Vancouver – With permit in hand, Morgain Minerals (MGM-V) is commencing operations at its Castillo gold mine in Durango State, Mexico.
First phase permitting, for 100,000 tonnes, allows Morgain to extract sufficient material to run a test round and load an initial 30,000 tonnes of ore on the pad for heap leach. Results from the trial will be used in plans for full-scale operations anticipated later in 2005.
The Castillo mine, previously referred to as the El Cairo project, was a grass roots discovery by Battle Mountain Gold, now part of Newmont Mining (NEM-N), in its 1995 regional hunt for large tonnage, low grade gold deposits. Following extensive drilling and a resource estimate, the project came in below Newmont’s threshold and was returned to the Mexican Government after spending over US$11 million. Morgain Minerals subsequently acquired the project through a lottery by the government.
The deposit lies within the Altiplano Subprovince on the eastern flank of the Sierra Madre Occidental belt. Epithermal gold mineralization occurs in silicified, argillized and pyritized mantos within the lower volcanic sequence. Mineralized zones have been oxidized to an average depth of 150 metres. The deposit also shows some copper-gold porphyry aspects with strong potassic and biotitic alteration in fractures as well as potassium feldpars associated with copper carbonates and oxides in the dioritic intrusive.
A revised prefeasibility study conducted in 2003, by engineering firm A.C.A. Howe International, reviewed a measured and indicated oxide resource of 37.3 million tonnes grading 0.7 gram gold per tonne. The study also recommended mining of a near-surface higher-grade zone at a lower rate of one million tonnes per year, versus the previously reviewed 4 million tonnes annually, significantly reducing estimated capital costs.
The study estimated total capital costs of only US$3 million, using the lower mining rate and assuming no crushing or agglomeration of the ore, and an 8-month pay-back period.
The Mexican-focused junior has a market capitalization of $19 million based on its 56 million shares outstanding and 34 per share trading level.