LATIN AMERICA SPECIAL — Growing mineral exploration activity

The Central American nation of Costa Rica is host to a growing number of exploration companies.

The country’s placer gold deposits have been exploited from the earliest days of the Spanish colonial regime to the present but it wasn’t until the late 1800s that hardrock gold mining came into its own.

Besides its known gold deposits, the country’s mineral potential includes bauxite, coal, oil, sulphur and base metals.

Costa Rica’s gold belt parallels the spine of the cordillera on its Pacific slope. It is about 65 miles long and 15 miles wide. The capital city, San Jose, is located at the mineralized belt’s southeastern extremity. About 60 gold prospects and old workings have been identified.

Ariel Resources (VSE) has been operating underground mines on the classic, steeply-dipping, gold-quartz veins and stockworks of the region since the late 1980s. The Tres Hermandos is one such vein system and has produced more than one million oz. gold from intermittent operations since 1892. Ariel acquired the Tres Hermandos mine in 1990, built a 200-ton-per-day (tpd) carbon-in-pulp, cyanide mill and recently increased capacity of mine and mill to 300 tpd. Ore reserves at Jan. 1, 1992, stood at 398,000 tons grading 0.23 oz. gold per ton. Current production approximates 1,000 oz. per month. Ariel recently acquired the contiguous San Martin gold property. Proven and probable underground reserves here are 320,000 tons grading 0.23 oz. In addition, drill-indicated open-pit reserves are estimated at 4.3 million tons grading 0.064 oz. Most of the bulk-minable ore is amenable to heap-leaching. Company officials feel the potential exists for 15-20 million tons of ore on the property.

Adjacent to San Martin, to the east, is the El Recio project of Greenstone Resources (TSE). Drill-indicated reserves are estimated at 254,000 tons grading 0.22 oz. gold. Total mineral inventory is 600,000 tons at about the same grade.

Feasibility studies for El Recio indicate a mixed underground-open pit operation is viable at a production rate of 120 tpd. Greenstone is seeking an outright sale or joint-venture partners to bring the property into production. Capital requirements are US$2.8 million.

Another company, Minera Rayrock (TSE), worked until recently on the Bellavista gold property for a number of years. Reserves are estimated at 14.5 million tons grading 0.05 oz. Company officials state the property needs US$400 per ounce gold to make it a go. In the meantime, exploration surveys are being carried out elsewhere at Bellavista, which is 18 miles southeast of Ariel’s operations.

Minera is also in joint venture with Battle Mountain Gold (NYSE) on a number of grassroots projects.

Other mining companies exploring in Costa Rica include Lyon Lake Mines (ME) and Newmont (NYSE), searching for gold, and Fischer-Watt (NASDAQ), seeking copper-lead-zinc.