Wheaton concludes Los Filos acquisition

Wheaton River Minerals (WRM-T) has taken full control of the Los Filos gold project in Mexico’s Guerrero state, putting it on-track to increase annual gold-equivalent production by 40%.

In late October, Wheaton acquired a partial interest in the deposit plus a full interest in the nearby El Limon deposit through the takeover of Miranda Mining. In relation to that deal, it has since paid US$87 million to Teck Cominco (TEK-T) in return for its 70% stake in Los Filos.

On Dec. 31, Teck pegged Los Filo’s measured resource at 5.2 million tonnes grading 2.24 grams per tonne, its indicated resource at 16.9 million tonnes grading 1.96 grams, and its inferred resource at 5.9 million tonnes grading 2 grams. All estimates are based on a cutoff grade of 0.8 gram per tonne and assume that mineralized material will be processed in a milling facility.

However, Wheaton River envisages a heap-leach operation and, toward that end, is reviewing the benefits of grinding higher-grading material to a finer size than that used in earlier studies. Those column tests reported recovery rates in excess of 70%.

Annual prodution is anticipated at 175,000 oz. over 10 years, while life-of-mine cash costs are projected to be US$175 per oz. Capital costs are expected to be about US$80 million, which would be funded through a combination of debt and internal cash. Further projections will be included in the feasibility study, which is scheduled for completion in 2004.

Situated 15 km to the north, El Limon is the less advanced of the two deposits and hosts an inferred resource of 13.4 million tonnes grading 3.53 grams. The resource was calculated by Teck, which owns the remaining interest in the project.

Teck recently indentified several new zones and is now incorporating them in the resource base. The update had been due for release in late September.

Mineralization at El Limon is skarn-related and extends from surface in the north to more than 100 metres below ground to the south. Magnetite, pyrrhotite, chalcopyrite and pyrite are the principal minerals associated with gold.

With Los Filos alone, by 2006, Wheaton expects to begin producing 700,000 oz. gold-equivalent at an average cash cost of US$140 per oz. The company now produces at an annualized rate of 500,000 oz. gold-equivalent, at US$100 per oz.

Wheaton’s producing assets include the 37.5%-owned Alumbrera copper-gold mine in Argentina, the wholly owned Peak gold-silver mine in Australia, and the wholly owned Luismin gold-silver operations in Mexico. Luismin consists of San Dimas, La Guitarra and San Martin, all of which were acquired during the 2002 takeover of Mexican-based Minas Luisman.