Meridian boosts reserves at El Peon

Reno, Nev.-based Meridian Gold (MDG-N) reports a 38% increase in gold reserves at the newly opened El Peon mine in northern Chile.

The reserve figure now stands at 1.2 million oz. gold following drilling of the high-grade Quebrada Colorada vein. The vein contains 370,000 tonnes grading 25.2 grams gold and 384.5 grams silver per tonne, equivalent to 296,000 oz. gold and 4.5 million oz. silver.

The main vein, Quebrada Orito, contains 3.46 million tonnes averaging 7.2 grams gold and 106 grams silver, or 803,000 oz. gold and 11.75 million oz. silver.

For the Cerro Martillo vein, Meridian reports lower-grade reserves of 710,000 tonnes grading 2.6 grams gold and 84 grams silver per tonne. Stockpiles at the combined open-pit/underground operation consist of 250,000 tonnes of 9.5 grams gold and 138 grams silver per tonne. The reserves were calculated using a gold price of US$300 per oz.

In the resource category, Quebrada Colorada contains 1.2 million tonnes averaging 19 grams gold and 327 grams silver, equivalent to 713,000 oz. gold and 12.2 million oz. silver.

January marked the beginning of commercial production at El Peon. During the first month of production, the mine contributed 17,500 oz. gold at a cash operating cost of US$75 per oz.

In 2000, Meridian expects to ramp up production by blending stockpiled ore with increased proportions of higher-grade material from Quebrada Colorada. In January, the mill reached full capacity, processing 62,800 tonnes (or 2,000 tonnes per day). Headgrades averaged 9.3 grams gold, though the company expects that figure to rise during the ramp-up period. Metal recoveries stand at 93% for gold and 88% for silver.

Overall, Meridian slightly increased proven and probable reserves to 1.7 million oz. gold and 19.3 million oz. silver in 1999. Additions at El Peon wiped out depletion at the Beartrack mine in Idaho, where reserves fell to 45,000 oz. gold in 970,000 tonnes grading 1.6 grams per tonne. The company expects to close Beartrack this year.

Reserves at Meridian’s 30%-held Jerritt Canyon mine, in northern Nevada, were up 5% to 456,000 oz. in 1.76 million tonnes at 8.1 grams per tonne.

Jerritt Canyon, operated by a subsidiary of AngloGold (AU-N), also contains a mineralized resource totalling 1.1 million oz. (4.8 million tonnes at 7.4 grams per tonne) for Meridian’s account.