Toronto,Ontario - September 20, 2001South American Gold and Copper Company Limited Reports on its Cal Norte Lime Project and Positive Results on an Extensive Channel Sampling Program on its Catedral Limestone Project
Toronto, Ontario, Canada - South American Gold and Copper Company Limited ("SAGC")(TSE Symbol SAG) announced today that the Company is currently reviewing bid proposals from three lime kiln manufacturers in connection with its Cal Norte Lime Project. Work is currently in progress analyzing the proposals. The Company is also advancing financing discussions for the project and will be holding meetings over the next several weeks with the project’s major potential customer to reach agreement on the terms and conditions of a long term lime supply contract. Stephen W. Houghton, President and Chief Executive Officer, explained that the substantial increase in world fuel oil prices which have occurred since the original feasibility study on the Cal Norte lime project was completed have caused the Company to re-evaluate the use of a vertical shaft oil fired lime kiln for the project as compared to the use of a horizontal rotary shaft kiln which can use finely ground coal as its primary fuel source. Coal prices have remained relatively constant during the recent period of substantial increases in world oil prices. Mr. Houghton further explained, "while finely ground coal can also be used in a vertical shaft kiln under certain conditions, the chemical composition of the Hornito limestone deposit which hosts the Cal Norte project does not lend itself as well to a coal-fired vertical shaft kiln. We have therefore had to take the time to analyze the possibility of using a coal fired horizontal rotary shaft kiln for the project. The capital cost of a horizontal rotary shaft kiln installation is approximately 25% higher than for an oil fired vertical shaft kiln. We are currently analyzing the higher capital cost impact of a coal fired horizontal rotary shaft kiln installation compared to the lower capital cost but higher fuel costs of an oil fired vertical shaft kiln. "In addition to conducting the comparative financial analysis we are also in active discussions with each kiln supplier regarding kiln performance guarantees we expect to obtain which include such items as fuel and electricity consumption per ton of kiln product at varying levels of plant operating capacity, specifications of lime product which the kiln will produce and number of days of kiln operation performance per year. "We expect to reach a decision on the selection of the most appropriate kiln design for the project in the coming weeks and recognize the delays which the Company has experienced in bringing the Cal Norte project into operation have been frustrating to our shareholders. However, with the continuing changes in world events, the Company’s Directors believe it is of paramount importance to consider all factors in the kiln selection process in order to assure the project’s success both to our shareholders and to the project’s major potential customer. "The kiln selection process in which we are currently involved will also be of benefit in the selection of a 600 ton per day lime kiln for the Company’s Catedral lime project." The Company also announced that it has completed a detailed channel sampling program on its Catedral limestone deposit which lies 120 kilometers southeast of Santiago, Chile. The Upper Jurassic-Lower Cretaceous Lo Valdes Limestone Formation at Catedral is 350 meters thick. It strikes due north and dips steeply to the west. Three parallel sample lines each approximately 265 meters in length and 90 meters apart were run across the most exposed part of the Formation sampling rock outcrops or trenches to bed rock. On the northernmost line, all samples were taken over 2 meter lengths with as few interruptions as possible. On the other two lines, all samples were over a meter length. The results established the presence of 11 high grade limestone beds. Eight of these beds in the western part of the Formation average 9.58 meters in horizontal thickness, with true widths varying from 6 to 14 meters. The average grade of the high grade limestone contained in these eight beds is 90.54% CaCO3 and 1.42% MgCO3. More information is needed to determine the width of the three other beds. The samples were assayed by Vancouver-based Acme Laboratories’ Santiago laboratory. Check assays were performed by CTL Laboratories, based in Skokie, Illinois. The INFERRED RESOURCE tonnage based on the surface sampling is estimated to be 6,229,800 tons. Overall RESOURCE POTENTIAL tonnage for the district is near 50,000,000 tons of high grade limestone. Dr. David R. S. Thomson, EVP and Director of Exploration, stated, "We are very pleased with the results of the channel sampling program at Catedral. We are currently planning an initial 1,000 meter drill program scheduled to commence in December on the western section of the limestone formation in order to develop the limestone resources into the proven and probable category. The drill program is expected to develop proven and probable resources of limestone of approximately 5,000,000 tons grading 90% CaCO3. While further drilling could expect to develop substantial additional high grade limestone reserves, the currently planned drill program is expected to develop sufficient reserves to support the operation of a 600 ton per day lime kiln operation for more than ten years which is planned for in the pre-feasibility study currently in progress on the Catedral Lime Project." Dr. David R. S. Thomson is a "Qualified Person." South American Gold and Copper Company Limited is a mineral exploration and development company with properties and activities currently focused in Chile. It is also developing industrial minerals projects and will utilize potential earnings from these projects to further advance its exploration and development activities. Its common shares are listed on The Toronto Stock Exchange under the symbol SAG. For further information, please contact Stephen W. Houghton, President and CEO at telephone (212) 751-0083, fax (212) 751-0319. |