Minefinders arranges financing for Dolores

Minefinders (MFL-T) has secured commitments for a non-brokered private placement of 1.8 million units priced at 90 cents per unit. Proceeds are expected to total $1.6 million.

Each unit will consist of one share and half a warrant. A whole warrant will allow the holder to buy an additional share at $1.25 in year one or $1.50 in year two.

Proceeds will be used to fund further drilling on the company’s 100%-owned Dolores gold-silver project in Chihuahua state, Mexico. Minefinders recently revised its resource estimate for Dolores, based on a new geological interpretation that focused on the structural controls of the mineralization. At a cutoff of 1 gram gold-equivalent, the resource is estimated at 35.2 million tonnes grading 1.4 grams gold and 84.46 grams silver per tonne, equivalent to 1.6 million contained ounces gold and 95.6 million contained ounces silver. Minefinders used a capping factor of 30 grams gold and 100 grams silver.

If a 0.3-gram gold-equivalent cutoff is used, the total resource rises to 88.8 million tonnes grading 0.75 gram gold and 42.76 grams silver, equal to 2.1 million oz. gold and 122 million oz. silver.

An initial scoping study by Mineral Resource Development Inc. in late 1998 concluded there was economic potential for an open-pit resource of 47 million tonnes grading 0.79 gram gold and 48 grams silver (or 1.2 million oz. gold and 72.7 million oz. silver) at a stripping ratio of 2.9-to-1. The resource estimate was based on a 0.4-gram gold-equivalent cutoff, with the higher-grade material capped at 10.2 grams gold and 447 grams silver.

The study stated that the project could be placed into production at a capital cost of US$80.5 million and produce an annual average of 71,226 oz. gold and 3.3 million oz. silver, or 125,244 oz. gold-equivalent, over a mine life of 14 years at a cash cost of US$177 per oz. gold-equivalent. The project showed an internal rate-of-return of 11.4%, using prices of US$300 per oz. gold and US$5.50 per oz. silver.

Ore would be mined from two separate starter pits at a daily rate of 10,000 tonnes (3.6 million tonnes annually) and hauled to a primary crusher. The higher-grade material would be processed separately and routed to a 5,000-tonne-per-day mill and carbon-in-leach circuit utilizing a Merrill-Crowe recovery process. This material would then be thickened and agglomerated with the lower-grade ore and placed on leach pads.

Metallurgical work to date indicates recoveries exceeding 89% for gold and 57% for silver, based on the extrapolation of results from column leaching of pulp-agglomerated material, which simulate the processing plan. Recoveries from the higher-grade ore, prior to agglomeration and heap leaching, range from 82% to 89% for gold and from 43% to 51% for silver in a 12-hour pre-leach cycle. The accelerated mill recovery will help generate early cash flow as 75% of the contained metal occurs in the higher-grade portion of the deposit.