LATIN AMERICA — Prefeasibility study begins on Dolores gold-silver project

Minefinders (MFL-T) has engaged MRDI Canada, a division of H.A. Simons, to complete a prefeasibility study on the promising Dolores gold-silver project in Mexico’s Chihuahua state.

The Dolores project covers 400 sq. km of ground in the Sierra Madre mountains, near the Chihuahua-Sonora border. It centres on a historic gold mining camp that saw 325,000 oz. gold produced between 1909 and 1929 from narrow, bonanza-grade ore shoots mined by underground methods. Production ended in 1929 when a fire destroyed the vat-leach cyanide mill.

The Dolores property had never been drilled or explored using modern methods until Minefinders optioned a 100% interest in the property in 1993. The company felt the property had the right ingredients to host a large, bulk-tonnage deposit.

The project is accessible by a 5.5-hour drive along 87 km of rough gravel road from the town of Madera (pop. 35,000). The property also has a small landing strip.

Surface geochemical sampling has outlined a north-northwesterly trending zone of anomalous mineralization extending for 4,000 metres of strike length and over a width of up to 600 metres. The main trend is divided into a number of target areas, including Norte, Chabacan, Hondo and South.

Mineralization is associated with an epithermal, low-sulphidation, quartz-adularia-sericite system controlled by northwest-striking high-angle shear zones. The precious metal system occurs in a complex sequence of propylitically altered volcanic andesites and northwesterly trending latite dykes exposed in a horst window through younger, unaltered volcanics.

A preliminary estimate of over 1.1 million contained ounces of gold and 38.4 million contained ounces of silver was announced in August 1997.

Nevada-based Humboldt Mining Services prepared the estimate based on 107 drill holes completed to the end of June 1997. Using a cutoff grade of 0.5 gram gold per tonne, a drill-indicated and inferred resource was estimated at 25.3 million tonnes grading 1.3 grams gold and 47.3 grams silver.

At a lower cutoff of 0.3 gram gold, the resource becomes 39.4 million tonnes grading 0.96 gram gold and 36 grams silver, equivalent to a 1.2 million contained ounces of gold and 45.8 million contained ounces of silver. The resource includes portions of the Chabacan main zone, Chabacan East Dike and Hondo main zone.

Drilling has confirmed mineralization to depths exceeding 200 metres. An updated resource estimate being prepared as part of the prefeasibility study will incorporate an additional 75 holes that have been drilled since the initial reserve estimate. Management believes the new resource estimate will be significantly greater than the one made last June.

The prefeasibility study will be based on an area of the main trend covering approximately 1,600 metres of strike length. The study will evaluate the project’s potential as an open-pit, heap-leach mine.

Initial bottle-roll tests completed by McClelland Labs and Colorado Mines Research Institute confirm that the ore is amenable to heap-leach cyanide processing. Recoveries have been in the range of 70-80% for gold and 40-50% for silver. Additional column-leach testwork is in progress.

Mineralization is primarily in the form of electrum, plus native gold and silver and complex silver sulphosalt assemblages, including pyrargyrite, miargyrite and stromeyerite. Accessory sulphide minerals include pyrite, galena, sphalerite, arsenopyrite and chalcopyrite. Oxide minerals include hematite, goethite, manganite and limonite.

Results from recent infill drilling along the main trend in the Chabacan area include 74.7 metres averaging 1.37 grams gold and 46.3 grams silver (including 3 metres grading 6.45 grams gold and 284.6 grams silver), starting at a downhole depth of 21.3 metres, and 29 metres averaging 0.38 gram gold and 41.8 grams silver, starting at a depth of 111.2 metres. Both intervals were from hole 98-R76.

Holes 98-113 and 114 were drilled at shallow angles to test near-surface mineralization at the south end of the resource area in the Hondo zone. Hole 113 returned 193 metres averaging 0.89 gram gold and 82.2 grams silver (including 26.8 metres with grades of 1.54 grams gold and 139.2 grams silver), starting at a depth of 49.3 metres. Hole 114 intersected 186.2 metres averaging 0.69 gram gold and 50.2 grams silver (including a 14.4-metre interval grading 1.61 grams gold and 97 grams silver), beginning at a depth of 45.7 metres. Included in this wide zone of mineralization are several high-grade intervals: 6.5 metres grading 5.52 grams gold and 420.4 grams silver; 4.6 metres grading 5.8 grams gold and 405.6 grams silver; and 2.9 metres grading 10.7 grams gold and 886 grams silver.

Minefinders is continuing with infill drilling, as well as stepout drilling over an additional 1,000 metres of strike length to the south. Recent holes have hit significant values in the Southwest extension, 500 metres to the south of the prefeasibility area. Two holes were drilled from a new road built

for better access to mineralization encountered in an early 1997 hole, 97-R3, which bottomed in 6.1 metres averaging 12.51 grams gold.

Hole 98-R74 intersected 16.8 metres averaging 1.47 grams gold and 32.6 grams silver (including 4.6 metres grading 3.67 grams gold and 94.7 grams silver), starting at a downhole depth of 121.9 metres. Hole 98-R75 returned 68.6 metres averaging 0.79 gram gold and 6.3 grams silver (including a 21.3-metre interval grading 1.13 grams gold and 3.6 grams silver) from 111.2 to 179.8 metres.

In the South extension, stepout hole 98-R73 intersected 24.4 metres averaging 0.65 gram gold and 127.5 grams silver between 134.1 and 158.5 metres.

Two holes tested the La Bohemia area: hole 98-R70 intersected 9.1 metres grading 1.3 grams gold and 76.1 grams silver, beginning at a depth of 82.3 metres, and hole 98-R72 intersected 7.6 metres grading 4.53 grams gold and 60 grams silver from 44.2 to 51.8 metres. Minefinders has about 14.1 million shares outstanding, or 15.7 million on a fully diluted basis. Working capital sits at around $8.3 million.