/NOT TO BE DISTRIBUTED OR DISSEMINATED IN THE U.S./
TORONTO, Oct. 22 /CNW/ - South American Gold and Copper Company Limited
(the "Company") (TSX-SAG) announces today the planned restart of operations at
its 100% owned Pimenton gold mine. This is contingent on a substantial portion
of the 43,000,000 warrants issued by the Company and expiring on November 1,
2007, at an exercise price of Cdn $0.04 being exercised for total proceeds of
up to $1,720,000 Canadian dollars.
For a planned investment of approximately US $1,370,000, including three
months of working capital, Pimenton will mine and mill 50 metric tons of ore
per day. The Company has set the following sequence of goals for Pimenton that
will be financed out of production cash flow:
1. Restart exploration and development crosscuts and raises
2. Use drilling to increase resources and reserves at Pimenton
3. Start mine preparation for a 200 tpd operation
4. Start drilling at Tordillo which is close to Pimenton
As audited in March 2005 by John Selters, an independent Qualified Person
under NI 43-101, Pimenton has proven reserves of 13,034 metric tons assaying
14.4 g/t gold and 1.27% copper, probable reserves of 35,038 metric tons with
14.4 g/t gold and 1.26% copper, and a inferred resource of 199,270 metric tons
running 18.8 g/t gold and 1.6% copper.
Direct operating costs of a 50 tpd operation at these grades is estimated
at approximately US $285 dollars per ounce. This cost is net of the Value
Added Tax (VAT, charged at 19%) refund discussed below. Monthly production
would be approximately 560 ounces of gold and 14.80 metric tons of copper, or
700 equivalent ounces of gold, at a gold price at US $700 per ounce and copper
at US $3.00 per lb.
As detailed below, the Company has the reserves, equipment, and people to
start a 50 tpd operation at Pimenton:
- In the mine there are 12,000 metric tons of ore in prepared stopes
ready for extraction with grades ranging from 10.8 g/t gold and
1% copper, up to 17.5 g/t gold and 1.8% copper.
- The Pimenton plant has a complete crushing section, a 75 tpd mill and
flotation cells that can be put back into service.
- Pimenton has a mine camp and all the necessary mining equipment
(including scoops, mine trucks, compressors, generators, underground
drilling equipment, a new Ingetrol Explorer Jr. diamond drill
currently drilling at the Company's Bandurrias project) that it needs
to restart production, development and exploration at the mine.
- The Company has ready access to professional consultants in geology,
mining engineering, metallurgy, mine safety, as well as for all
legal, environmental, labor aspects, along with a skilled pool of
experienced ex-Pimenton miners.
- The mine is fully permitted and prior to restarting operations
requires 15 days notice to be given to the Chilean mining
- Minera Pimenton has US $2,400,000 in Value Added Tax (VAT) refunds
recoverable against sales of concentrates.
Patrick Esnouf, President of the Company stated, "With the current price
of gold near a 28 year high, we believe we can quickly put the mine back into
operation and be profitable. While the operating scenario is a lot smaller
than the resource can support, it does have the advantage of being fundable
from the exercise of existing warrants, and thus not further diluting
shareholders' positions. Further, we will generate in-house financing for
exploration, development and resource drilling on a property which shows
tremendous high grade potential. In canvassing our backers recently, it has
become clear that we need more proven and probable reserves before we can
initiate plans to go to 200 tpd, which is the model Pincock, Allen and Holt
reviewed for us last year."
The contents of this News Release have been reviewed and approved by
William Hill, P.Eng., a Director of the Company and a Qualified Person under
South American Gold and Copper Company Limited is a minerals producing,
exploration and development company with properties and activities currently
focused in Chile.
FORWARD-LOOKING STATEMENTS: This news release contains certain
"forward-looking statements" within the meaning of Section 21E of the United
States Securities Exchange Act of 1934, as amended. Except for statements of
historical fact relating to the company, certain information contained herein
constitutes forward-looking statements. Forward-looking statements are
frequently characterized by words such as "plan," "expect," "project,"
"intend," "believe," "anticipate", "estimate" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety
of risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. These factors include the inherent risks involved in the
exploration and development of mineral properties, the uncertainties involved
in interpreting drilling results and other ecological data, fluctuating metal
prices, the possibility of project cost overruns or unanticipated costs and
expenses, uncertainties relating to the availability and costs of financing
needed in the future and other factors. The Company undertakes no obligation
to update forward looking statements if circumstances or management's
estimates or opinions should change. The reader is cautioned not to place
undue reliance on forward-looking statements.
For further information:
For further information: Patrick Esnouf, President, Dr. David Thomson,
EVP Exploration, Telephone: (562) 264-2295, Website: www.sagc.com