The company says the pace should continue through the second quarter, during which time 55,000 oz. are expected to be poured.
The improved output is a result of the high-grade Charnela zone, where mining began in March. Grades have exceeded expectations, and the blending of Charnela’s ore with other lower-grade ore has increased plant feed grades to 13 grams gold per tonne. Plant recovery has averaged more than 96%.
So far this year, Rio has produced 67,133 oz. gold. The company now expects full-year production to approach 155,000 oz. at cash costs of less than US$150 per oz., compared with the original projection of 150,000 oz. at US$160.
The new 2002 production estimate for El Valle eclipses last year’s record of 124,363 oz. gold at a cash cost of US$190 per oz. In 2001, the plant at El Valle processed 649,142 tonnes of ore with an average head grade of 6.5 grams gold per tonne. The company ended 2001 on a high note with record fourth-quarter production of 34,543 oz., nearly 18% more than a year earlier.
In 2000, 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%.
Rio Narcea finished off the first three months of 2002 with a net loss of US$1.3 million (or 2 per share), compared with a year-earlier loss of US$841,000 (1.3 per share). The expected drop reflects the fact that the recent quarter’s production was derived largely from stockpiled material from Boinas East whereas year-earlier production came from initial mining of the Charnela zone. Production totalled 25,117 oz., well off the 34,495 oz. produced in the year-ago period. Cash cost climbed US$20 per oz., to US$194 per oz.
Revenue between the two periods slipped to US$6.7 million from US$9 million. Cash flow from operations nearly doubled to US$1.8 million.
On the exploration front, Rio had drilled 746 metres in 10 holes aimed below the Boinas East pit at El Valle. Four of the first seven holes returned potentially minable grades and thicknesses. One hole cut both oxidized breccia and black skarn, with 16.3 metres averaging 6.4 grams gold per tonne. Pending the remaining results, Rio plans a 10,000-metre drill program in the El Valle area aimed at upgrading resources into reserves. Drilling will also target other areas in the Rio Narcea gold belt.
The company wrapped up an infill drill program on the Aguablanca nickel/copper/platinum-group-metals project in southwestern Spain. Fourteen holes totalling 3,637 metres closed the drill spacing to 25 metres in both the South and North zones down to a vertical depth of about 200 metres. Drilling also began below the planned open pit. Ore reserve and updated resource estimates are being prepared for the feasibility study, which is slated for completion in early June.
At last report, Aguablanca’s resources stood at 30 million tonnes grading 0.7% nickel and 0.5% copper, plus 0.3 gram platinum, 0.3 gram palladium and 0.3 gram gold per tonne.
At the end of March, Rio had US$3.2 million in cash.
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