Greenstone weathers storm in Central America

Gold miner Greenstone Resources (GRE-T) has reported less-than-catastrophic hurricane damage to its facilities in Central America.

Damage caused by Hurricane Mitch at the Cerro Mojon mine in Nicaragua was limited to slope failures above the leach pad and ponds, as well minor road washouts. Damage to other roads caused up to a 2-week delay in the delivery of supplies.

Milling at the Bonanza mine, also in Nicaragua, resumed slowly but still averaged more than 400 tonnes per day for the third quarter. While there was no hurricane damage to the mine’s facilities, delivery of supplies was interrupted for about two weeks, causing a slight reduction in gold production in November.

Final commissioning of the San Andres project in Honduras was delayed by several weeks both by hurricane damage and engineering changes to the conveyor and electrical distribution systems. Components should be available by mid-December and fully operational at design capacities in the first quarter of 1999. All operational personnel, including mining and drilling contractors, are on site and mining of the Water Tank Hill deposit is under way.

Hurricane damage at San Andres resulted in slope failures and road washouts. Also, access from the port was cut off for an extended period and most outside contractors left the site to help their families during the storm’s aftermath.

Drilling programs were recently completed at San Andres and at the La Libertad project, also in Nicaragua, and updated resource and reserve estimates are expected by year-end.

During the third quarter, Greenstone produced 31,453 oz. gold at a cash cost of US$237 per oz. The Santa Rosa mine in Panama produced 12,684 oz. gold at US$255 per oz.; Cerro Mojon, 14,088 oz. at US$207 per oz.; and Bonanza, 4,681 oz. at US$280 per oz. During the corresponding 3-month period in 1997, these mines produced 9,435 oz., 3,693 oz. and 2,287 oz., respectively.

The overall increase is due to higher recoveries at Cerro Mojon and the reopening of Bonanza, which had been closed in the second quarter.

At Santa Rosa, gold production during July and August averaged 5,000 oz. per month but dropped significantly in September as a result of excessive rain. With the subsequent reintroduction of cyanide to the heaps, pregnant solution grades are now on the rise and production levels are expected to be back to budget levels by year-end.

Apart from heavier-than-usual rainfall, Santa Rosa and Panama as a whole were relatively unscathed by late October’s hurricane.

At Cerro Mojon, leaching characteristics are improving as modifications are made to the agglomeration formulation. A new jaw crusher has been installed and final commissioning is expected in the coming weeks.

For the nine months ended Sept. 30, 1998, Greenstone earned US$691,000 (or 1 cents per share), compared with a net loss of US$1.1 million (2 cents per share) in the corresponding period last year. Revenue of US$27.1 million was up from the US$15 million reported a year ago, owing to increased production. The average realized gold price during the 9-month period was US$339 per oz. Cash flow, before changes in working capital and long-term assets, improved to US$4.6 million (7 cents per share), compared with US$987,000 (2 cents per share) in 1997.

Greenstone states that in response to “unsolicited expressions of interest” by several mining companies, it has retained Nesbitt Burns to assist in “identifying and evaluating alternatives to enhance shareholder value.”