Assured that the government of Costa Rica will support development of the Bellavista gold project,
Under the new deal, Glencairn will acquire all the outstanding shares of Wheaton River Holdings, which owns the Bellavista property and its permits. The price tag is US$250,000 in cash plus 750,000 shares. Regulators have yet to approve the deal.
In June, Glencairn backed out of a deal to buy Bellavista after a presidential decree banned open-pit mining in the tropical country.
At first, Glencairn said the decree did not appear to affect the deposit and that it would confirm that rights to the mine would be maintained. The company changed its mind a week later, ostensibly because the Bellavista project was included after all.
Bellavista is categorized as an epithermal gold-silver deposit, and hosts 11.2 million tonnes grading 1.54 grams gold per tonne. The resource can support annual production rates of 60,000 oz. for more than seven years.
A feasibility study pegged total operating costs at US$179 per oz. and capital costs at US$28 million. At a gold price of US$325 per oz., the project has a pretax internal rate of return of 19% and a net present value of US$20.2 million at a discount rate of 5%.
The project received all necessary environmental approvals in February 2001.
Glencairn is looking at financing alternatives for the project and is considering contracting out mining and crushing to reduce capital costs. Glencairn is also in talks with a potential Costa Rican company interested in a minority stake.
On the exploration front, the property overlies a 10-km portion of the Liz fault and is home to two large geophysical and geochemical anomalies centred over extensions of historical mines. Both targets lie within 1 km of the proposed mine.
Glencairn is managed by former Wheaton officers and directors, including Kerry Knoll, Ian McDonald, Dunham Craig, Peter Tredger and John Kalmet. The team began to leave Wheaton in September 2001, when the junior revamped its management and directors, with Ian Telfer — formerly of Vengold and TVX Gold — taking over as CEO.
Wheaton then relocated its headquarters to Vancouver from Toronto, sold off some development-stage gold assets, and, in the spring, struck a deal to buy the silver-oriented mining division of Sanluis, a Mexican-based autoparts manufacturer, for US$75 million.
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