“Bluestone is evaluating the legal aspects of the notification,” the company said in a statement Monday.
Vancouver-based Bluestone, 27%-owned by the Lundin family trust, plans a C$572 million gold project near El Salvador’s border. The project aims to yield 2.7 million oz. gold over 14 years, based on a 2022 feasibility study.
New president
Only two weeks after Guatemala President Bernardo Arévalo took office on Jan. 15, its Ministry of Energy and Mines announced a review of all decisions made in the recent past related to mining exploration, exploitation and export licences. Arévalo has alleged bribes, corruption and other illegal activities have dogged the local mining sector.
MARN told Bluestone it would review its Cerro Blanco gold mining operation, sending the shares cratering in January.
Haywood Capital Markets, however, says the company has a solid legal footing, given that it had first asked MARN how to apply for an open-pit licence. MARN responded then with a full legal opinion with terms of reference, confirming an amendment was the correct process. It ultimately led to a 3,800-page- document and permit approval in January, mining analyst Kerry Smith wrote in a note to clients on Monday.
“Given the uncertainty in the review process and the likelihood a resolution could take some time to conclude, we have revised our rating to ‘under review,’” Smith said.
Revised mine plan
Initially, the developer had proposed an underground operation, but around 2020 decided to switch to surface mining. Advanced engineering and optimization work had revealed an opportunity to capitalize on the project’s near-surface, high-grade mineralization through open-pit mining.
The assessment showed a doubling of the gold resource ounces and production profile. An open-pit gold mine could annually produce 197,000 oz. over 14 years, according to the 2022 feasibility study. At peak production, the operation would produce 347,000 oz. gold a year.
Environmentalists oppose the project, which Bluestone acquired from fellow Canadian miner Goldcorp in 2017 for C$18 million plus shares valued at roughly 9.9% of Bluestone. They say it will pollute the Güija lagoon and Lempa river, the main water source for San Salvador, the El Salvador capital.
The project has an after-tax net present value of $1.1 billion at a 5% discount rate and an internal rate of return of 30%, according to the feasibility study. It also forecast output of 10.2 million oz. silver from processing 53.9 million tonnes of ore in a three-stage development.
Cerro Blanco hosts measured and indicated resources of 63.5 million tonnes at 1.5 grams gold and 6.6 grams silver per tonne for 3 million oz. and 13.5 million oz. of metal, respectively.
