Nevada Pacific’s Magistral in full swing

Nevada Pacific Gold (NPG-V) has begun commercial gold production at its Magistral heap-leach operation in Mexico’s Sinaloa state.

The mine is expected to crank out 30,000 oz. gold at a cash cost of US$250 per oz. in the fiscal year ending June 30, 2005.

Nevada Pacific purchased Magistral for US$7 million plus 2 million of its shares in February 2004 from Queenstake Resources (QRL-T).

Until now, gold sales had been recorded as a reduction in operating costs; now that commercial production has begun, the sales will be treated as revenue, and operating costs will be expensed.

Over a projected 7-year lifespan, the mine is expected to produce 30,000-50,000 oz. gold annually.

The Magistral property is underlain by lower Tertiary andesites comprising pyroclastic flows, tuffs and agglomerates. Epithermal, low-sulphidation-style gold mineralization occurs in four mineralized zones comprising silicified stockwork and breccia zones in the volcanics. These zones, named San Rafael Samaniego Hill, Sagrado Corazon, and Lupita, along with the mill tailings, were found to contain 616,000 oz. in 11.8 million tonnes of material grading 1.62 grams gold per tonne, based on a cutoff of 0.42 gram gold per tonne.

Exploration and development are ongoing at Magistral, and Nevada Pacific also holds rights to 400 sq. km surrounding the mine.

The company recently uncovered a mineralized porphyry system 2 km south of current operations. The system covers 1 sq. km and is near the intersection of three structural trends. Trenching turned up 62 metres grading 0.79 gram gold and 24.7 grams silver per tonne, plus 0.19% copper.