Metallica breaks ground at Cerro San Pedro (February 20, 2004)

Metallica Resources (MR-T) has begun building its Cerro San Pedro heap-leach gold-silver project in central Mexico.

The company plans to begin leaching operations in September, with the recovery plant slated for completion in October, followed by the first gold pour in November. Construction of the mine and processing facility carries an estimated price tag of US$28.2 million. Another US$98 million is required to fund contract mining.

Annual production is pegged at 90,500 oz. gold and 2.1 million oz. silver over eight years. Total cast costs are projected at US$215 per oz. The net present value is US$36 million, based on a discount rate of 5%, a gold price of US$350 per oz., and a silver price of US$5 per oz. The internal rate of return is 23.6%.

Cerro San Pedro is home proven and probable reserves totalling 61.1 million tonnes grading 0.59 gram gold and 24 grams silver per tonne, based on a gold price of US$325 per oz. and a silver price of US$4.62 per oz.

Washington Group International (WGII-Q) will provide site development services and contract mining for the project; The Industrial Company of Colorado will handle procurement and construction management.

Glamis Gold retains a net return royalty on all production. The royalty varies from 0.5% to 2%, rising at US$25 increments in a range of gold prices starting at US$350-375 per oz.