South American Gold plans to open Chilean gold mine

In announcing the startup of milling operations at its Pimenton gold mine in Chile, South American Gold & Copper (TSE) has made the transition from junior explorer to producer.

Situated northeast of Santiago, the mine is expected to crank out metal equivalent to the value of 15,000 oz. gold per year at a cash cost of US$174 per oz. Also, daily mill throughput will rise to 70 tonnes from the current rate of 45 tonnes; eventually, it will reach 100 tonnes. Average mill feed is projected at 15 grams per tonne, with the first dore pour scheduled for early November.

Exploration has proved successful on the Maria Elena and Lucho vein systems. Horizontal advances along the former, at the 3367 and the 3322 levels, have resulted in more proven and probable reserves. This vein system is open at depth and runs for at least 700 metres, based on drill hole intercepts.

At Lucho, a new pyritic argillic vein system (averaging 2.5 metres wide) has been encountered at the 3480 level.

Based on the favorable exploration results, the mine should increase the estimated number of contained ounces of gold to 900,000 from 500,000.

The company expects to block out nearly 226,000 oz. of reserves within the next two years, which would support financing for a 400-tonne-per-day mill to produce 50,000 oz. per year.

South American believes Pimenton carries significant low-grade, bulk-tonnage potential, and that gold reserves can be increased. Further exploration will serve to evaluate this potential. The company has a 56% interest in the underground mine, of which it is the operator.