Minefinders boosts Dolores project

Infill drilling at the Dolores project in Mexico’s Chihuahua state continues to enhance the gold and silver asset base of Minefinders (MFL-V).

The property, which comprises more than 400 sq. km in the Sierra Madre mountain range, has been subjected to more than 266 drill holes. As a result, Minefinders has outlined a resource, minable by open-pit methods, of 35.2 million tonnes grading 1.4 grams gold and 84.46 grams silver per tonne, equivalent to 1.6 million contained ounces gold and 95.6 million contained ounces silver. The company used a cutoff grade of 1 gram gold-equivalent and a capping factor of 30 grams gold and 100 grams silver. Using a 0.3-gram gold-equivalent cutoff, the estimate weighs in at 88.8 million tonnes averaging 0.75 gram gold and 42.76 grams silver, or 2.1 million contained ounces gold and 122 million contained ounces silver.

Recent drilling has confirmed the continuity of the gold-silver mineralization hosted in feeder structures over a 4-km strike length and to a vertical depth of 300 metres. The initial holes infilled a 400-metre-long segment of the 1.9-km-long Main zone at 25-metre intervals. Highlights include the following:

– Hole 115 intersected 38.1 metres averaging 0.6 gram gold and 31.2 grams silver per tonne. Another interval, farther down-hole, cut 38.1 metres averaging 5.68 grams gold and 93.4 grams silver. Included in this intersection was a 6.1-metre section that assayed 31.2 grams gold and 512.3 grams silver.

– Hole 116 cut 50.2 metres averaging 1.25 grams gold and 23.8 grams silver.

– Hole 117 intersected 33.5 metres averaging 0.99 gram gold and 27.4 grams silver and included a 16.8-metre section that assayed 1.45 grams gold and 37.5 grams silver.

– Hole 118 intersected 12.2 metres averaging 2.7 grams gold and 87.2 grams silver within in a 64-metre mineralized zone that averages 0.89 gram gold and 36.6 grams silver.

– Hole 119 cut 131.1 metres grading 0.98 gram gold and 26.8 grams silver. Included in this intersection were two higher-grade sections that returned up to 4.1 grams gold and 39.1 grams silver over 4.6 metres.

– Hole 120 cut 114.3 metres grading 0.84 gram gold and 25.4 grams silver, including three higher-grade sections returning up to 9.79 grams gold and 176.1 grams silver over 4.6 metres.

– Hole 121 cut 61 metres grading 0.5 gram gold and 15.5 grams silver.

– Hole 122 cut 50.3 metres of 0.87 gram gold and 10.2 grams silver, including a higher-grade section running 2 grams gold and 22 grams silver over 6.1 metres.

– Hole 123 cut 32 metres grading 3.56 grams gold and 41.8 grams silver, including a higher-grade portion hitting 10.1 grams gold and 110.9 grams silver over 9.1 metres;

– Hole 124 cut 3.1 metres grading 1.18 gram gold and 18.4 grams silver within an 18.3-metre zone of mineralization grading 0.27 gram gold and 24.5 grams silver.

– Hole 125 cut 32 metres grading 1.68 grams gold and 52.2 grams silver, including three higher-grade portions that returned up to 3.76 grams gold and 288.4 grams silver over 3.1 metres.

– Hole 126 cut a 10.7-metre section running 1.63 grams gold and 35.2 grams silver within a 22.9-metre mineralized zone that averages 0.93 gram gold and 19.9 grams silver.

– Hole 127 cut 93 metres grading 1.59 grams gold and 36 grams silver, including five higher-grade sections that returned up to 7.34 grams gold and 190.5 grams silver over 4.6 metres.

– Hole 128 cut 47.3 metres grading 1.06 grams gold and 11.9 grams silver, including a 6.1-metre section of 3.6 grams gold and 31.2 grams silver.

– Hole 129 cut 126.5 metres grading 0.97 gram gold and 12.2 grams silver, including two higher-grade sections of 3.52 grams gold and 50.8 grams silver over 9.1 metres.

Minefinders intends to subject the Main zone deposit to a final feasibility study in 2001. Mineralization remains open for an additional 2.1 km of strike length to the north and south, as well as at depth. Previous drilling and historical mine data suggest that high-grade gold and silver mineralization extends considerably deeper than the 300 metres tested to date. The company will direct its drilling to extend and develop the high-grade feeder structures beneath the planned open-pit mine.

Geologists have determined regional mineralization is controlled by a large central domal intrusion and four smaller domes contained in a strong northwesterly trending structural zone. The mineralization wraps around these domes and has been used as a guide for identifying a new target, dubbed the West Flank target. The Main zone deposit occurs on the east side of this large dome and is hosted in andesite flows, basal latite pyroclastic rocks and latite dykes associated with the dome. The West Flank structural zone is a blind target hosted in andesites and latite dykes; it is covered by the latite pyroclastic rocks that originated from the central dome.

Minefinders believes that the Dolores Main zone is part of a much larger epithermal gold and silver system.

In late 1998, an initial scoping study by MRDI concluded that the Dolores project could be put into production at a capital cost of US$80.5 million. It was also estimated that annual production, over a mine life of 14 years and a cash cost of US$177 per oz. gold equivalent, would average 71,226 oz. gold and 3.3 million oz. silver, or 125,244 oz. gold-equivalent. The project showed an internal rate-of-return of 11.4%, based on prices of US$300 per oz. gold and US$5.50 per oz. silver.

Ore would be mined from two separate starter pits at the daily rate of 10,000 tonnes (3.6 million tonnes annually) and hauled to a primary crusher. The higher-grade material would be processed separately and routed to a 5,000-tonne-per-day mill and carbon-in-leach circuit utilizing a Merrill-Crowe recovery process. This material would then be thickened and agglomerated with the lower-grade ore and placed on leach pads.

Metallurgical tests indicate recoveries exceeding 89% for gold and 57% for silver. These estimates are based on the extrapolation of results from column leaching of pulp-agglomerated material, which simulate the processing plan. Recoveries from the higher-grade ore, prior to agglomeration and heap leaching, range from 82% to 89% for gold and from 43% to 51% for silver in a 12-hour pre-leach cycle. The accelerated mill recovery will help generate early cash flow, as 75% of the contained metal occurs in the higher-grade portion of the deposit.

Minefinders is also exploring the Bolsa deposit, in the northern Mexican state of Sonora. The company completed a resource estimate, based on results from 72 drill holes, in September 1999. The estimate weighed in at 6 million tonnes averaging 1 gram gold and 10 grams silver per tonne based on a cutoff grade of 0.4 gram gold and a capped grade of 8 gram gold. This translates into a contained resource of about 190,000 oz. gold and 1.9 million oz. silver. Mineralization in the shallow dipping deposit remains open, and Minefinders hopes to expand La Bolsa’s resources to the south and east through future drilling.

Within the deposit area, several major mineralizing feeder structures returned high-grade drill intercepts, including 3.1 metres averaging 8.6 grams gold and 96 grams silver per tonne, as well as a 4.3-metre intercept averaging 10.4 grams gold and 43 grams silver.

Minefinders is considering ways to advance the Bolsa deposit toward a production decision, including a possible joint venture.