EXPLORATION 1998 — Sunshine puts Pirquitas development in high gear

While the price of silver is robust, Sunshine Mining & Refining (SSC-N) is stepping up the pace of development at its Pirquitas silver-tin project in Argentina.

The price of silver leapt past US$7 per oz. in early February, after investment guru Warren Buffet announced he had purchased nearly 130 million oz. of silver bullion. Since then, the price as fallen back to about US$6 per oz.

Sunshine hopes to capitalize on the increased interest in silver by placing Pirquitas into production sooner.

Using current silver prices, the company calculates that it could add nearly 8 million oz. to proven and probable reserves by converting what would have been waste at US$5 per oz. into ore.

As of August 1997, reserves stood at 12.5 million tons grading 5.4 oz.

silver per ton and 0.3% tin, equivalent to 66.9 million oz. silver and 39,000 tons of tin.

Sunshine plans to expedite work on the project and select an independent consultant for a bankable feasibility study sooner than anticipated.

At this point, Sunshine has two rigs on site focusing on infill drilling within the main reserve area and on the nearby Potosi vein. The company recently completed sampling of the vein, which figured prominently in previous underground mining operations at Pirquitas. Assay results suggest that a portion of the vein, thought to grade as high as 14 oz. silver, may not have been mined out by the previous operator.

The Potosi vein lies subparallel to the main deposit, on ground currently considered to be waste. Sunshine states that additional drilling will be required to evaluate the full potential of this area, noting that any significant mineralization could lower the anticipated stripping ratio.

Sunshine reported a net loss for the fourth quarter of 1997 of US$3.1 million (or 1cents per share) compared with a loss of US$7.1 million (3cents per share) for the same period in the previous year.

Fourth-quarter revenues rose to US$8.4 million from US$3.8 million on the strength of a 65% increase in silver production and a 22% drop in net production costs. For the year, Sunshine lost US$19.3 million (8cents per share) on revenue of US$28.3 million, compared with a profit of US$11.6 million (5cents per share) on revenue of US$14.2 million in 1996.