Hi David: Hot off the PFG press:
Pacific Rim's 9mo results
Pacific Rim Mining Corp PFG
Shares issued 20,117,370 Jan 11 close $1.49
Tue 12 Jan 99 Company Review
Ms. Catherine McLeod Seltzer reviews the company
Pacific Rim Mining Corp. completed substantial exploration work during the
period Aug. 1 to Oct. 31, 1998. Work was completed on the Fantasma and La
Colorada projects and drill results were received for the Diablillos
project. In addition, the company acquired two new projects through
staking; the San Francisco project in northwestern Argentina and the La
Espina project in Peru.
Pacific Rim is pleased with the success of its ongoing project generation
campaign. The company's thorough regional compilations of the geology,
structure and satellite imagery of northwestern Argentina and southern Peru
have led to the discovery of numerous epithermal alteration anomalies on
the ground, the most promising of which were staked as new projects for the
company. The extensive geological conceptual groundwork laid out over the
last 18 months is now beginning to bear fruit for the company.
Exploration on the Fantasma project during the quarter indicates the
potential for mineralization on strike with, and in close proximity to, the
Oculto silver-gold deposit on the company's neighbouring Diablillos
property.
The Diablillos project, Pacific Rim's most advanced project to date, was
relatively quiet during the quarter. The operator of the Diablillos
project, a subsidiary of Barrick Gold Corporation, provided Pacific Rim
with partial results of a 7,000 metre reverse circulation drill program,
which they conducted on the property earlier in 1998. Subsequent to the end
of the quarter, Pacific Rim received the results of the final eight holes
from this program. Barrick also completed a column leach test at a 3/8 inch
crush size, the results of which were provided to Pacific Rim during the
quarter.
The following events were reported on by Pacific Rim during and subsequent
to the period Aug. 1 to Oct. 31, 1998:
Diablillos project
On Aug. 10, 1998 Pacific Rim announced the results of five reverse
circulation drill holes (RC-98-134 to RC-98-138) completed under the
direction of Barrick on the Oculto deposit. Subsequent to the end of the
quarter, results from the remaining eight holes (RC-98-139 to RC-98-146)
were provided to Pacific Rim. This 13 hole program formed the second half
of a 7,000 metre program completed by Barrick on the Oculto deposit between
January and June, 1998. Several of the holes reported on returned gold and
silver intercepts, however, in most of the holes, either no significant
results or sub-ore grade intersections were reported.
Most of the drilling completed during this 7,000 metre RC program tested
the northeastern part of the Oculto deposit in an attempt to extend the
deposit in that direction. Although several holes intersected precious
metal zones of grade and/or width, most of these intersections were
relatively deep and sporadic. The Oculto deposit remains open to the
southwest, toward the company's Fantasma property, but appears to be
economically closed off in all directions. Pacific Rim believes development
of the Oculto resource will be dependent upon the discovery of additional
ounces, which may be found along strike of Oculto to the southwest or at
other targets elsewhere within the Diablillos property.
Following the results of seven earlier column leach metallurgical tests
(see Pacific Rim news release dated June 12, 1998 and Pacific Rim first
quarterly report dated July 31, 1998), an eighth column leach test was
conducted by Barrick on 3/8 inch crush size material from the Oculto
deposit. On Sept. 8, 1998, Pacific Rim announced the results of this test
as provided to the company by Barrick. After 60 days of leaching with a
cyanide solution, 61 per cent of the gold and 50 per cent of the silver
were recovered. Pacific Rim has concluded, based on these results in
addition to the results from the previous column leach tests, that the
Oculto deposit would not likely be amenable to heap leaching. Metallurgical
testing results do indicate however that Oculto mineralization would be a
good candidate for standard CIP milling should development of the deposit
be warranted. There is no indication that Oculto mineralization is
refractory and as such, a simple milling circuit may be viable.
Subsequent to the end of the quarter, Pacific Rim announced the results of
an independent resource estimate for the Oculto silver-gold deposit located
within the Diablillos property in northwestern Argentina. This resource is
an update of the previous resource estimate for Oculto calculated in July
1997.
In the new resource calculation, the Oculto deposit is estimated to contain
an inferred resource of 49.5 million tonnes at an average grade of 68.3
grams per tonne silver and 0.42 grams per tonne gold, at a cutoff grade of
0.40 grams per tonne equivalent gold. This represents a resource of 108.8
million ounces of silver and 664,000 ounces of gold, an increase of
approximately 19 per cent in silver ounces and 132 per cent in gold ounces
over the 1997 resource estimate. In order to reflect the increased cutoff
grade required for a standard mill operation, the new resource estimate was
also calculated at 0.80 grams per tonne equivalent gold cutoff. Despite
this increase in the cutoff grade, the total equivalent ounces of gold
still rose by 47 per cent over the 1997 base case.
Fantasma proiect
On Sept. 1, 1998 Pacific Rim announced the results of a CSAMT geophysical
survey completed over part of its Fantasma project. The Fantasma property
is located contiguous to and immediately west of the Diablillos property.
The CSAMT survey identified two distinct resistivity anomalies that may
represent zones of anomalous silicification. The largest CSAMT anomaly is
approximately 300 metres long by 350 metres wide and is interpreted to be
coincident with the mineralized structural feature that hosts the Oculto
deposit on the Diablillos property, approximately 200 metres to the
northwest. The second anomaly lies approximately one kilometre north of the
first, and is interpreted to be coincident with a structure that hosts the
Laderas target, north of Oculto on the Diablillos project.
Pacific Rim is encouraged by the results of this survey, which indicate
excellent potential on the Fantasma property for the continuation of the
Oculto mineralization and for the discovery of a new mineralized zone on
strike with a known silver-gold occurrence. Management will await a
decision from Barrick regarding their future plans at Diablillos before
proceeding with drilling at Fantasma.
La Colorada proiect
During July and August 1998, Pacific Rim conducted geological and
geophysical surveys over its La Colorada project in northwestern Argentina.
Geological mapping indicated the presence of two distinct, three metre to
five metre wide, tightly folded stratiform volcanogenic massive sulphide
horizons. This interpretation differs from past models for the property,
which suggested the presence of a single shallowly dipping horizon. EM,
magnetics and CSAMT geophysical surveys conducted over the property in
August supported Pacific Rim's geological interpretation.
In October 1998, Pacific Rim announced that it had favourably renegotiated
the La Colorada property agreement. Pacific Rim was previously committed to
a $200,000 (U.S.) cash bonus payment to La Casualidad S.A. (the property
vendor), which under the renegotiated agreement, was reduced to $100,000
(U.S.) cash plus the completion of a 1,000 metre drill program.
The encouraging results of the geological and geophysical surveys,
particularly its coincident nature, and the successful renegotiation of the
property agreement, prompted Pacific Rim to launch a five hole, 1,000 metre
diamond drill program to test the presence, thickness and grade of these
massive sulphide horizons in the subsurface. The drill program was
initiated in late October 1998 and was completed in early December. Assay
results are pending and will be released in a timely manner upon receipt.
Cerro Blanco project
Pacific Rim terminated its agreement on the Cerro Blanco property in
northwestern Argentina during the quarter. The company had been seeking to
joint venture the property, but was unable to locate a suitable partner,
and did not believe the property warranted any further cash outlays from
its own treasury.
San Francisco project
On Aug. 12, 1998 Pacific Rim announced its acquisition through staking of
the San Francisco property, located in the province of Jujuy, Argentina.
The 3,600 hectare property was staked to protect a 500 metre wide by 3.5
kilometre long alteration system that had been identified by Pacific Rim
geologists through their regional project generation program.
Alteration on the San Francisco property is believed to be related to a
low-sulphidation epithermal system. This alteration is characterized by
highly anomalous trace element geochemistry and widespread silica sinter
terraces on surface, indicative of the highest levels of an epithermal
system. These sinters are also highly anomalous in gold, an unusual
characteristic as gold is usually restricted to lower levels in these types
of systems. Pacific Rim is hopeful that the presence of gold in these
higher levels may be indicative of gold enrichment at depth.
Follow-up rock chip sampling of the San Francisco property area returned
anomalous gold (greater than five ppb) over a wide area (most of the 0.5
kilometre by 3.5 kilometre alteration zone), including numerous values
greater than 100 ppb gold and up to 1.23 grams per tonne gold.
Pacific Rim is currently working toward receiving final title to the San
Francisco claims and intends to geologically map and then drill test the
property during 1999.
La Espina property
On Aug. 20, 1998 Pacific Rim announced its acquisition through staking of
the approximately 58,000 hectare La Espina project in southern Peru.
Several claim blocks spanning a total of 115 kilometres from northwest to
southeast were staked over a geologically and structurally favourable metal
belt known to contain epithermal gold mineralization. The La Espina project
comprises numerous satellite alteration anomalies that are currently being
field evaluated at a reconnaissance scale.
In September 1998 Pacific Rim announced its discovery of an alteration zone
within the La Espina land package that contains locally anomalous gold and
silver. The alteration zone, approximately one kilometre wide and five
kilometres long, returned a number of rock chip samples anomalous in
precious metals, with five samples running between 0.297 grams per tonne
and 5.139 grams per tonne gold, and three samples running 34.7 grams per
tonne to 118.0 grams per tonne silver.
Pacific Rim is currently continuing its reconnaissance scale evaluation and
sampling of the La Espina property, with about 40 per cent of the total
land package covered to date, and is concurrently conducting more detailed
follow-up on selected alteration anomalies. In addition, the company is
evaluating other regional prospects in southern Peru, concentrating both on
potential staking and purchase opportunities.
Corporate update
Pacific Rim held its 1998 annual general meeting on Oct. 15, 1998 in
Vancouver. Anthony Petrina, Catherine McLeod-Seltzer, Thomas C. Shrake,
William Myckatyn and David De Witt were re-elected to the company's board
of directors by unanimous vote of the shareholders in attendance at this
meeting. The company was pleased with the response of its shareholders,
with over nine million shares voted in favour of management.
In early 1997 Gerald Phillips, a former president and director of the
company commenced an action against Marian Plucinski, in which Phillips
sought an accounting of various loans received from Plucinski and a return
of 275,000 shares of Pacific Rim given by Phillips to Plucinski as
collateral for the loans. During the course of this lawsuit, Phillips
sought an injunction to restrain Plucinski from disposing of the 275,000
shares, and gave an undertaking compensating Plucinski for any damages
suffered as a result of the injunction. Phillips did not have the authority
of the board of directors to give this undertaking and present management
was not aware of it until recently. If Mr. Phillips is successful in the
lawsuit no liability will arise from the undertaking.
Management is not able, at present, to accurately assess the potential
liability that could arise from Phillips' undertaking. Phillips has agreed
to indemnify the company for any loss the company may suffer as a result of
the action he launched against Plucinski, including any damages as a result
of the undertaking and all of the company's legal costs.
Subsequent to the end of the quarter, Pacific Rim announced it was named as
one of several defendants in a separate Supreme Court action commenced by
Marian and Tadeusz Plucinski. The Plucinskis claim damages arising from the
injunction. It appears they seek to recover some of the same potential loss
which might become payable under the indemnity.
Pacific Rim and its counsel continue to investigate this matter. Management
will take the appropriate steps to protect Pacific Rim and the interests of
its shareholders.
Management's discussion of financial statements
Liquidity
The cash balance decreased from $9,833,276 to $8,008,969 from April 30,
1998 to Oct. 31, 1998, a difference of $1,824,307. In 1997 the cash balance
decreased from $11,185,993 to $10,945,925 from April 30, 1997 to Oct. 31,
1997, a difference of $240,068.
Operations
Loss from operations increased from $1,166,431 in 1997 to $2,099,200 in
1998. However, if the writeoff of mineral property costs ($1,800,481 in
1998 and $490,751 for 1997) is excluded, the loss from operations for 1998
has decreased from $675,680 in 1997 to $298,719. The Cerro Blanco mineral
property costs of $1,345,341 were written off in 1998 and are included in
the 1998 writeoff of mineral property costs of $1,800,481.
Income from interest increased from $142,493 in 1997 to $207,054 in 1998
due to the increase in interest rates in 1998. Professional fees decreased
from $240,736 in 1997 to $67,272. The decrease relates to a onetime
consulting fee of $120,000 paid to the former president and director of the
company in 1997.
Investing and financing
Total expenditures on properties decreased from $1,719,710 in 1997 to
$1,482,783 in 1998. Expenditures on the new La Espina claims were $398,515
in 1998 and nil in 1997. <P> Expenditures for the La Colorada claims
increased from $244,937 in 1997 to $383,732 in 1998. Investigative
exploration costs decreased from $490,751 in 1997 to $455,142 in 1998.
In the current period, no warrants were exercised, resulting in a decrease
of cash received by the company from $2,466,009 in 1997 to nil in 1998.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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