EXPLORATION ROUNDUP — Rio Narcea boosts gold reserves in Spain — Denver-based junior expanding El Valle, Carles

Rio Narcea Gold Mines (RNG-T) has boosted reserves at its Spanish properties by almost one-third.

The properties, which are centred in the northwestern region of Asturias, now contain total proven and probable reserves of 20.9 million tonnes averaging 3.86 grams gold per tonne, 12.27 grams silver and 0.4% copper. The new figures represent a 29% increase over the total reported in mid-1996.

The additional reserves are the result of a 40,000-metre drill program, conducted over the past 14 months. The program included 21,000 metres at El Valle, 15,500 metres of infill drilling at Carles and 3,500 metres of exploration drilling at Godan. All three deposits lie in the Rio Narcea gold belt.

“These new estimates represent not only a significant increase in the company’s ore reserves but a major improvement in the quality of our ounces,” says Rio Narcea Chairman Chris von Christierson.

“We now have a reserve base to support mining operations for more than 15 years at the current design throughput, and plant expansion will be a serious consideration once the rated capacities at El Valle have been achieved.”

Discoveries in the past year have necessitated an expansion at two of the three planned open pits at El Valle, where a feasibility study in 1996 demonstrated the economic viability of mining 600,000 tonnes per year at a gold-equivalent grade of 5.5 grams per tonne. With pre-stripping costs capitalized, the average cash operating cost over the projected 7.5-year life of the pit was estimated at US$141 per oz. gold (US$186 per oz. if prestripping costs are included).

Two new open pit zones at Carles have also been defined.

Drilling continues to add tonnes to the Black Skarn zone below the Boinas East pit at El Valle. Although much of the zone is now defined on 25-metre spacings, minable reserve status will require additional underground drilling; it is currently in progress.

Exploration drilling continues to extend the high-grade zone downdip, where the skarn mineralization remains open.

A 30,000-metre drill program is planned for 1998, more than half of which will be aimed at exploring the Rio Narcea gold belt, where each of the company’s deposits remains open along strike and downdip and where several exploration targets have yet to be tested.

About 14,000 metres of drilling will be dedicated to other gold belts in the region, where reconnaissance drilling by Rio Narcea has identified several prospective gold targets.