Centurion/Western States joint venturing new mine

Centurion recently entered into a joint venture agreement with Western States Minerals Corp., a private company based in Denver, Colo., to develop the Zaca property on a joint venture basis.

Under terms of the agreement, Western States has agreed to fund 100% of all pre-production costs and 70% of all capital costs to earn a 50% interest. Western States will fund Centurion’s 30% share of costs by way of a private placement.

Commenting on the agreement, John Chapman, who took over as president in March, emphasized the agreement “fulfills Centurion’s corporate objective of joint venturing its larger gold properties with established mining companies.” Western States is credited with the discovery of the Goldstrike mine near Carlin, Nev., which the company later sold to American Barrick Resources (TSE).

Although not in the same league as Barrick, Western States is nonetheless a significant gold producer in its own right. The company has two heap leach mines in Nevada that are expected to produce 63,000 oz in 1989, increasing to 81,000 oz in 1990.

The 3,000-acre Zaca mine property is near the California-Nevada border, 60 miles south of Reno. It has a mineable reserve of 9.4 million tons grading 0.029 oz gold and 0.57 oz silver and “four large exploration targets” that were identified in a recent exploration program, Centurion said.

A 15-month production timetable has been established from the date of the agreement, or six months following the receipt of any required permit amendments. All engineering is complete and major permits are in place although some have to be amended to comply with proposed operations that are larger than originally intended. Cash flow will be distributed 70% to Western States and 30% to Centurion until payback after which it will be split evenly between the two partners.

A feasibility study for the property assumes average annual production of 31,000 oz gold and 400,000 oz silver from a heap leach operation at a cash operating cost of $200 per oz of gold.

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