Esperanza sets October start for Tillicum mine

There is a busy 6-month period ahead for those involved with Esperanza Explorations’ (VSE) Tillicum Mountain gold project located near Burton, B.C.

Start-up of a 100-ton-per-day mill is slated for October, President John Brock reports. “Contracts for design and construction of a 100-ton-per- day mill with capacity for expansion to 300 tons per day will be awarded within the next two weeks,” Brock says.

Mill capacity is scheduled to increase to 300 tons-per-day within two years, boosting annual gold production to 41,000 oz from 25,000 oz.

Average grade mined in the first year will be 0.64 oz gold. Over five years, average mill grade is expected to be around 0.47 oz gold per ton.

Underground work resumed early March with engineering crews advancing the 2,050-m main haulage level and constructing ore passes to areas of shrinkage stope development. An 8,000-ft underground drill program is planned for 1988, along with up to 10,000 ft of surface drilling.

Mining will start from the Heino- Money deposit which has proven reserves of 30,000 tons grading 0.8 oz, an additional drill-indicated 170,000 tons of 0.5 oz and geological potential of another 200,000 tons of 0.5 oz.

Production will increase as reserves are added from the East Ridge and Strebe zones. The former has drill-indicated three million tons of 0.05 oz, within which is a higher grade core of 83,000 tons of 0.55 oz. East Ridge has geological potential for another 333,000 tons grading 0.4 oz, Brock says. Drilling on the Strebe zone has returned assays of up to 0.33 oz over 30 ft.

It is expected the construction work force will peak at 45 this summer, dropping to about 36 people once operations are running.

Based on a gold price of $403(US), pre-tax net profits are forecast to be $30 million, from 173,000 oz of gold produced during the first five years of operation. Operating costs are projected to average $302(C) per oz.

Project financing of $2.5 million has come from Welcome North Mines (VSE) by way of a private placement of 2.5 million shares at $1 each. During the year, Welcome North has the right to provide a further $3.1 million in order to increase its interest in Esperanza to a total of 6.8 million shares out of 13.5 million shares, giving it 50.04% control. Welcome North, already operator of the company, has the right to exercise further options to increase its control position.