the purchase, Campbell raised up to US$15 million in convertible debentures. Santa Gertrudis contains 1.5 million tons averaging 0.050 oz. gold per ton — enough for two years of production. The geological resource is pegged at 500,000 oz.

A series of potentially open-pit deposits have been identified within a southeast-trending, 2-by-9-mile section of sedimentary rock. Although mineralization occurs throughout the stratigraphic section, most of the orebodies within the region are hosted in calcareous siltstone units. Mineralization is associated with a major east-southeasterly-trending structure, as well as three subordinate southeast-trending splays originating from the main structure.

The source of current production is the Becerros Norte pit, although the 65-sq.-mile property hosts many past-producing mines and deposits with mineral resources. It also features numerous occurrences that are in the initial stages of being explored.

Campbell plans to spend US$5 million on exploration and development during the next three years, with about $1.9 million budgeted for 1995 alone. Grassroots work will be carried out on some of the occurrences, while more advanced methods will be applied to the Christina and Dora deposits and such past producers as Maribel and Corral.

A grid has been laid down near Dora, where geochemical sampling will be performed this fall. Stripping will follow. Stripping and sampling will also be performed at the Maribel and Corral pits, the objective being to test for additional mineralization. At Christina, a prefeasibility study will be undertaken, as will airborne geophysical surveys.

In the mid-1980s, Phelps Dodge began searching northwestern Mexico for Carlin-type gold deposits. By 1986, nine deposits had been defined on Santa Gertrudis, prompting Phelps to proceed with a preliminary feasibility. In 1989, a 2,200-ton-per-day heap-leach facility was constructed at a cost of US$28.4 million.

The first full year of production was 1991, when 26,000 oz. gold were produced at an operating cost of US$205 per oz. Daily capacity was increased to 3,300 tons in the following year, resulting in annual production of 52,500 oz. at a cost of US$234 per oz. In 1993, heavy rains and disappointing grades at the Becerros pit lowered annual production to 38,000 oz. while increasing costs to US$394 per oz.

In the first quarter of 1994, 12,000 oz. were produced at an operating cost of US$294 per oz. Campbell subsequently bought the project and is now forecasting even lower costs and higher production during the next two years. The company holds a 30% interest in a second openpit, heap-leach mine — La Colorada, 75 km southeast of Hermosillo.

In January, La Colorada was brought into production by 70%-owner Eldorado Resources (TSE). Production for the year is expected to reach 25,000 oz. at a cost of US$135 per oz., of which Campbell’s share will be 7,500 oz. The minable resource stands at 7.9 million tons averaging 0.038 oz. gold per ton. Eldorado can acquire Campbell’s interest for US$5.5 million. Campbell also owns the San Luis gold project, which includes a test-mining and heap-leaching facility that was shut down this year. Despite the closure, Campbell remains encouraged by the project’s exploration potential. The company is retaining about $600,000 (or 25%) of this year’s exploration budget, which will be used for grassroots work on various properties.