Wheaton advances Bellavista mine

Toronto-based Wheaton River Minerals (WRM-T) has moved one step closer to commercial production at its wholly owned Bellavista gold project in Costa Rica.

The company recently received what it described as “an indicative term sheet” from Barclays Bank for a US$19-million limited recourse finance facility for the project.

According to Wheaton River: “The Barclays facility will constitute the largest portion of the Bellavista production financing package, and is subject to a number of conditions including legal and technical due diligence, finalization of fees and rates, adequate gold hedging, and final credit approval.”

The company’s relationship with Barclays dates back to 1997, when the latter provided US$11 million to fund development of Wheaton River’s Golden Bear mine, near Dease Lake in northwestern British Columbia.

Growing incrementally in one of the poorest gold markets in recent memory, Wheaton River has built up its asset base through several small but strategic acquisitions in the precious metals sector. Proving it is still possible to make a silk purse out of a sow’s ear, the company acquired control of the Golden Bear mine in 1993 for a paltry US$1.5 million. Its payback period was three months.

By October of that year, the company had discovered the Kodiak A deposit, which added some much-needed reserves to its inventory and allowed for the preparation of an initial mining plan. In 1997, the mine switched to low-cost heap-leaching technology, despite the relatively high-grade nature of its reserves. Gold recoveries were achieved significantly faster than predicted, and Wheaton River managed to beat its production forecasts in both 1997 and 1998. The mine produced 71,300 oz. gold last year at a cash cost of US$162 per oz., and it has another two years of life remaining.

The feasibility study for the Bellavista mine was completed in April 1999 and was based on an annual production rate of 60,000 oz. over a 7-year mine life. Total cash and operating costs (including royalties) are expected to be about US$179 per oz. The project will also employ heap leaching to recover gold from agglomerated ore at a processing rate of 5,750 tonnes per day.

Wheaton River has already spent US$6 million to acquire and develop Bellavista and is working with government agencies in Costa Rica to complete construction and operating permits.

In 1999, Wheaton River moved aggressively to expand its asset base through mergers and acquisitions. In November, the company announced plans to merge with Kit Resources (KIT-T), owner of the George Lake gold project, about 70 km south of Bathurst Inlet in Nunavut. The boards of both companies have advised their shareholders to approve the merger.

MRDI Canada, a division of AGRA Simons, estimates the George Lake project has an indicated resource of 4.2 million tonnes grading 9.8 grams gold per tonne plus an inferred resource of 2.2 million tonnes averaging approximately the same grade. Kinross Gold (K-T) holds the right to earn a 70% interest in the project by spending US$20 million before Nov. 30, 2004.

Wheaton River’s 89%-owned subsidiary, North American Metals, recently purchased the Red Mountain gold project near Stewart, B.C. for C$413,000 from the interim receiver for now-defunct Royal Oak Mines. The property has about 13.2 million tons of reserves grading 0.074 oz. gold per ton.

Wheat River has established that a higher-grade core of 700,000 tonnes averaging 12 grams per tonne exists in this overall reserve. “It is on this higher-grade, downsized basis, and the project’s exploration potential, that the property is being purchased,” the company states.