Caledonia boosts stake in Spanish gold mine

Toronto-listed Caledonia Mining has bought an additional 15.2% interest in the Filon Sur gold mine in Spain for US$1.3 million. This raises to 98.4% the company’s ownership in the project.

Since 1988, the deposit has been producing gold and silver from the heap leaching of gossan ores. This material has been obtained both from shallow, open-pit mining and surface stockpile dumps.

Situated in the southwestern province of Huelva, the mine produced 20,300 oz. gold and 137,000 oz. silver in 1984, generating after-tax net profits of $4 million. This year, production is forecast at 25,000 oz. gold and 175,000 oz. silver, with cash costs estimated at US$176 per oz. gold-equivalent. Proven and probable reserves stand at 5.3 million tons grading 0.058 oz. gold and 0.84 oz. silver per ton, with inferred reserves estimated at 3.3 million tons grading 0.23 oz. gold and 0.84 oz. silver. An exploration program is under way in an attempt to upgrade the reserve base.

Plans call for an increase in the annual plant capacity to 1 million tons from the current 500,000 tons. With this increase, output in 1996 is projected to reach 64,000 oz. gold-equivalent at a cash cost of US$136 per oz. In other news, Caledonia has completed its acquisition of Eesterling Gold and Barbrook Mines (T.N.M., Jan. 2/95). The two South African companies operate gold mines in Transvaal province. The cost of the purchase was $49.1 million in cash and Caledonia shares.