Bluestone changes tack for higher returns
Junior gold developer Bluestone Resources is changing tack as it looks to bring its Cerro Blanco project in Guatemala into production through an open pit development scenario which promises to deliver higher returns and more benefits to local stakeholders.
The company recently released a "game changer" preliminary economic assessment for a compact open pit mine which doubled the Cerro Blanco gold resource, doubled the potential production to more than 225,000 ounces a year and tripled its net present value (NPV) to US$907 million.
Earlier in the year the company indicated Cerro Blanco could have a longer mine life as infill drilling added over 200,000 ounces in the measured and indicated categories since the 2019 underground feasibility study and optimisation studies. Those studies and the completion of advanced engineering now presents an opportunity to be able to exploit a near-surface, high-grade mineralisation via a 15,000 tonnes per day open pit operation with peak production of 334,000oz/y at first decile all-in sustaining costs (AISC). "Given the geometry and near surface mineralization of the Cerro Blanco resource, the underground scenario would leave behind at least 1.4Moz of gold. With our improved understanding of the geology of this deposit, we decided late last year to look at the potential of developing this project as an open pit." Bluestone Resources president and CEO Jack Lundin told Mining Journal.
The open pit PEA outlines average annual production of 231,000oz gold and 979,000oz silver over an initial 11-year mine life at an AISC of $642/oz following an initial capital expenditure of $548 million. The surface operation would yield an after tax NPV of $907 million at a 5% discount rate and an internal rate of return of 28.5% with a 2.6-year payback period based on a $1,550/oz gold price and $20/oz silver price compared to a ~$300 million NPV for the 112,000oz/y underground operation.
Bringing in the near surface resources in the PEA increased the measured and indicated resources to 61.5 million tonnes grading 1.5 grams per tonne gold and 6.7 g/t silver for 3.0 million ounces of gold and 13.2 million ounces of silver. The 2019 feasibility featured a proven and probable mineral reserve of 3.4Mt grading 8.5g/t gold and 32.2g/t silver for 940,000oz gold and 3.6Moz silver.
"The pivot to surface mining is a culmination of our increased understanding of the geology and grade distribution that will realise the full potential of the Cerro Blanco low-sulphidation mineralisation. The inverted wedge shape of the deposit with its upper half forming the Cerro Blanco hill lends itself to surface mining with a low strip ratio. The low-grade mineralisation present in the Salinas cap rocks, where we currently have five drill rigs operational, make up a fifth of the M&I ounces and show excellent potential to further grow the resource by additional drilling," said Bluestone Resources VP Exploration David Cass.
Bluestone is advancing Cerro Blanco through permitting processes and it aims to prepare a coordinated environmental and social impact assessment which aligns with the International Finance Corporation Performance Standards and Equator Principles. The aim is to submit an environmental impact assessment prior to year-end as well as completing a feasibility study in early 2022.
David Cass, VP Exploration examines core at Cerro Blanco (source: Bluestone Resources)
Switching to an open pit concept simplifies some of the technical challenges of the project resulting in a more straightforward development with fewer risks such as dealing with the ingress of heated water from nearby geothermal sources. Bluestone is also investigating the possibility of using geothermal energy to help power Cerro Blanco through its Mita project, which was begun by previous mine operator Goldcorp. "An open pit will have less technically challenging hot water mitigation and ventilation measures and it will be a much safer operation. It will also mean we can focus more on local employment and training initiatives as this type of operation won't demand mining experts with experience working in technically challenging underground environments," said Lundin.
The open pit would use filtered dry stack tailings eliminating the need for a traditional tailings impoundment.
With the company rapidly approaching the environmental permitting stage it will draw on the extensive experience of operating in Latin America of principal shareholder, the Lundin Group. The Lundin Group currently operates mines in Chile, Brazil and Ecuador in addition to exploration projects in Argentina. Its most recent development was the Fruta del Norte gold mine in Ecuador by Lundin Gold. While that is an underground mine, Bluestone will seek to replicate its approach to social engagement and development which were key in a region without other major economic activity, something Jack Lundin experienced first-hand as project superintendent of the Fruta del Norte construction. The company will also be able to draw on the experience and capacity of the Lundin Foundation to help establish community development projects.
"We are going to do this to the best of our ability and in a transparent way, working with the necessary authorities and making the phases of the project very clear. We are a Lundin Group company with the Lundin Foundation to support us with local stakeholder engagement and sustainable development programmes. The adoption of a dry stack tailings facility and real time monitoring technologies puts the Cerro Blanco Project at the forefront of responsible mining practices being adopted for the future of sustainable mining globally." said Lundin.
With 2021 shaping up into a key year for the development of Cerro Blanco, the company continues to drill as it seeks to build on the lower grade material in the Salinas capIn an open pit production scenario, wide intervals of disseminated material can be fed into the mill, allowing the company to maximise the use of the resource and benefit to all stakeholders.
Cerro Blanco project at sunset (source: Bluestone Resources)
Bluestone Resources - at a glance
Head Office: Suite 2000 - 885 West Georgia St, Vancouver, British Columbia V6C 3E8
Tel: +1 604-757-5559
Email: info@bluestoneresources.ca
Web: https://bluestoneresources.ca/contact/
Directors: Jack Lundin, John Robbins, Zara Boldt, Jamie Beck, Dave Dicaire, Leo Hathaway, Darren Klinck and William Lamb