Central Sun keeps finding gold in Nicaragua

Vancouver – Even though a failed financing has forced the company to suspend a major development project at one of its two Nicaraguan gold mines, Central Sun Mining (CSM-V) continues to hit good grades in its expansion drilling at both operations.

Central Sun owns the Limon and Orosi gold mines. Limon, in northwest Nicaragua about 100 km north of Managua, is an underground mine and 1,000-tonne-per-day mill that is on track to produce 45,000 oz. gold this year. Currently the mine is tapping into the Santa Pancha orebody, which sits some 4 km east of the mill and carries an average grade of 5.6 grams gold per tonne.

Expansion drilling at Limon has focused on the Santa Pancha south extension, which has been traced for 500 metres strike and to 150 metres depth. Gold mineralization occurs within a steeply-dipping epithermal quartz vein breccia zone that is on average 15 metres thick, and the new zone is directly adjacent to current underground workings.

For example, hole LM-01 cut 12.3 metres grading 5.83 grams gold and hole LM-03 returned 4.54 grams gold over 15 metres. Hole LM-13 hit 15.4 metres averaging 8.76 grams gold and hole LM-19 returned 9.83 grams gold over 6.4 metres. The bonanza intercept came in hole LM-22: 5.3 metres grading 198.69 grams gold.

The company is currently calculating a resource estimate for the Santa Pancha extension.

Central Sun’s other Nicaraguan gold operation is Orosi, which sits 110 km due east of the nation’s capital city. After acquiring the open-pit mine in mid-2006 the company completed a series of optimization projects, include a major pre-stripping operation and the establishment of permanent, rather than cyclical, leach pads. However recoveries through the old heap leach operation sat below 50%. As such Central Sun suspended operations in order to convert the mine to a conventional milling system with a recovery rate closer to 90%. The new mill should produce 80,000 oz. gold annually.

The company is now in the final stages of that conversion and has already spent US$31 million on the project. However a US$22.5-million financing needed to complete the project failed in mid-October because of global financial uncertainty. As such the project is temporarily suspended and Central Sun is investigating its financing and cost-cutting options.

Nevertheless, expansion drilling at Orosi continues and has focused on testing gold targets that could add resources within 5 km of the central processing plant. The company completed almost 14,000 metres of drilling in 82 holes around Orosi, testing six target areas.

San Juan is a potential now open-pit target carrying reasonably high grades. In a recent set of results hole SJ-14 returned the strongest intercept from the new area to date: 58.69 grams gold over 4.4 metres, from 49 metres depth. Hole SJ-15 cut 2.8 metres grading 38.58 grams gold from 105 metres downhole and hole SJ-16 returned 14.45 grams gold over 7.7 metres from 55 metres depth. A resource estimate for San Juan, which remains open along strike and at depth, is now in progress.

Adjacent to San Juan, the Los Angeles vein structure likely represents a related splay structure that could add to a San Juan open pit. The best hits came from hole AN-02, which cut 5 metres of 13.04 grams gold from 25 metres depth, and hole AN-01, which returned 2,61 grams gold over 4.5 metres from 30 metres downhole.

Drilling to test potential splay structures of the Mojon-Crimea structure, which is the main deposit at Orosi, returned several good results. Hole DES-03 returned 13.49 grams gold over 2.1 metres; hole DES-02 cut 4 metres grading 11.77 grams gold.

Orosi is currently home to 16.3 million indicated tonnes grading 1.52 grams gold. Proven and probable reserves sit at 11 million tonnes grading 1.44 grams gold, contained primarily in the Mojon-Crimea zone.

Central Sun shares are currently trading around 10¢. The company has a 52-week trading range of 8.5¢ to $2.50 and has 61 million shares issued.