Manhattan banks on Tambo Grande

After spending US$10.5 million on exploration at its Tambo Grande project in Peru and taking a US$8-million writedown of its Moris gold mine in Mexico, Manhattan Minerals (MAN-T) was left with a loss of US$12.5 million (or US46 per share) for the year ended Dec. 31, 1999.

Indeed, the Vancouver-based junior saw its yearly loss nearly triple from US$4.5 million (US19 per share) in 1998.

However, the company was able to point to a success on several fronts, particularly at Tambo Grande. Highlights include the discovery of the TG-1 oxide gold deposit, an expansion of the TG-1 sulphide deposit, and the recent discovery of a new sulphide body at the B-5 geophysical anomaly.

The TG-1 oxide cap contains an inferred resource of 8 million tonnes grading 5.2 grams gold and 48 grams silver per tonne, equivalent to 1.3 million oz. gold and 12.4 million oz. silver. Further drilling on the underlying TG-1 sulphides expanded the resource to an inferred 64.2 million tonnes grading 1.7% copper and 1.4% zinc, plus 0.7 gram gold and 31 grams silver, based on a cutoff grade of 1% copper-equivalent.

TG-3 lies about 500 metres south of TG-1 and consists of two distinct mounds (or lobes) of mineralization. The northern lobe is richer in zinc and contains 20 million tonnes grading 0.9% copper, 2.7% zinc, 0.8 gram gold and 35 grams silver, based on a cutoff grade of 1% copper-equivalent. The copper-enriched southern lobe hosts 48 million tonnes grading 1.1% copper, 1.1% zinc, 0.9 gram gold and 25 grams silver at a cutoff of 1% copper-equivalent.

Earlier this year, a drill hole testing the B-5 geophysical gravity anomaly, 11 km south of the TG-1 and TG-3 deposits, intersected 142 metres of massive sulphides averaging 0.5% copper and 0.9% zinc, plus 0.6 gram gold and 17 grams silver per tonne, starting at a depth of 436 metres. A higher-grade, 23-metre section ran 2% copper, 3.5% zinc, 1 gram gold and 56 grams silver between a depth of 464 and 487 metres.

Exploration drilling continues at the B-5 target; infill drilling, at the TG-1 deposit. The company expects a feasibility study on TG-1 to be completed early in 2001.

Manhattan can earn a 75% stake in Tambo Grande, which consists of 10 concessions comprising 100 sq. km. The company also has a 100% interest in the Lancones concessions (737 sq. km) and an option to earn up to a 100% interest in the Papayo joint-venture lands (32 sq. km). The Lacones land package adjoins Tambo Grande, mainly to the south and partially to the east and north, whereas the Papayo concessions are to the south. Manhattan can earn an initial 51% interest in Papayo by spending $5 million on exploration over five years and paying $250,000.

At the Morris mine, in Mexico’s Chihuahua state, gold production hit 13,041 oz. gold during 1999, compared with 21,100 oz. in 1998. The company suspended mining operations in April 1999 because of severe drought and the low gold price. Leaching of the pads continued throughout the remainder of the year and should be concluded in the first quarter of 2000. Manhattan is considering putting the mine up for sale, having written down the non-core asset by US$3.7 million in 1998 and US$7.97 million last year. The mine hosts proven and probable reserves of 3.4 million tonnes averaging 1.73 grams gold. The calculation is based on a gold price of US$300 per oz., a silver price of US$5 per oz., a recovery rate of 65%, and a cutoff grade of 0.74 gram gold per tonne.

Before the latest writedown on the Moris mine, Manhattan recorded a loss of US$4.57 million (US17 per share) in 1999, compared with a loss of US$820,000 (US3 per share) in 1998. At the end of 1999, Manhattan had working capital of US$14.5 million.