Santa Cruz beefs up Lluvia de Oro mine

Drilling has boosted proven reserves at the Lluvia de Oro gold mine by nearly two-thirds, reports new owner Santa Cruz Gold (SCG-T).

A 6,100-metre drill program at the mine, which is situated in Mexico’s Sonora state, was undertaken to expand the open pit to the northeast along the Lluvia shear zone. The effort succeeded in increasing reserves by 2.1 million tonnes grading 0.81 gram gold per tonne. Additional, lower-grade material, which Santa Cruz says could be exploited in the mine’s later years, was also delineated.

The new reserves were defined along 300 metres of strike from the present open pit.

The new reserves amount to a 64% increase in the size of the deposit, with proven reserves now estimated at 4.6 million tonnes grading 0.81 gram gold.

Santa Cruz notes that the new reserves have essentially replaced the 2 million tonnes that have been moved to the heap-leach pads since the mine began producing in April 1996.

The recent drilling delineated, along the same structure, an additional resource of 4 million tonnes grading 0.95 gram gold. Infill drilling, scheduled for later this year, will be undertaken to prove up this resource.

According to Santa Cruz, the property contains several other exploration targets with the potential to add reserves to the mine.

The latest drilling included three holes, all of which ended in mineralization. The drilling appears to have intersected a deeper, somewhat richer zone.

Hole L188 (60 metres from, and on strike with, the current pit limits) intersected 15.2 metres of 2.3 grams gold; hole L194, on the next section, intersected 19.8 metres grading 1.8 grams; and hole L202, which is 200 metres from, and on strike with, the current pit limits, hit 7.6 metres grading 3.8 grams gold. Deeper drilling will begin shortly in an effort to follow up these holes.

“These new reserves, along with the potential to convert additional resources into reserves, not only add mine life to the operation but provide us with the potential to increase production in 1998,” says Gerry Gauthier, Santa Cruz’s chief operating officer.

Lluvia de Oro is expected to produce 25,000 oz. gold in 1997. Santa Cruz acquired the mine only recently, by way of an amalgamation with sister company Newmex Mining. Newmex, in turn, had acquired the mine from Great Lakes Minerals (GKM-T), which is affiliated with both Santa Cruz and Newmex.

Great Lakes now holds no mineral assets.

Santa Cruz, which also operates the Magistral, Escobal and Quitovac gold projects in Mexico, was to have merged with Great Lakes and Manhattan Minerals (MAN-T) under the latter company’s name in mid-1996, but the deal was aborted following due diligence reviews.

Just before their amalgamation, Santa Cruz and Newmex acquired the right to earn a 100% interest in the Sindrome de Peidra gold project in Jalisco, a state in west-central Mexico. The 1,842-ha property was the site of historic mining activity focused on narrow, high-grade gold-silver veins.

To acquire its interest, Santa Cruz must pay the vendor, a private Mexican individual, US$550,000 over three years, including US$70,000 in the first year. The vendor retains a sliding-scale net smelter return royalty: 0.5% on the first 50,000 oz., 1% on the next 450,000 oz., and 1.1% thereafter, to a cap of 900,000 oz.

Santa Cruz believes the property has potential for hosting a bulk-tonnage gold deposit amenable to open-pit mining. Chip sampling of the main shear structure, which hosts high-grade veins, yielded 8 metres grading 15 grams gold, whereas sampling across the altered footwall yielded 25 metres grading 1 gram gold. The shear structure has been mapped along strike for more than 2,500 metres. Additional exploration potential was identified along another, subparallel zone with similar dimensions.

Santa Cruz has begun a first phase of reconnaissance work at Sindrome de Piedra, which will include sampling, mapping and compilation of historical mine data. The program is due to wind down by year-end.