Newmont drops Nicaraguan option

As part of a plan to dump projects not deemed to meet its thresholds, Newmont Mining (NEM-N) has balked at an option to earn a 55% stake in Black Hawk Mining‘s (BHK-T) exploration properties in Nicaragua.

Newmont had already sunk US$1.5 million into exploration on the concessions, including stream sediment sampling, mapping and prospecting, ground geophysical surveying and 2,400 metres of drilling on the Bonete prospect. On the Real de la Cruz prospect Newmont funded soil sampling, mapping and trenching. The option did not include the Limon mine concession.

To earn a 55% interest in the concessions, Newmont was to spend US$5 million by June 6, 2006.

Black Hawk plans to continue exploration on the concessions and will follow up on areas of interest outlined by Newmont’s data.

Fieldwork is planned for the past producing La India district and Rincon de Garcia-Mina de Agua veins. The La-India-El Sauce mineral concession already hosts an indicated resources of 775,400 tonnes running 8.2 grams gold per tonne plus inferred resources of 1.1 million tonnes of 9.3 grams gold. Exploration will also target areas of artisanal mining operations, like those at Villanueva and La Grecia.

Meanwhile, Black Hawk continues to drill targets on its Limon mine concession. Earlier this year, the company came to an agreement to buy back Repadre Capital‘s (RPD-T) 2% royalty on the El Limon gold mine. Black Hawk can do so by paying $1.25 million over 2 years. El Limon produced 70,351 oz. gold in 2001 at an average cash cost of US$187 per oz.

During the recent second quarter, the mine churned out 15,229 oz. of gold, off slightly from the year-ago 16,042 oz. owing to lower grade (6.4 grams versus 6.5 grams). For the first half of 2002, Limon spat out 30,677 oz., compared with 37,483 oz. a year earlier on lower grades (6.5 grams versus 7.2 grams) and fewer tonnes milled (168,820 tonnes compared with 176,833 tonnes).

The mine is expected to produce 30,000 oz. of gold for less than US$200 apiece for the balance of the year.

Second-quarter cash costs were US$211 per oz., down from US$203 per oz. in 2001. For the first half, cash costs climbed US$28 to US$204 per oz. on lower production.

The cash operating costs per tonne milled were $38 and $37 for the second quarter and first half of 2002, respectively. The cash operating costs were the same in 2001.

For the first half, Black Hawk posted a net loss of US$491,000 (nil per share) on revenue of about US$8 million, compared with a year-ago net income of US$1.2 million (1 per share) on US$10.7 million.