Great Lakes to focus on Lluvia de Oro mine

Now that its proposed merger with Geomaque (TSE) has been derailed, Great Lakes Minerals (TSE) intends to focus on doubling its gold production by bringing into production the Lluvia de Oro project in Mexico.

Great Lakes already has a 20% interest in a producing mine in Idaho, operated by Hecla Mining (NYSE). Grouse Creek is expected to generate 22,000 oz. gold and 130,000 oz. silver to Great Lakes’ accountthis year.

During Great Lakes’ annual meeting, President Nicholas Tintor told shareholders that despite its “tough startup” during this year’s first quarter, Grouse Creek is operating beyond the budget capacity of 6,000 tonnes per day. “We now have the [startup] problems behind us,” he said.

On the exploration front, a planned drill program will test for both open-pit and underground high-grade reserves. This will entail testing for extensions of known zones, including seeking more high-grade feeders in the bottom of the current pit.

But Tintor said the 22-sq-km property has other regional exploration targets which have yet to be drill-tested.

“Estes Mountain will be a priority target,” he said, adding that a geochemical sampling program has generated some “spectacular anomalies.” Great Lakes intends to delay exercising its option to acquire a further 10% interest in Grouse Creek until after it brings Lluvia de Oro — and possibly another Mexican project, Palmarito — into production.

Situated in Sonora state, Lluvia de Oro hosts 5 million tonnes grading 1 gram gold per tonne. Construction of an open-pit, heap-leach mine is expected to begin this summer, and annual production is estimated at 25,000 oz. gold over an initial 4-year period. Operating costs are projected at US$220 per oz. gold.

More exploration is planned for Lluvia de Oro, said Tintor. “We see potential to more than triple reserves.”

The Geomaque merger will no longer be pursued, but Great Lakes does intend to continue looking outside its current asset base for growth, Chairman John McBride told shareholders.