Metallica Begins Loading Cerro San Pedro Leach Pad


Cerro San Pedro site plan.
Metallica Resources announced in January that the first truck load of ore was delivered to the leach pad over the recently constructed haul road at its Cerro San Pedro heap-leach gold and silver project. Additionally, Metallica's wholly-owned Mexican subsidiary, Minera San Xavier, S.A. de C.V., received its explosives permit from SEDENA (Secretaria de Defensa National) for the calendar year 2007. According to a company press statement, the processing plant, initial leach pad and piping are in the final stages of completion and a test of the entire processing system was planned to immediately follow. Commercial production is anticipated to commence in the third quarter of 2007 when the plant is projected to be operating at 60% of its rated capacity. During 2006, approximately 1.1 million mt of material were broken in the pit area, including approximately 70,000 mt of ore. Metallica notes that the mineral reserve estimate for the project is being updated using metal prices that reflect the higher gold and silver prices of the past several years. The updated mineral reserve estimate will also provide the basis for a new life-of-mine production schedule and project economic forecast. The 2006 mineral reserve estimate used metal prices of $400/oz for gold and $6.15/oz silver and resulted in an estimate totaling approximately 70 million mt grading 0.55 g/t gold and 23 g/t silver, and containing 1.2 million oz of gold and 51.7 million oz of silver. The 2006 mine plan forecast an average annual production of approximately 85,500 oz of gold and 2 million oz of silver, or approximately 115,000 oz of gold and gold-equivalent silver, over an estimated nine-year mine life. The company said it spent approximately $20.5 million in 2006 on pit development as well as the construction of the processing facilities, infrastructure and haul road. An estimated $12.1 million remains to be spent to complete the prestripping and Phase 1 leach pads as well as other on-going construction activities. Current leach pad capacity is sufficient for the first year’s production. Finalization of Phase 1 of the leach pads in 2007 is expected to take approximately six months and will result in sufficient leach pad capacity to satisfy the operation’s needs for approximately the next four years.