Morgain initiates Castillo mine startup test

Vancouver — Morgain Minerals (MGM-V) is about the start up the Castillo gold mine in Mexico’s Durango state.

As a test, the company will initially mine 30,000 tonnes and load it on to heap leach pads. Full-scale mining will follow, later in the year.

Castillo (previously El Cairo) was a grassroots discovery in 1995 by Battle Mountain Gold, now part of Newmont Mining (NEM-N). Following extensive drilling, Newmont decided to return the property to the Mexican government. Morgan subsequently acquired it through a government lottery.

The deposit is in the Altiplano sub-province on the eastern flank of the Sierra Madre Occidental belt. Epithermal gold mineralization occurs in silicified, argillized and pyritized mantos in the lower volcanic sequence. Mineralized zones have been oxidized to an average depth of 150 metres.

A 2003 prefeasibility study by A.C.A. Howe International confirmed a measured and indicated oxide resource of 37.3 million tonnes grading 0.7 gram gold per tonne. The study also recommended mining of a near-surface, higher-grade zone at a lower rate of 1 million tonnes per year.

Capital costs are pegged at US$3 million; the payback period, at eight months.

The junior has 56 million shares outstanding and last traded at 34.