Manhattan about to reach producer status as Mexican mine gears up

The next two months will mark a transition for Manhattan Minerals (TSE) as it makes the leap from junior exploration company to junior gold producer.

Robert Willis, chairman and chief executive officer, is confident the Moris gold-silver project will be pouring gold by the end of January.

On a recent visit to the mine site, The Northern Miner observed that construction was well-advanced, and Willis projects the capital cost will be about US$9 million, including US$1 million in working capital.

The project lies in the eastern foothills of the Rio Santa Maria Valley, near the town of Moris in the Mexican state of Chihuahua. A farming community, Moris has a population of little more than 1,000.

The open-pit, heap-leach operation is expected to yield 28,000-30,000 oz. gold and 100,000 oz. silver per year over an 8-year mine life. The projected cash cost is US$190-195 per oz.

Minable reserves are estimated at 4.7 million tons grading 0.062 oz. gold and 0.3 oz. silver per ton. The life-of-mine stripping ratio averages 1.3-to-1, with the majority of the waste to be removed in the later years of mine production. The total geological reserve is calculated at 6.7 million tons averaging 0.058 oz. gold and 0.3 oz. silver.

Accessible by road, Moris lies 174 miles west of the provincial capital of Chihuahua at an elevation of 2,800 ft. An upgraded airstrip at the mine site allows access by small planes.

In February 1993, Manhattan’s wholly owned Mexican subsidiary acquired an option for a 100% interest in the Moris project from fluorite producer Minera Las Cuevas. Willis explained that Las Cuevas decided to concentrate on fluorite mining rather than diversify into heap leaching of gold ores.

Willis was attracted to the project by its grade, low stripping ratio and low cash operating cost. He points to a US$7.5-million line of credit arranged in September with N.M. Rothschild & Sons as the first stand-alone project financing facility to be completed by a foreign junior resource company in Mexico.

The equivalent of up to US$5 million in ounces of gold is being used to fund development and capital cost requirements at Moris. The gold will be repaid from production. Also arranged is a forward-selling program with Rothschild, whereby the Moris mine’s operating costs will be hedged at prices exceeding US$400 per oz.

Manhattan will own the Moris property fully once commercial production is achieved. Las Cuevas retains a 5% net smelter return royalty and a 20% net profit interest, once Manhattan recoups all exploration, development and capital costs.

Las Cuevas spent $3.5 million on exploration at Moris, identifying three contiguous oxide deposits: El Creston, San Luis and Eureka. Work consisted of 150 diamond and reverse-circulation drill holes, as well as 10 hillside adits totalling about 820 ft. Manhattan followed up with an additional 30 infill holes to confirm Las Cuevas’ results.

Pointing to the three outcropping mineralized areas, Willis explained that they are actually one deposit, which has been eroded and cut by several valleys. He described the deposit as a mineralized quartz-carbonate vein and associated breccia system within a north-south-trending, westerly dipping fault structure that is up to 120 ft. wide and 4,300 ft. long. The system extends to the north and south for several miles.

The fault occurs as a contact between Tertiary-age rhyolite-andesite volcanics and Cretaceous limestone-conglomerate sediments.

The mining plan calls for the ore to be fed into a 3-stage crushing system, then amalgamated and stacked in three 26-ft. lifts on the leach pad area. The leached cyanide-gold solution is collected in a pregnant solution pond, from where it is pumped through a carbon adsorption process plant, at a maximum rate of 1,000 gallons per minute.

The gold and silver are adsorbed onto activated carbon and then stripped from the loaded carbon and recovered by electrowinning. Gold-silver dore bars will be poured on-site. Recoveries are projected at 75% for gold and 50% for silver over a 60-day leach period.

Manhattan hopes to begin crushing by early January. Although plans call for the construction of 14 leach pads for the life of the mine, only three of the five pads currently being built are necessary for the first two years of operation. The three pads, each measuring 1,300 ft. in length and 148-213 ft. wide, are expected to be lined by Christmastime.

Excavation work, which is continuing in the area of the pregnant solution pond, is to be completed by the same time. While the ponds will be used to hold only about 3 million gallons, they are being built for a capacity of 8 million.

Instead of netting, which is used to cover the solution ponds, Hans Geertsema, vice-president of mining operations, intends to use lightweight plastic balls. The objects are 6 inches in diameter and similar in composition to ping-pong balls. Their function is twofold: to cover the surface area (thereby blocking access to animals) and form a barrier to evaporation.

For the first three years, mining will be carried out under contract. Conventional, front-end loaders and haul trucks will take ore from the Talud area, which lies at the base of the Creston deposit, and haul it to the crusher feeder 1 km away.

The Talud comprises ore material that, over geological time, broke off from the main deposit; the resource is estimated at 320,000 tons grading 0.082 oz. gold, with no waste. Moreover, Willis believes the tonnage figure will probably be closer to 500,000, since a high-grade hole was discarded when reserve calculations were made.

While the initial feasibility study suggested gold recoveries of 75% over a 60-day period for material crushed between minus 1/8 inch and minus 1/4 inch, recent metallurgical testwork indicates a recovery of 66% in just seven days for material crushed to minus 1 inch. Based on these results, Manhattan has decided to process the Talud ore using only two stages of the crushing system. A final gold recovery is now expected to exceed 80%.

The Talud area contains enough ore to sustain operations for seven to eight months, allowing sufficient time to finish roadwork and predevelopment of the Creston pit.

Manhattan intends initially to operate the mine at a 2,200-ton-per-day throughput, but Willis said the company can increase this by as much as 50% at no additional capital cost.

Power is provided by three diesel generators on-site, and water is obtained by utilizing, at any time, two of seven wells drilled along the nearby Santa Maria River.

Manhattan believes significant potential exists to increase the reserve base at Moris. Exploration work along trend to the north is focusing on the Eureka and a new area of mineralization, called the Mexicana. Preliminary drilling in February will follow up soil sampling and trenching. The company also expects to carry out further exploration work at its Montosa project, 60 miles south of Moris. The target is an extensive porphyry system with associated, gold-bearing, breccia zones. Manhattan has 12.4 million shares outstanding, or 16.2 million fully diluted.