Eldorado expanding Colorada mine

By expanding facilities at the Colorada mine in Mexico’s Sonora state, Eldorado (TSE) expects to reduce processing costs by up to 30% and improve gold output by up to 15%.

A new Merrill-Crowe circuit, now operational, was purchased for US$100,000 from FMC Gold’s Paradise Peak mine in Nevada. It replaces a carbon-in-pulp circuit which runs parallel to an existing Merrill-Crowe circuit.

The expansion is expected to boost production to 30,000 oz. in 1995 from 19,900 last year, with a corresponding fall in the operating cost to US$189 from US$191 per oz.

(The carbon-in-pulp circuit plant is slated for the Trinidad gold project, a joint venture with Vancouver-listed Almaden Resources, which owns 49%. Situated in Mexico’s Sinaloa state, the project is in the final stages of feasibility and permitting.)

Preliminary exploration at the Colorada mine site has resulted in the discovery of a new mineralized zone. Situated half a mile east of the Creston deposit, the structure extends over a distance of 2,000 ft. on surface and is associated with quartz-hematite-manganese alteration.

Surface sampling of old workings returned peak values of 0.013 oz. per ton, while three reverse-circulation drill holes yielded 39 ft. of 0.011 oz., 85 ft. of 0.015 oz., and 33 ft. of 0.009 oz.

Although the gold mineralization is low in grade, Eldorado believes the structural environment is identical to that of the Creston deposit, where surface mineralization increases in grade with depth.

In other developments, Eldorado is addressing the ownership of a parcel of land within the Creston pit area, which Morgain Minerals (VSE) contends it owns. Morgain filed a civil lawsuit last November against Eldorado, in the amount of US$2 million, for the alleged illegal exploitation of ore mined from the “Susy” claim.

The land parcel in question measures 10 by 50 metres and slices through the pit, Eldorado reports. The matter is before the Mexican courts, and Eldorado has filed both criminal and civil lawsuits against the individual who staked the claims for the company.

Meanwhile, the company has retained Richardson Greenshields as its advisor in response to an unsolicited, $135-million takeover bid by Glamis Gold (TSE).

Glamis recently made an offer to buy all of Eldorado’s common shares, 8.25% convertible debentures and special warrants. It is offering $1.20 in cash and 0.4 of a Glamis share for each Eldorado share.

Eldorado, which has a shareholder rights protection plan, views the bid as insufficient.