Westfield Minerals has 35% interest in Chilean heap leach mine

Toronto-based Westfield Minerals, is expanding its exploration and mining activities to include a 35% interest in a large Chilean heap leach mine.

Nearly four months after negotiations were first announced, Westfield has reached an agreement with Shell Chile S.A. and Citibank, N.A. to develop the Choquelimpie gold/ silver deposit in Northern Chile.

Located 15,200 ft above sea level in Parinacota (close to the Bolivian border), the mine was operating at a rate of 800 tpd before the agreement. It is accessible by road to the Chilean port of Arica.

Westfield says project development and mine operations will be managed through a separate company — Compania Minera Altiplano — in which Westfield’s Chilean subsidiaries (45.45%) and Shell Chile (54.55%) will be the shareholders. Altiplano will have a 77% interest in the mining entity and the remaining 23% will be held by Citibank, N.A.

Westfield says gold/silver reserves, including oxide and sulphide mineralization are estimated at 12,925,000 tons grading 0.06 oz gold per ton and 1.75 oz silver.

After mining 6,887,100 tons (at cost $13(US) per ton) of oxide ores grading 0.065 oz gold and 2.54 oz silver at an annual rate of one million tons, the gold/silver will be extracted using heap leach methods.

Beginning around mid-1988, the mine will produce 50,000 oz gold equivalent in the first year, before increasing that rate to 100,000 oz by the end of the third production year. Stripping ratios in the open pit are 1:1 and recoveries are expected to be 72% gold and 35% silver. Based on current reserves, oxide ores are sufficient for a 6-year lifespan, but Westfield says results from development drilling this year, indicate that outlined reserves in the vicinity could support a 10-year mine life.

But before production can begin, the company must complete a 9-month construction program. To expand the current operation, the partners will build a plant and upgrade the access road. Westfield says work will begin at the end of this month.

Since the mining concessions which form the Choquelimpie Group, cover an area of approximately 34 sq m, Westfield says the chances of adding to current reserves are excellent.

“The Choquelimpie Hill zone has not been fully delineated as drilling so far, shows that it has not yet been closed off to the southwest or northeast,” said J. J. Royall, Westfield’s general manager exploration and development.

To finance its portion of capital costs, estimated at $42 million, and its other exploration and mining activities, Westfield plans to raise $20(C) million. An initial $5.5-million financing has been provided by Westfield’s major shareholder and associate companies, Northgate Exploration and Whim Creek Consolidated.

By exercising its option on one million Westfield common shares, at $2.50 per share, Northgate has provided $2.5 million. In return, Norhtgate has an option on an additional 320,000 Westfield common shares at $4.50 per share over a 2-year period ending Sept 30, 1989.

Under another agreement with Whim Creek which has contributed $3 million to Westfield’s treasury, the company has granted Whim Creek an option on 750,000 common shares at $4.50. This option expires on Sept 30, 1989.

According to Mr Royall, Westfield expects a mine payback within two years at a gold price of $415(US) but based on current gold prices, payback could occur within 19 months.