GLOBAL SEARCH FOR GOLD — Geomaque impressed by results from Honduran deposit

Infill drilling continues to return significant grades over substantial widths in the San Juan zone at the Vueltas del Rio gold deposit in northwestern Honduras.

Geomaque Explorations (GEP-T) has now received results from 93 of 102 holes drilled in the San Juan zone, and assays continue to confirm the continuity of the near-surface oxide and deeper sulphide mineralization.

Oxide intercepts from the 18 most recently reported holes include: * hole V-77, which returned 31 metres grading 1.96 grams gold per tonne; * hole V-81, which returned 21 metres of 0.7 gram gold:

* hole V-82, which returned 32 metres of 1.25 grams;

* hole V-85, which returned 40.25 metres of 1.26 grams;

* hole V-86, which returned 27 metres of 4.76 grams;

* hole V-88, which returned 25 metres of 2.94 grams;

* hole V-89, which returned 19 metres of 1.4 grams; and

* hole V-93, which returned 7 metres of 4.10 grams.

Since drilling began, in February, the area of economic interest in the San Juan zone has been extended to 1 km.

“The drilling continues to confirm previous results, and we’re particularly encouraged by the grade and width of the oxide intercepts in the eastern part of the San Juan zone,” says Phillip Walford, vice-president of exploration.

Drilling in the Main zone began in July, since which time 42 holes have been completed, though no assay results have been received. Preliminary metallurgical work by previous operators on samples from the San Juan and Main zones indicated gold recoveries of 78% from a flotation test of sulphide samples and 90% from column tests of oxide samples. Geomaque has contracted Lakefield Research and McLelland Laboratories to conduct a comprehensive metallurgical study of the sulphide and oxide samples.

“With the metallurgical program set to begin, we expect to have confirmation of the rapid leach times and high recovery rates found in previous testing of the oxide mineralization,” Walford says. “This will help us gain an understanding of the characteristics of the sulphides by year-end.” Geomaque recently received approval of an environmental impact study on the Vueltas del Rio deposit. An environmental permit has been issued, and, as a result, Geomaque now holds all permits required to bring the Vueltas del Rio deposit into production.

Geomaque produces gold from its wholly owned San Francisco mine in Mexico’s Sonora state, where the leach pad area was recently expanded. Gold production at the mine totalled 9,470 oz. during the second quarter, and the company posted revenue of US$3.4 million on gold sales of 8,995 oz. at an average realized price of US$375 per oz.

Geomaque’s revenue in the second quarter of fiscal 1996 (ended June 30) was US$4.3 million. The company reports that, as a result of the expansion program, mining and crushing rates at San Francisco increased substantially during the second quarter.

A new crusher circuit was installed, and, as a result, crushed ore sent to the pads totalled 720,000 tonnes during the recent 3-month period, compared with 362,000 tonnes crushed and stacked during the first quarter and 351,000 tonnes in the second quarter of 1996.

The third and fourth phases of leach pad construction was completed in June, more than doubling the pad area at San Francisco and enabling the phase-1 and phase-2 pads to be placed entirely under leach. As a result, record production of 7,010 oz. was achieved in July.

Mine operating costs for the second quarter were US$2.2 million, compared with US$2.4 million in the corresponding period of the previous year. The cash operating cost per ounce of gold was US$233, compared with $217 in the second quarter of 1996, and total mine costs per ounce rose to US$297 from US$263.

Capital expenditures at the mine totalled US$2.7 million, reflecting the leach pad expansion and the purchase of a stacker-conveyor system for loading ore on the pads.

“We are extremely pleased with how efficiently the San Francisco mine is operating,” says Geomaque President John Paterson.

The company reported earnings of US$220,000 (or 1 cents per share) in the second quarter, compared with US$791,000 (2 cents per share) a year earlier.

For the six months ended June 30, earnings totalled US$649,000 (2 cents per share), compared with US$830,000 (3 cents per share) during the first six months of 1996.