Vancouver – Nevada Pacific Gold (NPG-V) has begun commercial gold production at its Magistral heap leach operation in Sinoloa state in northwestern Mexico.The company forecasts output of 30,000 oz. gold at a cash cost of US$250 an oz. for its fiscal year ending June 30, 2005. The silver production is being stockpiled.
Nevada Pacific purchased the operating Magistral mine for US$7 million plus 2 million of its shares last February from Queenstake Resources (QRL-T).
Until January 1, gold sales were recorded as a reduction in operating costs but now that commercial production has started, the company’s gold sales will be treated as revenue and operating costs will be expensed.
The mine has a seven-year life and as of July 2004, was projected to produce 30,000 to 50,000 oz. a year. An engineering study looked at increasing the mining rate from 4.7 million tonnes (in 2003) to 7 million tonnes.
The Magistral property is underlain by lower Tertiary andesites comprising pyroclastic flows, tuffs and agglomerates. Epithermal, low-sulphidation-style gold mineralization occurs in four mineralized zones comprising silicified stockwork and breccia zones within the volcanics.
These zones, named San Rafael Samaniego Hill, Sagrado Corazon, and Lupita, along with the mill tailings were found to contain 616,000 oz. within 11,822,000 tonnes of material grading 1.62 grams gold per tonne, at a cutoff of 0.42 gram gold.
The company also holds the rights to 400 sq. km surrounding the mine which is situated some 100 km northwest of Culiacan, the state capital. Exploration and development are ongoing on the property. The potential for resource expansion is greatest around existing mining operations.
Interestingly, recent exploration found a mineralized porphyry system some 2 km south of the company’s current mining operations. The Cerritos porphyry system covers 1 sq. km and is near the intersection of three structural trends. Trenching turned up 62 metres grading 0.79 gram gold, 24.7 grams silver and 0.19% copper.
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