Westmin completes study at Big Missouri, Silbak

Westmin Resources of Vancouver has indicated that production on a major new gold/silver operation near Stewart in northwestern B.C. could begin as early as December 1988.

Following an extensive diamond drilling program at the Silbak Premier and Big Missouri mines, Westmin has delivered feasibility studies to Silbak Premier Mines, Tournigan Mining Explorations and Canacord Resources.

Westmin says the project should produce an annual average of 76,000 oz of gold and 650,000 oz silver during its first five years in operation.

Average gold production costs in that period would be $166(US) per oz and based on a gold price of $400 per oz and $6.50 per oz of silver, payback is expected within 2.6 years.

Joint venture partner Silbak Premier will retain a 50% working interest and participate in the development of the properties where combined reserves stand at 8,198,000 tons grading 0.072 oz gold per ton, 2.03 oz silver and 0.101 oz gold equivalent.

Westmin has earned a 100% interest in the Big Missouri property subject to a 30% net profits carried interest to Tournigan. A total of $3 million in exploration financing has earned Canacord an 18.75% interest in Westmin’s share of both Silbak Premier and Big Missouri.

The likelihood of a production decision is also good news for Vancouver-based Pioneer Metals which has earned a 50% interest in the project thanks to its recent acquisition of Silbak Premier.

After purchasing the Block Group of 1,049,208 Class A shares (formerly owned by a group of investors including Silbak Chairman Henry J. Block and his family) at $4.62 per share through a private placement, Pioneer holds a 41.07% controlling interest in Silbak.

However, Pioneer can increase its interest to 55.80% by exercising a warrant to buy 4.5 million Silback shares. Under the terms of the acquisition, Pioneer President Robert Willis replaces Mr Block who recently resigned as chairman of Silbak Premier Mines.

With adequate financing in place, the partners have agreed to a $4 million pre-development on the Stewart program. Scheduled to begin immediately, it will include site preparation for a mill, road building and initial work on hydroelectric power development.

According to the feasibility study, ore mined from Silback Premier and Big Missouri could be processed in a plant located on the Silback property.

Based on a milling rate of 2,000 tpd, the project would have an estimated capital cost of $76.2 million, including contingencies and hydroelectric power costs. Westmin says average operating costs will be $25.11 per tonne during the mine’s life cycle.

However, the partners will examine the viability of increasing the milling rate to 3,000 tpd and a final production decision will be made after the studies are complete.

To define four proposed open pit zones and test other mineralized zones, a 14,000 ft diamond drilling program is being conducted at Big Missouri. Westmin has also drilled 22 holes (9,988 ft) in Silbak Premier’s Glory Hole area to test depth extension of the higher grade west zone.

According to Westmin, drilling on both properties has expanded the mineralized zones.