THE GLOBAL SEARCH FOR GOLD SPECIAL — Changes in store for Geomaque’s San Francisco mine

If all goes well, Geomaque Explorations (GEO-T) will soon turn the four small pits at its San Francisco gold mine into one large pit and greatly expand its heap-leach pad area.

Development and expansion at the operation has continued unabated since the first gold pour in October 1995.

Originally, San Francisco had three pits, but a fourth was added after a successful drilling program two years ago. At a recent visit to San Francisco, General Manager Michael Carter told The Northern Miner that the plan to merge the four pits into one is contingent on new reserve calculations, which are pending.

“It’s more of an economic decision than a geological one,” he said, adding that the decision will be made by September. If the calculations warrant expansion and combination of the pits, annual production at San Francisco will be increased to 75,000-100,000 oz. gold.

“When we originally built this place, we built in the ability to expand, because we knew it was coming.”

Gold production in the second quarter of 1996 totalled 10,862 oz. In June, production reached 3,849 oz., which, if repeated, would lead to an annual rate of 46,000 oz.

During the second quarter of 1996, operators crushed and heap-leached 351,000 tonnes of ore, which carried an average grade of 1.39 grams gold per tonne. A total of 11,294 oz. were recovered, and the cash cost for each ounce was US$217.

As of April 1, gold in proven and probable reserves totalled 525,000 oz.

Three drills are now turning at San Francisco: one diamond drill and two reverse-circulation rigs.

Much of the recent drilling has been definition work, proving up more ore within the new pit limits. The most recent stepout drilling has been extending mineralization downdip and to the west, beyond the new pit limits.

The most recent drill results include: 26 metres of 2.6 grams gold per tonne; 26 metres of 2.32 grams; 44 metres of 1.46 grams; 10 metres of 3.75 grams; 16 metres of 1.41 grams; 24 metres of 1.89 grams; 14 metres of 1.51 grams; and 22 metres of 2.69 grams. The best intervals are found between 4 and 214 metres below surface.

Last year’s drill campaign was successful in finding gold in the Chicharra area, just north of the existing pits. Geomaque plans to continue drilling in this area this fall.

Crusher throughput at San Francisco has been about 104,000 tonnes per month for two months running, Carter said. The percentage of gold recovered from the ore at the heap leach pads is expected to remain above 75%.

Geomaque has been working on the second phase of its heap-leach pad.

“We can lay the liner out and establish a permanent haul road to the pad, and after that we’ll get the new reserve figure, so we can sit down and make decisions on such matters as ore haulage,” Carter said.

Once the new laboratory being built on site is completed, Geomaque plans to complete a definitive study on crushing and recovery.

The latest ore being crushed was thought to be oxide ore, Carter said. “But it looks pretty fresh to me. It leaches well and is a non-active pyrite, so you don’t see cyanide consumption or get a bunch of iron coming out of it.”

Red tape

He says the only significant snag Geomaque has hit at San Francisco is the endless red tape of dealing with Mexican politicians and military personnel.

“I guess it’s just a matter of learning the ball game. You walk in here with your uniform and your gloves, but you still have to learn the game.”

He adds, however, that the Mexicans who have been recruited to work at San Francisco are impressive.

“It’s a good workforce. When we came to town, a lot of these people were making bricks, and that’s what they had done here for 200 years. Now we’ve got `em sitting in million-dollar loaders.”

Geomaque has hired a teacher to come to the mine to teach English to the local workers.

“We have a responsibility because this [mine] isn’t going to go on producing forever, so these workers are being trained to be competitive in the workplace.”

While Geomaque is satisfied with its Mexican workforce, its mining equipment comes not from local sources but from a North Dakotan firm, Butler.

“If we can save money by bringing it down from North Dakota, we’ll do it. [Mexican contractors] keep bidding high, and we keep using Butler.”

Geomaque reported earings of US$791,000 (or US2 cents per share) for the quarter ended June 30, compared with a loss of US$371,000 (US1 cents per share), for the same period in 1995. Revenue during the quarter was $4.33 million, representing gold production (after final settlements) of 10,750 oz. Mine operating costs for the 3-month period were $2.38 million.