Comsur eyes Don Mario (September 17, 2001)

Vancouver — The long and winding road to development of the Don Mario gold-silver-copper project may be on its final stretch as Bolivia’s largest mining company has signed a definitive agreement with owner Orvana Minerals (ORV-T).

Under the deal, which is expected to close in about six weeks, Compania Minera del Sur (Comsur) would receive about 53 million Orvana shares in return for US$4 million and the financing of Orvana’s purchase (from Comsur) of a gold mill and equipment valued at US$8 million.

The Bolivian mining company also agreed to lend Orvana US$6 million to buy mining equipment and to develop the open-pit and underground mining operations in the Lower Mineralized zone (LMZ) at Don Mario.

Production would occur within 18 months of the closing, at a mine and mill rate of not less than 600 tonnes per day.

Cash-strapped Orvana has been struggling to advance the project over the past few years. Since it acquired Don Mario from Billiton and a group known as La Rosa in 1995 (for 6.75 million special warrants and US$10 million), Orvana has upped the resource and completed a feasibility study.

However, low gold prices and a lack of investor interest limited the junior’s financial capabilities. This resulted in the suspension of the project.

Orvana feels that the mining expertise of Comsur will lower capital costs enough to place the mine into production.

Comsur operates six mines in Bolivia, where it produces zinc, lead, tin, gold and silver. The company also has operating assets in Argentina.

The Don Mario project consists of two deposits — the Lower Mineralized zone (LMZ) and Upper Mineralized zone (UMZ).

Based on a previous feasibility study, the LMZ hosts minable reserves of about 848,000 tonnes grading 15.55 grams gold per tonne. Of this total, 246,000 tonnes grading 10.19 grams are minable by open-pit methods. The remaining tonnes are minable by underground methods.

Based on Orvana’s in-house evaluation, the UMZ is reported to host an oxide resource of 2.4 million tonnes grading 1.66 grams gold, 51.9 grams silver and 1.94% copper. A transition sulphide resource contains 1.9 million tonnes grading 2.26 grams gold and 48.9 grams silver per tonne, plus 1.39% copper.