Rio Narcea production hits high

Rio Narcea Gold Mines (RNG-T) produced a record 124,363 oz. of gold at an estimated cash cost of US$190 per oz. from its El Valle operation in Spain during 2001, and the company says it expects to build on that with 2002 production forecast at about 150,000 oz.

During 2001, the plant at El Valle ran through 649,142 tonnes of ore with an average head grade of 6.5 grams gold per tonne. A year earlier, the plant processed 723,588 tonnes running 4.6 grams to produce 97,016 oz. gold . Recovery rates between the two periods climbed to 91.2% from 89.7%.

The company ended the yet on a high note with record fourth-quarter production of 34,543 ounces of gold, nearly 18% better than the year-earlier period.

During June and July, El Valle suffered a hiccough encountering complex ore with higher than normal levels of impurities in the Boinas East pit, which forced recovery rates down and processing costs for the treatment of the copper concentrates up. About 100,000 tonnes of ore running 7 to 8 grams gold and up to 3% copper was stockpiled and will be blended with lower grade ore for processing in the first half of 2002.

Mining in the Boinas East pit was completed on schedule last week. During 2001, Rio sank 693 meters of development and exploration ramp, and a ventilation raise below the Boinas East pit in preparation for an underground drilling campaign in 2002.

Waste removal at the El Valle pit is continuing at an accelerated pace in preparation for the second mining phase of the main portion of the high-grade Charnela zone, which is slated to begin to in March 2002.

At the Carls Mine, about 112,000 tonnes of ore averaging 4.8 grams gold were mined and transported to El Vale from the Carls North pit.

With Charnela expected to come online in March, Rio expects production in 2002 to hit 150,000 oz. at a cash cost of US$160 per oz. Capital expenditures for the year are pegged at US$7.5 million mainly for exploration and underground development at El Valle, and completion of the feasibility study at the Aguablanca nickel-copper-platinum-group-metals project in the Extremadura province of southwestern Spain.

The study at Aguablanca is expected to wrap up in June with a production decision to follow shortly thereafter. About two thirds of a 10,000-metre infill core drilling program has been completed closing the hole spacing to 25 metres. If approved, Rio plans to fast-track the project with an eye toward beginning production as soon as mid-2003.

Aguablanca hosts a resource of 30 million tonnes grading 0.7% nickel, 0.5% copper, 0.3 gram platinum, 0.3 gram palladium and 0.3 gram gold. A prefeasibility study on a 17-million-tonne deposit grading 0.73% nickel, 0.51% copper and 0.6 gram PGM at a 3.5-to-1 strip indicates a net present value, discounted at 10%, of US$59 million at roughly current metal prices. Capital costs are pegged at US$60 million. The deposit is amenable to open-pit mining.

The company also holds more than 6,200 sq. km covering a series of gabbro intrusions along a belt that extends through southern Spain and Portugal. Many of the intrusions are geologically similar to Aguablanca with coincident geophysical and soil anomalies.

Meanwhile, in the boardroom, an investment group, which includes Rio’s chairman Chris von Christierson, recently purchased 12.8 million of the company’s shares to take a 19.8% equity stake in the company. The shares were purchased from Hullas del Conto Cortes and Lignitos de Meirama at 65 apiece. The two companies formerly held 19.9% and 14.9%, respectively.

Concurrently, Fernando Chinchurreta Bollain, Fernando Herranz Villafruela and John Hough have resigned as directors. The resignations leave the board with eight members: von Christierson; Alberto Lavandeira; Stanley Beck; Anthony Bloom; Elias Velasco Garcia; John Hick; Jacobo Valdes Pedrosa; and Hugh Synder.