LATIN AMERICAN SPECIAL — Production, exploration advance in

Central America continues to attract Canadian mining companies with offers of comparatively relaxed regulation and taxation, along with above-average geological potential.

Countries such as Panama, Nicaragua and Costa Rica have projects either in or near production, while El Salvador and Honduras continue to spark interest among Canadian companies.

Panama

In Panama, Adrian Resources (VSE) holds three concessions: Petaquilla, Belencillo and La Esperanza.

The 1,361-sq.-km Petaquilla concession comprises six separate properties with copper-gold-silver-molybdenum porphyry potential. The ground is owned 52% by Adrian and 48% by Metall Mining (TSE) and more than $6 million has thus far been spent exploring two deposits. Reserves exceed 990 million tonnes, averaging 0.6% copper with gold credits. Adrian recently reported drill results from three of the properties, with the best intersection running 0.01% copper, 3.82 grams gold and 7.3 grams silver per tonne over 45 metres. The companies are awaiting delivery of a prefeasibility study, at which time Teck (TSE) might choose to earn half of Adrian’s interest by providing a final feasibility study and paying 32% of the capital costs. West of Petaquilla, Adrian has optioned the Belencillo concession to Madison Enterprises (VSE), which can earn a half interest by spending $500,000. Adrian will complete a first phase of drilling to test for copper-gold mineralization.

The company has optioned half of La Esperanza, a porphyry copper property, to Silverstone Resources (VSE) in return for a commitment to spend $300,000 on exploration. Here, too, Adrian has reported results from recent holes, with the best intersection averaging 0.24% copper, 0.02 grams gold and 0.8 grams silver over 53.5 metres.

In Panama, Greenstone Resources (TSE) plans to start up the Santa Rosa gold mine later this year. Proven and probable reserves consist of 9 million tonnes averaging 1.5 grams, which will be mined from open pits and heap leached. Full production of 1.9 million grams (60,000 oz.) per year should be reached in 1996. (The company is also exploring for gold on six other concessions in Panama.)

Costa Rica

In Costa Rica, Minera Rayrock (TSE) is completing a final feasibility study of the Bellavista gold property. The deposit contains 12 million tonnes grading 1.71 grams gold and earlier studies indicated this could be mined profitably only if gold reached US$400 an ounce. Nevertheless, after an optimization study, the company decided to proceed with a $1.8-million final study that will include infill drilling.

Also in Costa Rica, Ariel Resources (VSE) has acquired the San Martin gold mine where proven and probable reserves of 290,910 tons average 7.88 grams gold. Ariel is also mining Tres Hermandos, a steeply dipping gold-quartz vein and stockwork system that has produced more than 31.1 million grams (1 million oz.) gold since 1892.

Other companies exploring in Costa Rica include Lyon Lake Mines (ME) and Green Line Business Stores (CDN). Lyon’s Beta Vargas gold concession has a geological reserve of 1.5 million tonnes grading 1.37 grams gold in the probable category and 1 million tonnes averaging 1.47 grams, possible. For its part, Green Line is carrying out infill drilling and production tests on its 2141 claim.

Nicaragua

In 1992, the Nicaraguan government awarded to Greenstone the 120-sq.-km La Libertad gold concession. It contains a small gold mine hosting high-grade quartz veins and stockworks and overall reserves of 8.8 million tonnes averaging 4.11 grams gold. Greenstone is upbeat about its prospects in Nicaragua and hopes to have a 37.5% share in the mine.

Honduras

In Honduras, Breakwater Resources (TSE), through its wholly owned subsidiary, Santa Barbara Mining, operates the Mochito zinc-lead-silver mine. The main deposit has 4.3 million tonnes grading 1.89% lead, 7.92% zinc 0.27% copper and 68.4 grams silver.

At Breakwater’s nearby Nacional deposit, reserves are estimated at 2.1 million tonnes averaging 11.74% zinc, 0.79% lead, 0.15% copper and 82.3 grams silver.

The San Andres gold project in Honduras is also being explored, Greenstone having recently acquired an exclusive option to buy all rights and interests from Fischer-Watt Gold (NASDAQ). At the time of the agreement, Fischer-Watt held a 51% interest in the company that operates the mine; it had also agreed to buy an additional 25.5% interest in the company from Milner Consolidated Silver Mines (ASE). Greenstone is completing 2,500 metres of reverse circulation drilling.

El Salvador

In El Salvador, Commerce Group (NASDAQ) has a 90% interest in the San Sebastian open-pit gold mine. Reserves are 12.2 million tonnes grading 2.98 grams gold and production was scheduled to have started by presstime.