GOLD DEVELOPMENT NEWS – Magistral Mine Ramping up on Schedule

SINOLA, Mexico The Magistral gold mine is ramping up to its nominal production rate of 34,000 oz of gold expected...



SINOLA, Mexico The Magistral gold mine is ramping up to its nominal production rate of 34,000 oz of gold expected during the first 12 months of operation, according to 50% owner QUEENSTAKE RESOURCES of Vancouver.

"Our acquisition of the Jerritt Canyon gold mine (in Nevada) has not affected operations at Magistral at all," said company president and CEO Chris Davie. Magistral is currently producing at a rate of between 2,000-2,500 oz of gold/month and will end the first year of operations a "tad under" the nominal 34,000-oz figure, he said.

The mine and crusher are operating at 4,000 tonnes/day and have reached nominal capacity of 83,000 tonnes/month, Davie, said, adding the rate was currently below capacity due to "pressure problems."

Davie said there were "no meaningful" numbers yet for production costs as Magistral has not hit a "steady mining state." However, the feasibility study estimate of US$180/oz was "not far off" for the life of mine, he said. Labour and fuels costs were coming in higher than expected, but less cyanide than forecast was being used, he added.

The Magistral open pit and heap leach project took eight months to build and was financed by Delaware-based Midwest Mining to the tune of US$6.13 million in return for a 50% stake. The first ore was placed on the pads in late August 2002 and the first bar of gold poured in October of the same year.

Queenstake has just completed financing for the acquisition of Jerritt Canyon from Reno-based Meridian Gold and South Africa's AngloGold. The mine produces 300,000 oz of gold yearly at average cash cost of US$240/oz, said Davie, adding that the company has already shipped its first 4,000 oz from the mine.

The US$14-million Jerritt Canyon acquisition, which at one point looked like falling through because of what Queenstake called "geopolitical uncertainties", was finalized early this month after being first announced in February. AngloGold had 70% of the mine, which according to Queenstake has a life of at least six years, and Meridian the other 30%.


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