Vancouver — The acquisition of the La Victoria open-pit mine in Venezuela helped to keep Crystallex International (KRY-T) in the black during the second quarter of 2001.
The company earned $464,814, or 1 per share, in the three months ended June 30, compared with $633,341, or 1 per share, in the corresponding period of 2000. Revenues surged to $13.7 million from $8.9 million in the year-ago period.
Gold production rose 48% to 27,358 oz. in the quarter, up from 18,475 oz. Cash flow from operations stayed flat at $800,000. The San Gregorio mine in Uruguay contributed 16,358 oz. during the quarter. The new La Victoria operation, which includes the Tomi mine, added 11,000 oz. to the junior’s bottom line.
“Crystallex has produced increased revenues and profits over 10 consecutive quarters in a soft gold market,” says Marc Oppenheimer, the company’s CEO. “Our strategy of internal development and acquisition has placed the company in an excellent position for continued growth.”
Driving the revenue surge was the start of mining at La Victoria on the newly acquired Lo Increible property, which Crystallex took control of in February through a US$12-million share swap deal with El Callao Mining.
El Callao’s main asset was the Lo Increible gold property, which lies adjacent to Crystallex’s Revemin mill.
Located in southeastern Venezuela, La Victoria is one of six gold deposits on the property. Last year, El Callao moved a step closer to developing the 40-sq.-km property with the completion of geostatistical drilling of open-pit reserves.
Prefeasibility work arrived at a diluted open-pit reserve of 11.4 million tonnes averaging 3.14 grams gold per tonne, or 1.1 million contained ounces. The waste-to-ore stripping ratio has been calculated at 6.74-to-1. The reserve was based on data culled from 268 holes drilled between 1994 and 1997.
The La Victoria and La Cruz deposits account for 780,000 oz., or 71%, of the recoverable gold.
Indicated and inferred resources from all six deposits — La Victoria, La Cruz, El Tapon, La Sofia, La Loca and El Extranjero — total 24.1 million tonnes grading 3.28 grams gold. The estimate is equivalent to a contained resource of 2.5 million oz. All the deposits remain open at depth and along strike in at least one direction.
The prefeasibility study recommended a 3,000-tonne-per-day operation over the first six years of the mine’s 11-year life. Ore will be processed in a conventional carbon-in-leach circuit with gold recoveries averaging 92%. El Callao estimates that the operation will produce 97,000 oz. gold per year at an average operating cost of US$167 per oz. The total cost, including capital, is pegged at US$235 per oz.
The project carries a pretax internal rate of return of 26.1% at US$325 per oz. gold and 19.9% at US$300 per oz.
Due to weak gold prices, El Callao was unable to raise the financing to advance the project through a bankable feasibility study.
Crystallex is using the ore to supplement feed for its nearby Tomi mine. Both ores are being treated at the Revemin mill. The company has already studied the possibility of expanding the Revemin mill to 3,000 tonnes per day from its current 1,150 tonnes.
Crystallex holds a 51% stake in the central property that hosts the resource and a 70% interest in the surrounding properties. The junior also has the right to up its stake in the central portion to 70%. The remaining 49% and 70% belong to the company’s Venezuelan partners.
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