Genco Looking To Expand Tenfold
By Rob Davies
minesite.com
Most mining companies have got expansion plans, but few are aiming to grow by a factor of ten. Yet that’s what Canadian junior Genco Resources is planning to do on its Temascaltepec properties in north central Mexico. Most of the expansion is focussed around the La Guitarra mine, although the company’s ambitions do spread a lot further. Genco Resources’ investor relations executive Robert Blankstein told Minews that the plan is to increase production tenfold over the next two or three years. While that might sound a tad overambitious, the company has the resources to do it - 154 million ounces of silver or its equivalent. The current mining rate of 800,000 ounces of silver equivalent a year is far too low to maximise the returns on such a large resource so the aim is to take production to 8 million ounces of silver equivalent by 2010.
At the moment output is constrained by narrow vein cut and fill mining, using trackless equipment and by a mill that can only deal with 340 tonnes per day. A feasibility study now being carried out is examining the potential to take the mill up to 5,000 tonnes per day and feed it from long hole stoping, with the potential for more feed to come from open cut operations. The man in charge of this is Greg Liller, a mining engineer with a proven track record in mine building and expansion. First, though, the resource base has to be confirmed, so a massive drilling programme is underway. A revised resource is expected in a few weeks time but as of now the 43-101 resource on a silver equivalent basis stands at 5.2 million ounces in reserve, 2.8 million ounces in the measured and indicated categories and 99 million ounces in the inferred category.
These data have been determined from 55,000 metres of drilling completed last year. The current programme adds another 55,000 metres which will go towards upgrading the resource and giving a sounder base to the feasibility study. Much of the drilling is taking place around the Creston part of the property which is giving the best results so far. However, Mr Blankstein is also enthusiastic about the Coloso area to the north west at Nazareno as well as at Rincon. This last is where the drill results in the company’s latest press release came from. But Genco Resources’ ambitions don’t stop there, because the Temascaltepec trend extends for 20 kilometres north west –south east and is four kilometres wide and so far Genco Resources has only looked at 5 per cent of the area.
One thing the first round of drilling did determine is that there is a lot of relatively low grade material that could be amenable to heap leaching. Using that process would be a relatively quick and cheap way of increasing production. Until the final results of the feasibility study have been announced no precise numbers are available, but a ballpark figure for the expansion would be C$70m. Even though the company has C$19m in the treasury now it would need to access the capital markets to finance the expansion. With a market capitalisation of C$106m that should not be too much of a challenge. |
