Financing Completed Drilling to Recommence in December
Minefinders Corporation Ltd MFL
Shares issued 14,171,685
1999-11-30 close $0.90
Tuesday Nov 30 1999
Mr. Mark Bailey reports
Minefinders has completed a non-brokered private placement of
2,225,000 units of the company at a price of 90 cents per unit for
total proceeds of $2,002,500. Each unit consists of one common share
and one-half of a warrant. Each full warrant will entitle the holder
to purchase a further share for a period of two years at a price of
$1.25 per share in the first year and $1.50 in the second year.
Proceeds will be used to finance infill and step-out drilling on the
company's Dolores gold-silver deposit, Chihuahua, Mexico, and provide
working capital.
Dolores project update
Drilling will recommence on the Dolores project in December. The
objective for the next phase of drilling will be to confirm the
potential to double the current resource of 1.91 million ounces of
gold and 111.56 million ounces of silver (59.3 million tonnes at 1.98
grams per tonne Au equivalent at a cutoff grade of 0.5 g/t Au
equivalent) and to systematically drill out the near surface, open
pit minable resource. Step-out drilling will focus on extending the
known high-grade mineralization to depth beneath the current open pit
resource and along strike to the south.
The company has prepared a preliminary cash flow model based on the
revised resource reported in October. The following table compares
the 1998 cash flow model with the revised 1999 model. The mine plan
and operating parameters used in the 1998 scoping study were used in
the new analysis. Mining rates, annual strip rates, start-up and
sustaining capital costs, mining, leaching and agglomeration costs
per tonne, annual general and administrative costs, recovery factors,
net smelter return royalties, transportation and refining costs,
power and consumables, and realized metal prices are all consistent
with the previous work.
The lower tonnage of ore but higher contained metal within the pit
results from less averaging of the high-grade mineralization over the
deposit and better definition of grade distribution within the
deposit.
ECONOMIC IMPACT OF UPDATED RESOURCE
WITHIN EXISTING OPEN PIT DESIGN
(U.S. dollars)
1998 Study 1999 Study
Aueq cutoff,
leach ore 0.4 g/t 0.4 g/t
Aueq cutoff,
agglomeration ore 1.5 g/t 1.6 g/t
Total tonnes
mined ore 47,329,000 42,598,203
Tonnes
agglomeration ore 17,649,000 14,775,352
Tonnes leach ore 29,680,000 27,822,851
Strip ratio 2.9:1 3.3:1
Aueq grade
overall 1.59 g/t 1.86 g/t
Aueq grade
agglomeration ore 2.84 g/t 3.78 g/t
Aueq grade
leach ore 0.85 g/t 0.85 g/t
Total gold
produced
(recovered oz) 997,160 1,021,475
Total silver
produced
(recovered oz) 46,236,350 51,425,013
Total Aueq
produced
(recovered oz) 1,753,419 1,878,559
Estimated
capital costs
(millions
of dollars)
Direct and
indirect
project costs $67.1 $67.1
Contingency @ 20% $13.4 $13.4
Total operating
costs ($US) $6.61/t ore $6.99/t ore
Cash cost per
oz Aueq ($US) $177/oz $158.61/oz
Mine life 14 years 13 years
Pretax NPV @
0% discount
($U.S. millions) $122.6 $179.4
Study values are $325 per ounce Au, $5.50 per ounce Ag; gold
equivalent values (Aueq) is based on 60 to 1, Ag to Au.
These calculations assume average metal prices of $325 gold and $5.50
silver for the life of mining. Several significant factors not
considered in this revised cash flow model include the reduction in
grinding requirements from 5,000 tons per day in the 1998 model to
3,200 tpd in the new model and the coincident reduction in leach pad
requirements, which should contribute to lower capital costs.
According to the 1999 analysis, even at lower metal prices of $275
gold and $5.50 silver, the open pit mine would still result in an NPV
of $106-million.
Additionally, the resource classified at higher cutoff grades
represents the potential of step-out drilling to expand on existing
drill intercepts to develop high-grade underground reserves below the
planned open pit. At a two g/t Au equivalent cutoff, the deposit
contains 15.23 million tonnes averaging 2.16 g/t gold and 136.9 g/t
silver totalling 1.06 million ounces gold and 67.02 million ounces
silver (4.45 g/t Au equivalent totalling 2.18 million ounces Au
equivalent). Historical mining activity at Dolores averaged 9.81 g/t
Au and 563 g/t Ag, from surface to a depth greater than 300 metres.
Results from more than 50,000 metres of drilling completed by the
company confirmed similar high-grade mineralization over 2,400 metres
of strike length from the surface to a depth of 300 metres. Step-out
holes will be targeted to expand the high-grade mineralization
encountered in previous holes, such as the eight metres averaging
11.11 g/t gold and 527.7 g/t silver, intercepted in core hole D97-107
(100 metres below the planned open pit).
The Dolores deposit remains open along strike and at depth and has
the potential to become one of Mexico's largest gold-silver mines. |
