Viceroy waits it out in Mexico

The drop in the price of gold has forced Viceroy Resource (voy-t) to postpone construction plans at Paredones Amarillos in Mexico.

A joint venture with 60% partner Echo Bay Mines (eco-t), the open-pit project lies at the southern end of the Baja California Peninsula.

The mine had been expected to open in the third quarter of 1998, with commercial production slated for late 1998 or early 1999.

Viceroy says that by deferring a construction decision beyond 1997, it will substantially reduce capital expenditure requirements. To date, expenditures at Paredones Amarillos have totalled US$4.7 million. By re-engineering the mill process flow sheet, the companies have reduced the estimated total capital cost to US$92 million from US$107 million. Other modifications included eliminating the cyanide regeneration circuit, purchasing used equipment and redesigning the site layout.

Cash operating costs have been reduced by US$7 per oz., to US$231 per oz.

Priorities for the current year include: acquiring used grinding equipment for the mill; completing the acquisition of several land parcels; and securing permitting and water rights.

The partners estimate that by deferring the construction decision until early 1998, less than US$2 million will be added to the total cost of the project, and they note that this amount is more than offset by the capital cost reductions.

Proven and probable reserves stand at 36 million tonnes grading 1.1 grams gold per tonne, based on a 0.5-gram cutoff.