Panamanian project on schedule — Greenstone hikes Santa Rosa

Having announced a 39% increase in minable ore reserves at the Santa Rosa deposit, Greenstone Resources (TSE) is looking forward to the startup of its second Latin American gold mine later this year.

On a visit to Santa Rosa, The Northern Miner learned of results from a recent 2,300-metre reverse circulation drill program and observed that construction and development are nearing completion.

The drill program, coupled with new open-pit designs, has yielded new proven and probable minable reserves of 12.4 million tonnes averaging 1.49 grams gold per tonne containing 18.5 million grams (592,000 oz.). Previous minable reserves, calculated at the time of the feasibility study last October, were 9 million tonnes averaging 1.5 grams.

The exploration potential of the two adjoining concessions also seems encouraging, according to Peter Bojtos, Greenstone president. “We’ve got some pretty good geological evidence that we’ll be around for some time,” he said. The Santa Rosa, Alto de la Mina and Alto de los Sanchez concessions comprise more than 3,500 hectares.

In addition to proven and probable reserves, the project contains possible in-pit mineralization of 10 million tonnes averaging 1.34 grams. When proven, probable and possible reserves are combined, the Santa Rosa project contains more than 31.1 million grams (1 million oz.).

The Santa Rosa operations consist of five deposits that will be mined from two open pits. Initial production will be from the Alto de la Mina pit, with subsequent ore coming from the Santa Rosa pit which hosts the Santa Rosa A, B, C and D deposits. The average waste-to-ore stripping ratio will be 2.4-to-1.

(These grades and tonnages are based on a gold price of US$375 per oz. and cutoff grades of 0.67 and 0.52 grams per tonne for the Alto de la Mina and the Santa Rosa pits, respectively.)

According to chief geologist Michael Johnson, the gold mineralization is hosted in epithermal vein systems associated with north-south-trending extensional fractures. Mineralization is sandwiched between two andesitic units within a porous and permeable pyroclastic unit. The deposits are capped by a zone of silicification and are associated with intense argillic alteration.

At the time of the visit, foundations for the crushing plant were being completed and the first of two heap-leach pads had been constructed. The pads, when completed, will cover 16 hectares and will have a maximum capacity of 20 million tonnes. The pads have been designed to match specifications required by North American heap-leach operations. The first pad has been constructed with a double liner and is underlain by a 0.3-metre-thick layer of compacted clay.

Several 70-metre-deep water wells have also been completed in key locations to monitor groundwater for any potential leaks from the pads. In addition to the pad and foundations, two solution ponds with a total capacity of 12 million gallons and a surge pond with a capacity of 21 million gallons have been completed.

Construction at the mine site is proceeding on schedule and the company expects to pour gold by the end of 1994.

Greenstone has also constructed a water treatment plant near the mine site at a cost of US$440,000. The plant, which was officially opened by Panama’s president-elect, Ernesto Perez Balladares, will provide a year-round supply of potable water for the town of Canazas at a rate of 250 gallons per minute. Before the plant was constructed, the town’s water supply was mostly rationed and, at times, running water was not available.

At Santa Rosa, open-pit mining will be conducted on a contract basis by Brown and Root at a cost of about US$1 per tonne. Material will be mined using front-end loaders and 85-ton trucks. Ore will then be delivered by the contractor to Greenstone at which point Greenstone will complete the crushing, heap leaching and processing of the ore.

Heap leaching is expected to begin later this quarter, with ultimate gold recoveries projected at 73%. At full capacity in 1996, the project is expected to produce 60,000 oz. annually with cash production costs of about US$220 per oz. for the first eight years, after which time costs are expected to drop to below US$200 per oz.

Power for the project will be supplied by three diesel generators with a capacity of 3.3 MW.

Total capital costs for the project are estimated to be US$12 million. To raise the funds needed for the development, Greenstone tapped various sources of capital. Most recently, it signed a letter of intent with Repadre Capital (TSE), whereby Greenstone will receive US$4.3 million in exchange for granting Repadre a 5% net smelter royalty on production from the Santa Rosa project.

The royalty will be paid on production from the Santa Rosa and Alta de la Mina exploitation concessions, as well as the adjacent Alto de los Sanchez exploration concession.

Greenstone recently sold $10 million worth of common and preferred shares to an American-based gold fund and a 12.3% equity interest in its newly formed Colombian subsidiary to a Colombian government agency.

Greenstone, through the Colombian subsidiary, operates the Oronorte gold mine which has a mineral resource of 780,000 tonnes averaging 11.32 grams. The company also has properties in neighboring Honduras and Nicaragua.