Lyon Lake sells off mining assets

Montreal-based junior Lyon Lake Mines (LLL-V) has decided to liquidate its mining assets in order to improve its balance sheet.

The assets include: the Cerro Crucitas gold project in northern Costa Rica; the dormant Beta Vargas open-pit, heap-leach gold mine in the western portion of that country; and the various, mostly Southeast Asian assets of Palmer Mineral Resources, which merged with Lyon Lake last year.

Already, Vancouver-based junior Vannessa Ventures (VVV-V) has offered to acquire the 176-sq.-km Cerro Crucitas property, 105 km north of San Jose. Reserves there are estimated at 21.7 million tonnes grading 1.58 grams gold and 3.14 grams silver per tonne.

Pending due diligence, Vannessa must pay Lyon Lake an undisclosed amount of cash, issue 250,000 shares and assume certain liabilities related to the property.

A feasibility study by Cambior‘s (CBJ-T) construction division concluded that 1 million oz. gold can be mined from Cerro Crucitas over 12 years at a capital cost of US$50-60 million.

The study examined a scaled-back, 4,500-tonne-per-day operation — less than half the capacity Lyon Lake had envisioned when it acquired the project from Placer Dome (PDG-T) in November 1998.

Lyon Lake had almost secured funding for the project last August, but discussions with the potential investor collapsed before the deal could close. Nonetheless, the company applied for a mining permit at year-end.

Meanwhile, at the Beta Vargas mine, Lyon Lake is carrying out site reclamation and negotiating the sale of milling equipment.

Production at Beta Vargas was suspended in July 1998, though the company had hoped to reopen the mine following construction of a second leach pad.

Palmer Mineral Resources and its subsidiaries are also up for sale.

Proceeds from the sales should enable Lyon Lake to pay most of its debts, which total US$1.5 million.