Polar Star files technical report on Chepica in Chile

A year ago cattle grazed at the entrance to Polar Star Mining‘s (PSR-V) Chepica copper-gold mine and a mill from China had yet to be built. The Toronto-based company had just picked the mine for $5.1 million and was starting to get to work on defining a resource.

Since then Polar Star has completed a National Instrument 43-101 compliant resource and the plant is milling limited amounts of exploration and development rock from the deposit’s No. 2 vein.

According to the resource estimate, Chepica’s No. 1 vein has measured and indicated resources of 401,000 tonnes grading 2.6 grams gold per tonne, 8.3 grams silver per tonne and 0.48% copper using an uncapped 0.6 gram gold per tonne marginal cut-off grade.

The Chepica plant should allow for processing at the designed capacity of 120 tons per day of sulphide ore, and operating costs of US$8 per ton are in line with the plant’s design and size, the company says.

A resource cut-off of 1.3 grams per tonne of gold was applied based on experience with the Chepica mill and other operations in the area, and the company says it considers that 1.3 grams per tonne is an “appropriate indication of commercial viability.”

The resource calculation was based on 50 of 66 drill holes and 5,299 metres of diamond drilling, together with 17 underground channel samples and two trench samples totalling 92.5 metres in length.

Altogether in Chile, Polar Star has 155,481 hectares (22 properties) including gold, copper-gold and uranium.

In the first quarter, Polar Star posted a net loss of $1.54 million or 4¢ per share, up from a net loss of $349,905 or 4¢ per share in the first quarter of 2008. Of the $1.54 million, about $1.3 million was the result of a costly proxy battle between chief executive Douglas Willock and his board.

Willock was fired in January after he requisitioned for a shareholders’ meeting to overthrow the board. He had already presented a financing opportunity a month earlier that was contingent on executive chairman Stephan G. Roman stepping down. Willock won the proxy contest and was later reinstated.

At presstime Polar Star was trading at 35¢ per share. Over the last year it has traded in a range of 21¢-$1.10 per share.

The Toronto-based company has 59.7 million shares outstanding.