Comsur eyes Don Mario (September 24, 2001)

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

Under the deal, which is expected to close in six weeks, Compania Minera del Sur (Comsur) would receive 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 a total of US$8 million.

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

Production would occur within 18 months of the closing, at a mining and milling 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 and resulted in the project’s suspension.

Orvana believes 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 LMZ and the Upper Mineralized zone (UMZ).

Based on a previous feasibility study, the LMZ hosts minable reserves of 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.