William readies Velardena for spring production

Backed by a recent feasibility study and $8 million in its treasury, William Resources (TSE) has begun production development at its wholly owned Velardena silver-gold project in Mexico.

The property, which hosts three past-producing gold and silver mines, is in Durango state, southwest of Torreon. William expects to have the first of these, the Santa Juana, up and running by March, 1996.

The mine is expected to crank out 31.1 million grams (1 million oz.) silver and 591,000 grams (19,000 oz.) gold in its first year of operation. The following four years should see the daily extraction rate more than double to 900 from 400 tonnes. Once the 900-tonne rate is achieved, annual metal production will be 839,800 grams (27,000 oz.) gold and 68.4 million grams (2.2 million oz.) silver. William expects average cash operating costs will be less than US$200 per oz. gold-equivalent.

Current reserves and resources at the mine stand at 2.85 million tonnes grading 3.6 grams gold per ton, 313 grams silver and 4.4% combined base metals.

Of the planned mine opening, William’s president and chief executive officer, Stanley Bharti, says: “This is a big step forward for William Resources. Velardena is the first of many mines that William hopes to put into operation in Mexico and Latin America in the foreseeable future.”

Once Velardena is in production, William will pay Minorca Resources (ME) a 1% net smelter return royalty on 40% of the total proceeds of the mine. The former purchased a 40% interest in the property from the latter for $3 million.

William now has a mine contractor and 24 miners on site driving a 2.5-by-2.5-metre drift, using jacklegs and a load-haul-dump machine to bypass a narrow section of the main access and haulage routes. The company is also augmenting its initial 26-hole, 2,200-metre drilling program (completed during preparation of the feasibility study) with an additional 3,500 metres of drilling, mostly underground.

The deposits at Velardena, like typical polymetallic silver-gold-lead-zinc carbonate properties of north-central Mexico, are associated with limestones, intrusive stocks and skarns. Lower Cretaceous limestones have been intruded by acidic rocks of Tertiary age and associated mineral-bearing fluids.

The Velardena property was first developed in the late 1800s, and, in the 1920s, was operated on a large scale by Asarco (NYSE). After being abandoned in 1927, the mine’s smelter was moved elsewhere. The property was operated intermittently by local owners up to the early 1990s.

Meanwhile, William has announced that revenue for the three months ended June 30 was $9.07 million, compared to nil for the corresponding period in 1994. Net earnings were $515,000 (4 cents per share), compared to a net loss of $180,000 (2 cents per share) last year.