Northern Crown plans 1998 work program for Guadalupe

Based on the recommendations of a preliminary study, Northern Crown Mines (NCW-T) is preparing to advance its Guadalupe de los Reyes gold project toward final feasibility.

The 88-sq.-km project lies 160 km north of Mazatlan in the Mexican state of Sinaloa. It centres on 13.7 km of mineralized structure that hosts extensive epithermal gold-silver vein breccia zones.

Denver-based consultants Pincock Allen & Holt prepared a base-case study of the Zapote deposit, the economics of which were enhanced by including production from the nearby San Miguel zone. The conceptual study envisions an open-pit, heap-leach operation that would produce an average of 40,700 oz. gold and 126,000 oz. silver over a 4-year span at a total cash cost of US$190 per oz. gold. Total production costs are pegged at US$267 per oz., while capital costs are projected to be US$12.4 million.

In-pit, drill-indicated and inferred resources total 3.7 million tonnes grading 1.81 grams gold and 18 grams silver per tonne, equivalent to 215,400 contained ounces gold and 2.1 million contained ounces silver. The stripping ratio is projected at 2.9-to-1.

Metallurgical testwork indicates recoveries in the order of 76% for gold and 24% for silver using quarter-inch crush size material from Zapote.

The total geological resource of Zapote is almost 5.9 million tonnes grading 1.35 grams gold and 8.7 grams silver. The prefeasibility report recommends that further reserve definition drilling on San Miguel is necessary to upgrade the inferred 377,800-tonne resource to a proven category.

The base-case study assumes a price of US$325 per oz. gold and US$4.50 per oz. silver. The pre-tax and pre-financing internal rate of return is calculated at 29.4%, or 19.2% after-tax.

The prefeasibility study ignores the Guadalupe mine, Noche Buena and Tahonitas zones, which together contain a potential resource of 3.4 million tonnes grading 1.29 grams gold and 30.2 grams silver, representing 142,000 contained ounces gold and 3.3 million contained ounces silver, all of it amenable to open-pit mining. Further drilling is required to fully establish the ultimate grade and tonnage of these zones.

The Guadalupe mine and Chiripa-San Miguel zones also contain an additional deeper resource totalling 2.5 million tonnes averaging 3.79 grams gold and 120.6 grams silver, which Northern Crown believes is potentially minable by underground methods.

The company plans to further test the higher-grade potential of these zones, as well as the 5-km-long El Orito zone, with a first-ever diamond drill program.

The 1998 work program planned for Guadalupe will include geotechnical and infill drilling in the vicinity of the Zapote open-pit plan, reserve definition drilling on San Miguel, additional metallurgical work and continued environmental studies. The company says it is in the process of arranging the financing necessary to carry out this program.