Bluestone hits more high-grade near Cerro Blanco in Guatemala

An infill drill program designed to upgrade inferred resources at Bluestone Resources‘ (TSXV: BSR; US-OTC: BBSRF) Cerro Blanco project in Guatemala has returned intercepts of 201.4 grams gold per tonne and 2,139 grams silver per tonne over 1 metre from 40 metres downhole, about 20 metres outside the project’s current resource envelope.

Other highlights include 8.5 grams gold and 7 grams silver over 3.5 metres from 45.3 metres downhole; and 18 grams gold and 27 grams silver over 1.4 metres, 58.9 metres downhole.

Earlier this week, the company closed a $22.4-million bought deal financing, which will be used to advance the Cerro Blanco project. The financing consists of 12.8 million units and an over-allotment of 5.1 million units at $1.25 per unit. Each unit is made up of one common share and one-half one common share purchase warrant. Each warrant entitles the holder to acquire one share at a price of $1.65 over the next 24 months.

Bluestone completed a feasibility study on Cerro Blanco in late January that outlined life-of-mine production of 902,000 oz. gold over an eight-year mine life.

The study was based on proven and probable reserves of 3.4 million tonnes grading 8.5 grams gold and 32.2 grams silver, and excluded the project’s additional inferred resources of 1.4 million tonnes grading 8.1 grams gold and 23.6 grams silver.

Initial capital is forecast to reach US$196 million, with an after-tax payback period of just over two years.

Average life-of-mine costs net of credits are estimated at US$579 per oz., which would place the project in the bottom-end of the lowest quartile of the global cost curve.

The study is based on a gold price of US$1,250 per oz. and a silver price of US$18 per oz., and estimates an after-tax net present value of US$241 million and after-tax internal rate of return of 34%.

The project already has significant infrastructure including 3.2 km of underground development declines, a fully functioning water treatment plant, maintenance shops, warehouse and office facilities, and a total of 580 holes and over 128,000 metres of drilling. Bluestone plans to update the mineral resource through the conversion of inferred resources into the measured and indicated category with infill drilling.

Cerro Blanco is a hot-springs related, low sulphidation epithermal gold-silver deposit made up of a system of moderate to steeply dipping quartz-adularia-calcite veins. The resource currently has a footprint of 800 by 400 metres between elevations of 525 metres and 200 metres above sea level.

The majority of the high-grade veins occur as two upward-flared vein arrays (North and South zones) that converge at depth into master-feeder veins that, the company says, define a positive flower structure.

Bluestone shares are trading at $1.23 in a 52-week range of $1.05 to $1.60. The company has 82 million common shares for a $100.6-million market capitalization.