Bluestone hits highest-grade yet at Cerro Blanco in Guatemala

Bluestone Resources’ Cerro Blanco gold project in Guatemala. Credit: Bluestone Resources.

Bluestone Resources (TSXV: BSR; US-OTC: BBSRF) has reported the highest-grade gold assay to date at its wholly owned Cerro Blanco gold project in Guatemala, 160 km southeast of Guatemala City.

As part of an underground drill program in the South Zone, drill hole UGCB20-180 intersected 1 metre grading 1,380 grams gold per tonne and 2,194 grams silver per tonne from 175 metres downhole. The intercept surpassed the previous record earlier this month of 1 metre grading 674.8 grams gold and 2,863 grams silver starting from 71 metres in drill hole UGCB20-179.

“The fact that we have received the two best-ever intercepts in the project’s history within weeks of each other perhaps reflects the team’s increased understanding of the deposit which is guiding our drill targeting,” Jack Lundin, the company’s chief executive, said in a statement. “What is also equally encouraging is that we continue to find new veins like those intersected in all but one of the five holes, offering additional potential for the future expansion of the resource.”

Bluestone has five rigs operating from the underground workings and at surface. The focus of the drill program is to improve the definition of key veins and expand the high-grade mineralization for known veins outside the resource area.

Other highlights from the underground drilling included drill hole UGCB20-181, which returned 5 metres grading 75.7 grams gold and 32.8 grams silver from 211 metres, including a higher-grade core of 1 metre grading 152.7 grams gold and 124 grams silver from 211 metres.

Both holes UGCB20-180 and UGCB20-181 were drilled at steep angles to better define and confirm a high-grade southerly plunging shoot within the principal feeder vein VS-01 and better define its relationship with its sub-parallel splay VS-21, the company said.

Highlights from surface drilling included drill hole CB20-428, which cut 1 metre grading 98.1 grams gold and 68.8 grams silver from 233 metres. Drill hole CB20-430 returned 9 metres grading 34.6 grams gold and 66.9 grams silver from 227 metres, including 2 metres grading 144.4 grams gold and 282 grams silver from 227 metres.

The company said that the work is expected to build on the infill drill program completed in the North Zone of the deposit in 2019, which resulted in an updated mineral resource estimate of 4.3 million tonnes in the measured and indicated category grading 10.3 grams gold per tonne and 36.8 grams silver per tonne for 1.4 million contained oz. gold and 5.1 million oz. silver.

Previous owners spent about US$230 million on the project. When Bluestone acquired the project in 2017, it already had portals, declines, multiple Alimak vent raises, and 3 km of underground development in place.

The project is fully permitted for production, with the company targeting the second half of 2022 for the first production at the mine.

A 2019 feasibility study outlines an underground operation with a mine life of eight years, producing 146,000 oz. gold per year during the first three years at an average all-in sustaining costs (AISCs) of US$579 per ounce.

Initial capex was pegged at US$196 million and the study estimates an after-tax payback of just over two years. The study, which used a gold price of US$1,250 per oz. and a silver price of US$18 per oz., forecast an after-tax net present value of US$241 million, at a 5% discount rate, with an after-tax internal rate of return of 34%.

“The project is very robust and is a strong acquisition candidate for mid-tier gold companies looking to add a shovel-ready, permitted project to their project portfolio,” mining analyst Kerry Smith of Haywood Securities commented in a research note to clients. “We recommend accumulating shares at current levels.”

Smith has a buy rating on Bluestone with a target price of $4.50 per share. 

At press time in Toronto, Bluestone was trading at $1.92 per share within a 52-week trading range of 99¢ and $2.43. The company has around 143 million common shares outstanding for a $275.1-million market capitalization.

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