An infill drill program designed to upgrade inferred resources at its Cerro Blanco project in Guatemala has returned intercepts of 201.4 grams gold per tonne and 2,139 grams silver per tonne over 1 metre from 40 metres downhole, about 20 metres outside the project’s current resource envelope, Bluestone Resources (TSXV: BSR; US-OTC: BBSRF) reports.
Other highlights included 8.5 grams gold and 7 grams silver over 3.5 metres from 45.3 metres downhole and 18 grams gold and 27 grams silver over 1.4 metres, 58.9 metres downhole.
Earlier this week, the company closed a $22. 4 million bought deal financing, which will be used to advance the Cerro Blanco project. The financing consisted of 12.8 million units and an over-allotment of 5.1 million units at $1.25 per unit. Each unit is made up of one common share and one-half one common share purchase warrant. Each warrant entitles the holder to acquire one share at a price of $1.65 over the next 24 months.
Bluestone completed a feasibility study on Cerro Blanco in late January that outlined life-of-mine production of 902,000 ounces of gold over an eight-year mine life
Bluestone completed a feasibility study on Cerro Blanco in late January that outlined life-of-mine production of 902,000 ounces of gold over an eight-year mine life.
The study was based on proven and probable reserves of 3.4 million tonnes grading 8.5 grams gold and 32.2 grams silver and excluded the project’s additional inferred resources of 1.4 million tonnes grading 8.1 grams gold and 23.6 grams silver.
Initial capital is forecast to reach $196 million with an after-tax payback period of just over two years.
Average life-of-mine costs net of credits were estimated to run to $579 per oz., which would place the project in the bottom-end of the lowest quartile of the global cost curve.
The study was based on a gold price of $1,250 per oz. and a silver price of $18 per oz., and estimated an after-tax net present value of $241 million and after-tax internal rate of return of 34%.
The project already has significant infrastructure including 3.2 km of underground development declines, fully functioning water treatment plant, maintenance shops, warehouse and office facilities, and a total of 580 holes and over 128,000 metres of drilling.
Bluestone plans to update the mineral resource through the conversion of inferred resources into the measured and indicated category with infill drilling.
Cerro Blanco is a hot-springs related, low sulphidation epithermal gold-silver deposit made up of a system of moderate to steeply dipping quartz-adularia-calcite veins. The resource currently has a footprint of 800 by 400 metres between elevations of 525 metres and 200 metres above sea level.
The majority of the high-grade veins occur as two upward-flared vein arrays (North and South zones) that converge at depth into master feeder veins, that the company believes appear to define a positive flower structure.
(This article first appeared in The Northern Miner)