LATIN AMERICA — Consolidated Nevada irons out wrinkles in Mexico — Mines acquired in 1996 merger experience various setbacks

Four mines recently acquired in Mexico by Consolidated Nevada Goldfields (KNVCF-Q) are yielding mixed results.

The Denver-based company took on the mines following a merger, in October 1996, with Mexican-based Grupo Real del Monte.

* The largest of the operations is the Pachuca silver-gold mine, northeast of Mexico City, which has been producing for 465 years.

Improvements to the underground mine have been slower than expected, following the introduction of shrinkage stoping and the installation of rubber-Tired equipment and underground haulage ways.

In recent months, however, milling rates have periodically exceeded 1,300 tonnes per day, and production should increase throughout the year.

In fiscal 1996, the mine produced 1.6 million oz. silver, 7,100 oz. gold, 223 tons of zinc and 29 tons of lead from its 3,000-Ton-per-day

flotation-cyanidation mill.

Pachuca owns and operates the only precious metals refinery in Mexico, which is situated on site.

* Operations at the Bazatan copper mine, near Acapulco, have been complicated by smelting problems at the facility in San Luis Potos state. On the up side, underground diamond drilling has outlined an additional inferred resource of 507,000 tons grading 1.5% copper, and analysis of historical production date has outlined a potentially high-grade oreshoot in the Arroyo area. This oreshoot is the target of ongoing, underlying exploration.

* At the Magistral del Oro gold tailings project, Consolidated Nevada has entered the second phase of a metallurgical testing program. So far, the operation has experienced difficulties with excessive copper absorption and delays in gold leaching. Results from the second phase are expected by June.

The project processes tailings from a mine which produced roughly 700,000 oz.

gold during its 100-year life. The tailings are subjected to heap leaching * High overhead costs and unavailability of equipment have prevented the Barita de Sonora barite mine from meeting its budgetary targets. The company has responded by initiating maintenance programs and restructuring its staff.

The barite is mined by conventional open-pit methods and sold to PEMEX, Mexico’s national petroleum company.

* Meanwhile, the Nixon Fork gold mine in Alaska is experiencing problems with equipment availability. Nonetheless, the underground operation has recently been performing satisfactorily, and reserves are being replaced faster than they are being depleted.

On the financial side, the company has completed a US$4-million line of credit and continues to restructure banking debts in Mexico and the U.S.