Greenstone finds new deposit at San Andreas project

Results from a drill program by Greenstone Resources (GRE-T) have identified a new bulk-minable gold target at the San Andreas property in western Honduras.

The 26-hole program followed up on previous drill work conducted on the Twin Hills prospect, which outlined 10 million tonnes grading 1.1 grams gold per tonne. Recent results have identified a 750-by-300-metre area of mineralization in oxidized, silicified rhyolite host rocks. Although the size of the new deposit has yet to be determined, the company suspects it could host more than 1 million oz. gold.

“When we initiated this exploration program, we did not expect to discover such an extensive and consistently mineralized system,” says President Rudi Fronk. “Based on exploration results to date, the Twin Hills area has the potential to deliver at least 1 million oz. of additional reserves.” Twin Hills is 2 km southwest of the Water Tank Hill deposit, where development work continues to prove up minable reserves of 18.3 million tonnes averaging 1.44 grams gold.

To date, assay results have been received from 15 of the 26 holes drilled.

All 15 intersected at least one zone returning greater than a quarter of a gram of gold over a minimum 6-metre width. Nine holes intersected multiple zones.

Highlights from the program include: hole 3, which intersected 24.4 metres (from 12.2 to 36.6 metres) grading 1.43 grams gold, and 12.2 metres (from 65.5 to 77.7 metres) grading 1.08 grams gold; hole 5, which cut 57.9 metres (from 22.9 to 80.8 metres) grading 1.28 grams gold; and hole 14, which returned 82.3 metres (from 21.3 to 103.6 metres) grading 1.10 grams gold.

Preliminary engineering studies suggest operating costs of less than US$200 per oz. First-stage metallurgical tests suggest leaching characteristics similar to those of the Water Tank Hill ore, where an earlier study indicated an 85% recovery rate, based on a 45-day leach period. Also, drill hole intercepts at Twin Hills suggest low stripping ratios similar to those at Water Hill (0.3-to-1).

As a result of the discovery, Greenstone is rethinking the final design of the Water Tank Hill facilities with the objective of increasing the planned production rate to 200,000 oz. gold per year.

Production from the Water Tank Hill deposit is scheduled to begin during the fourth quarter of 1997. Earlier this year, a feasibility study estimated an optimal annual production rate of 90,000 oz. gold per year at an average operating cost of US$108 per oz. gold.

Capital costs for the project are estimated at US$22.9 million.

Greenstone holds a 99.9%-stake in San Andreas.