Apex Silver among juniors active in Central America

Denver — After being pushed out of the region by Hurricane Mitch in 1998, Apex Silver Mines (SIL-X) has returned to Central America for another joint-venture opportunity.

The Denver-based company, whose major asset is the giant San Cristobal silver-zinc project in Bolivia, has entered into an option agreement for a 60% interest in the El Zapote silver project in northwestern El Salvador from Intrepid Minerals (IAU-V).

In 1998, Apex and Intrepid teamed up at the Honduran silver project known as La Labor, which occupies a buffer zone near one of the country’s famed cloud forests. However, as the partners were applying for drill permits, Hurricane Mitch swept in and reduced the region to near chaos. At that point, Apex opted out of La Labor and shifted its attention back to the US$430-million San Cristobal project, for which financing is currently being raised.

Under the most recent agreement, Apex can earn an initial 60% in El Zapote by spending at least US$400,000 on exploration and completing two staged private placements totalling $300,000. It can increase ownership in the 42-sq.-km property to 75% by completing a bankable feasibility study.

The company intends to roll its various exploration projects into a subsidiary named SilEx.

Intrepid will retain a royalty on proven and probable reserves of 20 per oz. silver, up to a maximum of US$10 million. The royalty would be paid at a minimum rate of US$1 million per year once production begins.

Proceeds from the transaction will be used to fund further deep drilling at El Zapote. The 1,000-metre program will target the Cerro Colorado III bonanza breccia zone, where Intrepid has already outlined a silver-zinc system measuring 700 by 100 metres.

Cerro Colorado III is a silicified ridge, containing stockwork quartz veins and quartz-barite veins that were exposed by trenching. Results from the previous (April 2000) drilling program include 53 metres grading 285 grams silver and 1.6% zinc. The assays from the core hole confirmed mineralization cut in a nearby hole in 1999.

Intrepid also plans to carry out 1,500 metres of drilling at the San Carolina skarn target, which measures 1,000 by 200 metres and hosts anomalous silver, lead, zinc and gold values associated with a limestone-intrusive contact.

Though known during Spanish Colonial times, modern exploration began only in 1996.

Mineralization is hosted in Cretaceous limestones and altered Tertiary volcanics. Intrepid has yet to evaluate the San Casimiro target, adjacent to Cerro Colorado III.

Freedom index

In the recent Index of Economic Freedom, published by The Wall Street Journal and the Heritage Foundation. El Salvador ranked eleventh, tied with Chile and Canada. Intrepid President Laurence Curtis says El Salvador’s reputation as a banana republic is undeserved, pointing out that its civil war ended nine years ago and that market reforms have been adopted.

Also active in El Salvador is Dayton Mining (DAY-T), which is awaiting possible changes in the new mining law before proceeding with a feasibility study at the El Dorado gold-silver project.

The feasibility study is a government requirement, says Dayton President William Myckatyn. The company expects to update the resource based on infill drilling completed last September.

The resource was last estimated to contain 901,500 oz. gold within 4.17 million tonnes grading 6.73 grams gold per tonne. The high-grade portion of the resource consists of 1.3 million tonnes grading 10.95 grams gold and 74.6 grams silver per tonne, equivalent to 457,000 oz. gold and 3.1 million oz. silver. However, the resource was calculated at a cutoff grade of 3 grams per tonne, whereas the new resource will be calculated at a 6-gram cutoff, deemed more suitable for underground mining.

In all, Dayton has outlined resources on only three of the 35 veins that are known to host mineralization on the El Dorado property.

Other countries in Central America have not fared so well in the Freedom Index: Panama ranked 33rd; Guatemala, 46th; and Costa Rica, 58th. However, these findings have not dampened the spirit of explorationists.

Vancouver’s Radius Exploration (RDU-V), for example, says it has received significant results from trenching at the El Tambor gold project in Guatemala. Five epithermal gold zones appear to be associated with a low-angle structure. The gold is hosted in strongly deformed and brecciated units within the oxidized and friable shear.

The shear at El Tambor, hosted in highly deformed Paleozoic schists, sits adjacent to a major crustal shear zone that bisects the country.

Radius is encouraged by the success of the Honduran gold mine known as San Martin, which is hosted in similar rocks. The property, owned by Glamis Gold (GLG-N), reached commercial production in early January and is expected to contribute 113,000 oz. gold in 2001 at US$113 per oz. Reserves are pegged at 38 million tonnes grading 0.9 gram gold per tonne.

Glamis has resumed exploration around San Martin, though it wrote-down the value of another Central American asset, the Cerro Blanco project in Guatemala, where work has ceased.

Also in Honduras, Geomaque Explorations (GEO-T) expects to pour its first gold at the Vueltas del Rio mine by mid-March. Mining began in November of last year, and leaching began in late February. The company expects to ramp up throughput to 4,200 tonnes per day to the crusher. At full capacity, Vueltas del Rio should contribute 60,000 oz. gold annually at cash operating costs of US$169 per oz.

Geomaque is also eyeing the Zapotal prospect, where mineralization sits on strike with Vueltas del Rio, though it is stratigraphically higher in limestones and sediments. The company expects to resume exploration here by the fall.

Maya

In southernmost Honduras, Spokane-based Maya Gold (MAY-V) recently started the second phase of exploration at the Los Lirios copper-gold porphyry target. The $375,000 program, paid for by London’s Billiton, includes 57 line km of ground magnetics and drilling.

By funding this second round, Billiton has initiated its right to buy 51% of Los Lirios by spending $2.25 million on exploration. The major can boost its stake to 70% by providing project financing.

Scheduled to begin in mid-March, the drilling should total 1,500 metres, for as many as six holes. The holes will target deeper levels of the hydrothermal system, as well as test for lateral extensions.

Farther south, in Costa Rica, Wheaton River Minerals (WRM-T) has received government approval to begin construction of the Bellavista gold mine, north of the coastal town of Puntarenas. The company is awaiting an improvement in gold prices before proceeding.

Capital costs for the open-pit, heap-leach project should run to US$28 million, not including preproduction costs, financing costs and working capital. Cash operating costs over the life of the mine should average US$179 per oz., including royalties.