Bluestone Resources (TSXV: BSR) witnessed a twofold increase in its shares following Guatemala’s approval of a shift in the Cerro Blanco gold project’s strategy, transitioning from underground to an open-pit operation. The company is also contemplating a potential sale of the project.
As of midday Wednesday in Toronto, Bluestone’s stock was trading at C$0.47, placing the company’s valuation at C$69.1 million. The stock has fluctuated within a 52-week range of C$0.18 to C$0.65
The Vancouver-based firm, in which the Lundin family trust holds a 26% stake, is proposing a $572 million project that has faced opposition from environmentalists. Situated near the El Salvador border, the project is expected to yield 2.7 million ounces of gold over a 14-year period, as per a feasibility study released in early 2022. In July, the company initiated a comprehensive review for the potential sale of its assets.
Expressing satisfaction, President, CEO, and Chairman Peter Hemstead stated in a release, “After dedicating over two years to obtaining the environmental permit amendment, we are pleased. We will continue with our strategic review, and having the environmental permit in hand helps de-risk the project.
Opponents argue that the project, acquired by Bluestone from Canadian miner Goldcorp in 2017 for C$18 million plus shares representing about 9.9% of Bluestone, will lead to contamination of the Güija lagoon and Lempa river—the primary water source for San Salvador, the capital of El Salvador.
Contrarily, Hemstead asserts that the local community is in favor of the project. He stated, “The design for Cerro Blanco reflects safe and responsible mining practices and sustainable socio-environmental management that can contribute significant economic growth, infrastructure, training, and job opportunities to Guatemala.
Silver too
According to the feasibility study, the project boasts an after-tax net present value of $1.1 billion at a 5% discount rate and an internal rate of return of 30%. The study anticipates the production of 10.2 million ounces of silver through the processing of 53.9 million tonnes of ore in a three-stage development.
As part of its ongoing review, the company is contemplating various options, including the potential sale of some or all of its assets, selling the entire company, or exploring merger and other business deal opportunities, as stated by the CEO.
Bluestone’s environmental approval coincides with the inauguration of new Guatemalan President Bernardo Arevalo on Monday, following a pro-democracy and anti-corruption campaign. Despite facing legal challenges aiming to prevent his assumption of office after a decisive victory in August, Arevalo was sworn in.
Various elements within the military, judiciary, and conservative political factions sought to invalidate the election results and suspend Arevalo’s Semilla party. Despite holding only 23 seats in the 160-member legislature, a party member was elected Congress president.
For the open-pit configuration of Cerro Blanco, Bluestone intends to implement dry stack tailings management and an independently monitored water treatment plant. During Goldcorp’s ownership, which is now part of Newmont (TSX: NGT; NYSE: NEM), 43,000 meters were drilled at Cerro Blanco, and 3.4 kilometers of underground works were constructed.
