Greenstone moves into black in first quarter

Greenstone Resources (GRE-T) is continuing its drive towards opening four mines in Central America in just three years. And, having nearly doubled its mining revenues over the past year, the company managed to turn a modest profit in the first quarter.

Greenstone operates three gold mines: the open-pit Santa Rosa mine in Panama; the open-pit Cerro Mojon mine in Nicaragua; and the underground Bonanza mine, also in Nicaragua. As well, the company is developing the San Andres open-pit gold project in Honduras.

For the quarter ended March 31, Greenstone posted net earnings of US$251,000 (nil per share) on mining revenues of US$8.1 million, compared with a net loss of US$198,000 (nil per share) on mining revenues of US$4.5 million during the corresponding period last year.

For the year ended Dec. 31, 1997, Greenstone posted a net loss of US$4.2 million (7 cents per share) on mining revenue of US$20.6 million. This compares with a net loss of US$4.5 million (9 cents per share) on mining revenue of US$11.1 million in 1996.

During the first quarter of 1998, Greenstone’s three mines produced 31,153 oz. gold — almost half of which came from Santa Rosa — at a cash operating cost of US$202 per oz. The company sold its production for an average US$344 per oz. gold. In the first quarter of 1997, Greenstone produced 14,519 oz.

gold at a cash cost of US$231 per oz.

In February, Santa Rosa’s total capacity was doubled when the new East leach pad was brought onstream. For the first quarter of 1998, some 511,000 tonnes grading 1.3 grams gold per tonne were placed on the pads. The operation is now running at its design capacity of more than 5,000 oz. gold per month.

At Cerro Mojon, 498,000 tonnes grading 1.9 grams gold were stacked on the pads in the first quarter, producing 13,345 oz. gold at a cash operating cost of US$164 per oz. The second-phase mine expansion was commissioned on March 1 and phase three is expected to be up and running later this year.

At Bonanza, an extended dry season has drained two reservoirs supplying the hydroelectric plants, forcing the suspension of milling operations.

Underground development has continued using diesel power, and milling is scheduled to resume in late June, using either hydroelectric or diesel power.

In the first quarter of 1998, 27,000 tonnes were processed at Bonanza, producing 3,324 oz. gold at a cash cost of US$280 per oz.

Construction of the San Andres mine is both on schedule and on budget for a July startup. Greenstone has completed the first phase of the leach pad, designed to accept 25 million tonnes, an adsorption-desorption-recovery plant and the building of a new town. The conveyor system and a 2-stage crushing plant have yet to be completed.

Greenstone forecasts that total gold production in 1998 will increase with each quarter, producing a total of 233,000 oz. at a cash cost of US$197 per oz.

While the company’s foremost concern is the development of its mining and processing operations, exploration work has been ongoing on several targets.

At La Libertad (which incorporates the Cerro Mojon mine), definition drilling has been completed along the 4-km Cerro Mojon trend and on the northern extensions of the super-pit area. Attention is now shifting to drilling the southern extension, including the Esmeralda, La Victoria, Populares and Santa Maria zones. An induced-polarization survey was also carried out along the structures linking the various mineralized zones.

A final reserve estimate for the super-pit area is scheduled to be calculated by September.

At San Andres, exploration has focused on extending the mine life at Water Tank Hill and drilling for dump site locations. Activity is now switching to the nearby Twin Hills zone, where infill and stepout drilling are to be completed.

At the Hemco concessions (which include the Bonanza mine), exploration drilling has been focused on the Rosita-Tigre Negro area, and a 12,000-metre follow-up program is being planned.

Due to low gold prices, Greenstone has asked each employee making more than US$40,000 ly to take a voluntary 5% pay cut. The company states that its officers have agreed to the cut, and that the salary reductions give it the credibility to ask for price reductions from its vendors and suppliers.

Greenstone reports that it has already renegotiated contracts with its drillers, assayers and chemical suppliers.