LATIN AMERICAN SPECIAL — Crystallex Int’l upgrades operations at its Albino open-pit gold project

Uncertainty over Venezuela’s mining laws is stalling development of the Las Cristinas gold project of Placer Dome, yet this has not dampened the spirits of next-door neighbor Crystallex International (VSE).

The junior has a 100% controlling interest in the producing Albino open-pit gold mine in the Kilometre 88 region and a property package that includes three major grassroots exploration concessions.

During its first year of production, in 1995, the Albino produced 16,391 oz. at a cash cost of less than US$150 per oz. Production was hampered last summer by a trespassing incident involving illegal miners, forcing the temporary closure of the Conductora pit.

Crystallex President Marc Oppenheimer says recent modifications will increase the running capacity of the carbon-in-pulp plant to about 500 tons per day from the current 200 tons. By May, he expects the mine to be operating at a rate of 30,000 oz. per year.

Crystallex has been examining the amenability of heap-leaching low-grade ore. Tests indicate a gold recovery of 88% after 24 days, and Oppenheimer expects to begin constructing a heap-leach facility, capable of producing 40,000 oz. per year, by the fourth quarter. By year-end, the company is expected to be producing 10,000 oz. by heap-leach methods.

Crystallex acquired the 500-hectare Albino 1 concession in 1992, during the height of a short-lived exploration boom in the Kilometre 88 district. It subsequently granted Eurus Resources an option to earn a half interest.

The property had been mined on surface by locals for many years prior to the acquisition. It is contiguous to the southeastern boundary of the Las Cristinas concession, where Placer Dome estimates a minable reserve of 205 million tonnes grading 1.22 grams gold per tonne and 0.12% copper.

In 1995, under the direction of a new management team, Crystallex resolved its dispute with its former joint-venture partner by acquiring all outstanding shares of Eurus, gaining a 100% controlling interest in the mine.

Half-purchased

The original purchase price of the Albino property was US$10 million, half of which has been paid. The outstanding balance is due, in staged payments, by the end of 1997. Title to the concession includes the exploration and exploitation rights to mine surficial deposits.

New mining legislation, currently before congress, will eliminate the distinction between surface and hard rock rights, and will automatically award all mineral rights to a concession. Crystallex expects the new laws to come into effect by the summer.

Mineralization in the Kilometre 88 region is contained within a Proterozoic greenstone belt, comparable to the Archean greenstone belt in Canada. An important distinction, however, is that the original bedrock is saprotilized to depths of 100-200 ft. below surface, owing to intense tropical weathering.

The Albino concession is dominated by a northeasterly trending shear structure. The Conductora and Aguao 2 oreshoots are contained within ductile, second- and third-order splays within the shear zones.

Within the saprolite profile of the Conductora zone, gold mineralization is confined to a zone of finely laminated, greenish-grey schists. The hangingwall is displayed by a sharp contact with unmineralized brown, yellow and red saprolite, while the footwall is transitional into a broad, kaolin-enriched structure.

The hard-rock gold mineralization is contained within mylonitized portions of the shear zone and is associated with silicified and carbonatized intervals hosting up to 30% disseminated pyrite.

Reserves increased

Last year’s initial drill program on the Albino concession boosted reserves to 332,500 tons grading 0.43 oz. for the Conductora zone and 63,000 tons grading 0.25 oz. for the Aguao 2 zone. Tailings account for a further 352,000 tons averaging 0.1 oz.

Subsequently, a 10-hole, 5,500-ft. program tested the downdip and southwestern extension of the Conductora. Intersections were reported in all holes, with widths and grades ranging from 5 ft. of 0.77 oz. for hole 95-49 to 31 ft. of 0.1 oz. for hole 95-50.

Of particular interest is hole 95-48, which intersected 36 ft. grading 0.5 oz. beginning at a depth of 490 ft. It intersected the high-grade mineralization 115 ft. downdip of hole 95-39, which returned a previously reported 42 ft. of 1.02 oz.

Drilling to date has tested the Conductora shear zone over a strike length of 800 ft. The work has identified, within the zone, a 300-ft., high-grade oreshoot, which remains open at depth and along strike to the southwest.

With reserves that total 800,000 tons grading 0.25 oz., Crystallex is working to expand its reserve base to 500,000 oz. by August and 1 million oz. by year-end. A third phase of drilling, now under way, is expected to total 16,500 ft.

While the Conductora and Aguao 2 shear zones will continue to be systematically tested downdip and along strike, about 4,000 ft. of drilling will be directed at testing the western portion of the property. Previous auger and vibracore drilling in this portion suggests the potential for low-grade, bulk-tonnage saprolite material, suitable for heap-leaching.

Well-positioned

Crystallex has 13.8 million shares outstanding (or 22.1 million fully diluted) and, with the completion of a recent financing, working capital in the neighborhood of $1.2 million.

The company hopes to establish a base of production at Albino and use the resulting cash flow to expand the mine’s reserve base and explore its other properties in Venezuela.

In the latter half of 1996, the company will begin exploring the adjacent 500-hectare Carabobo concession in the Kilometre 88 region and the 1,000-hectare Santa Elena 7 & 8 properties in the Dorado district.

At Santa Elena, the potential for a bulk-tonnage target is demonstrated by previous work, which has outlined a soil gold anomaly extending over an area measuring 4,900 by 3,300 ft. Trenching returned values of up to 0.07 oz. over 330 ft.