Santa Rosa on ‘fast track’ says operator Greenstone

To generate rapid cash flow, Greenstone Resources (TSE) is putting its 49% owned Santa Rosa gold project in Panama on the “fast track” to production, shareholders were told at the annual meeting.

Santa Rosa, scheduled to enter production next year, will become Central America’s largest new gold mine with annual gold output of 100,000 oz. in 1993. Greenstone’s 51% partner in the planned open pit, heap leach operation is Boliden International Mining of Sweden.

“By using the fast track approach, we believe we can save substantial amounts of money at Santa Rosa, and bring cash flow to the company earlier than expected,” said Greenstone President Ian Park.

He said initial capital costs for the mine are estimated at around $12 million with forecast production costs of US$212 per oz., and an annual cash flow of nearly $20 million. The engineering contract has yet to be awarded.

Greenstone’s first Latin American gold mine the Oronorte in Columbia entered commercial production earlier this year and is expected to yield 20,000 oz. gold at a cost of under US$165 per oz. A positive feasibility study has also been received for the company’s El Recio gold mine in Costa Rica for which non-recourse financing is being sought.

Meanwhile, a 140,000-ft. drilling program continues as part of a feasibility review at Santa Rosa. Minable reserves stand at 12.4 million tons grading 0.061 oz. gold per ton (758,000 oz. in situ). A substantial increase in reserves is expected to come from the current drilling program, said Park. One hole located northwest of the Alto de la Mina pit cut an impressive 249 ft. grading 0.17 oz. gold per ton.

Greenstone has also decided to begin leach pad construction in April so that it can test heap leach this spring. Pad construction will continue into 1992 to enable a production level of one million tons next year.

In 1993, Santa Rosa’s production is expected to reach three million tons or 100,000 oz. gold, the company said.

Commenting on the overall investment climate in Panama, Chairman James Anthony said the country has no significant mining industry at the present time, and there is a 3-year tax-free holiday for new mines. He said Panama, which has a population of nearly 2.5 million, is “very anxious for new investment.”

Better known for its famous canal, Panama also enjoys a U.S.-dollar based economy and has no barriers to the transfer of funds and no significant import or export restrictions. The corporate tax rate for mining is 35% and allowances for depreciation and depletion are also generous, said Anthony.

In Canada, exploration on Greenstone’s other properties has been left largely to its joint venture partners. This year, a deal was signed with Teck (TSE), allowing the latter company to earn a 60% interest in Greenstone’s Tache zinc property near Chibougamau, Que. That deal calls for Teck to spend $1.5 million on exploration over three years. Drilling also continues on the company’s Scott Lake base metal property which is 50% owned by Thunderwood Resources (TSE).