The Dolores Mine in the Sierra Madre Occidental range of northern Mexico is in production.
Vancouver-based Minefinders Corporation Ltd. is a junior mining company with considerable potential for growth. It currently has five projects in Mexico that are at different stages of development. The most advanced of these, the Dolores mine in the Sierra Madre Occidental range of northern Mexico, is in production. Exploration is underway at four other sites — La Bolsa, La Virginia, Planchas De Plata and Real Viejo.
Growing Producer
President and CEO, Mark Bailey, MSc. P.Geol., with more than 34 years experience in the mineral exploration and mining business, aims to grow the company to become a half million ounce gold producer within 3-5 years. He gave us an update on the present position: “We’re in production at our Dolores mine, producing gold and silver. We’re still ramping up and we had a bit of a setback this summer with a tear in one of our leach pads. We had already started loading our phase 2pad, which will hold the next 3 years of production and are working on repairing the phase 1pad to continue leaching from it as well. We are mining in the heart of the deposit with production from phases 2 and 3 of the open pit and with thirteen more years of production ahead of us, there is the potential for expansion peripheral to the open pit and underground plus the option of adding a mill to increase the deposit and recoveries.
The main aims at Dolores are to optimize mine operations and increase production. Mark says: “We’re expanding production, working on a mill addition and also exploring underground targets. We’re drilling on the underground potential of high-grade mineralization at Dolores. We’ve been drilling there since last year following-up on previously identified high-grade mineralized zones with two rigs currently operating.”
Production levels at Dolores have been pretty constant for the past two years, with around 100,000 ounces of gold produced last year and somewhat lower production expected this year because of the tear in our phase 1 pad. However, Mark expects this to improve: “Next year we should be producing above 100,000 ounces of gold and about four million ounces of silver as our leach curves mature and recoveries increase. When we achieve steady state production, our annual level for the next 12-13 years, is expected to be around 120,000 ounces of gold and 4-5 million ounces of silver per annum.”
Exciting Potential
Exploration at some of the Company’s other properties is progressing. The company has staked mineral rights covering more than 32,000 hectares plus options on a further 2,100 hectares at its La Virginia property. This is a large gold and silver mineralized system located in Sonora, Mexico approximately100 kilometers to the North West of our Dolores mine.
Initial drilling success at La Virginia will, says Mark, expand the drilling program next year with additional drill rigs: “We’ve started drilling on one of five prospective targets and have completed eleven holes thus far. It’s a high-grade gold and silver system, which had never been drilled prior to our initial program. We recently announced initial drill results which were encouraging. We’re excited about the potential of this large property for the discovery of a major gold and silver deposit. It will take quite a few years of drilling to bring this initial discovery to the development stage but it is potentially a large system, with high grade gold and silver similar to Dolores.”
A decision is yet to be made regarding the La Bolsa project, which is a relatively small gold deposit, hosting a Measured and Indicated resource of 344,000 ounces gold and 4.6 million ounces of silver. However, the majority of mineralization is relatively close to the surface, allowing reasonably low-cost, open pit mining with simple heap-leach recovery of gold and silver.
“It will produce 40,000 to 50,000 ounces of gold annually for about five years,” comments Mark. “At current gold prices, it’s potentially a very profitable deposit. We’re currently trying to decide what to do with it, whether we develop it ourselves or sell it.”
Mark says that operating in Mexico can have some challenges but he is convinced that the benefits of operating in the country far outweigh any risks: “Mexico is a very pro-mining country. The state and the government all support mining. The local communities do because we create jobs and infrastructure. So, I think it’s still a good place to invest. We’re heavily invested in Mexico and we’ve had no issues with that at all. We’ll continue to invest in Mexico. We’re also looking at other opportunities in the Americas — in Canada, the US and South America. We are continuing to expand our view.”
Discounted Trading
Given that the company is not yet in full production, its stock continues to trade at a discount. However, Mark believes the market will respond after a solid quarter of full production. He says: “We’ve been moving up slowly the last few months and our price is starting to get a little better. We’re still trading at about $100 an ounce in the ground for proven and probable reserves. The industry average is $300 to $400 so we still see a value play there for the stock. We should be trading, at this level, around $15 and we’re trading at $9-10, so we do see some room to move up. As we expand the deposit and get into better production next year, at the current level we should be trading at a much higher premium.”
Around 3% of the company’s stock is owned by management and other insiders, with about 68% being institutionally held. For others thinking of investing, Mark believes there are plenty of reasons that make Minefinders a good choice: “I think we’re a value play first off. We do have a good growth strategy, but there’s still unrecognized value in the company today. A lot of our peer group, we feel, is over-valued or fully valued so you don’t have a lot of leverage unless they have a good growth strategy.
“There are a lot of companies out there with multi-billion market capitalization that have a smaller reserve base than we do. We trade around a $600 million market capitalization so we feel that there’s a lot of upside, both in the value of our company and in the growth that we’re doing with expansion at Dolores, with the La Bolsa deposit, and with this new drilling at La Virginia. We have a good portfolio of projects and the management team to bring these to production. So, I think that there’s a good value play in the short term as well as a long term growth story for the company.”
For more information:
http://www.minefinders.com
Corporate Office
2288-1177 W Hastings St.
Vancouver, BC
Canada V6E 2K3
T: (604) 687-6263
F: (604) 687-6267
Exploration Office
Minefinders (USA) Inc.
South Meadows Commerce Center
9475 Double 'R' Blvd., Suite 9
Reno, Nevada 89521
T: (775) 851-2202
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Corporate Communications & Investor Relations
Jonathan Hackshaw
Director of Corporate Communications
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