Reserves up 27% at Andacollo

A 27% increase in overall minable reserves was reported by Dayton Mining (TSE) for its 100% owned Andacollo gold project in central Chile.

That’s good news for Dayton, a technically oriented junior which is currently arranging financing alternatives for its proposed open pit, heap leach operation.

Andacollo is now reported to contain minable reserves totalling 30.4 million tons grading 0.034 oz. gold per ton. This includes 28.29 million tons grading 0.034 oz. gold classed as proven and probable.

Dayton said the updated minable reserve is a result of incorporating drill results from the west extension of the Tres Perlas pit, and from increasing one of the pit walls to an overall slope of 48 degrees following a recent geotechnical study.

The property also has a considerable mineral inventory in other gold-bearing manto deposits which will require infill drilling before being upgraded to the minable category.

As for metallurgical recoveries, these are expected to average 73% based on extensive metallurgical test work on the free-milling ores.

Unlike some Chilean gold mines that are located at high elevations, Andacollo is at an elevation of about 3,300 ft. Electricity and water are available on the road-accessible property, about 35 miles from the coastal cities of La Serena and Coquimbo, and about 300 miles north of Santiago.

These factors contribute to a low capital cost, estimated earlier this year at US$31.7 million (which includes working capital) in a positive feasibility study by Bechtel Corp.

Dayton President Wayne McClay reports that detailed mine planning subsequent to the study resulted in an increase in projected gold production to 126,000 oz. in the first full year of operation, at an operating cost of US$146 per oz.

Over the life of the mine, annual gold production is expected to average 110,000 oz. at an operating cost of US$182 per oz.

Project financing negotiations with banking groups are described as “well advanced,” but Dayton said it will study proposals from several interested major mining companies before making a final financing decision.