Esperanza May Start Two Gold-Silver Mines by 2011, Pincus Says

By Karla Palomo and Alex Emery

April 9 (Bloomberg) -- Esperanza Silver Corp., a Canadian minerals exploration company, plans to start producing silver and gold at mines in Peru and Mexico by 2011. The next steps for Vancouver-based Esperanza will be to finish feasibility studies at the San Luis deposit in Peru this year, and at Cerro Jumil in Mexico in 2009, President William Pincus said yesterday in a Bloomberg Television interview. “San Luis will start producing first as it will be a more profitable mine,'' Pincus said, in comments from New York. “It's a high-grade discovery.” Gold and silver have had annual gains since 2000 and rallied this year as a weaker dollar and rising oil costs boosted the appeal of the precious metals as inflation hedges. Industrial demand also has grown, said Pincus, who has worked in the mining industry for 32 years. San Luis may produce as much as 100,000 ounces of gold and 2 million ounces of silver a year, while Cerro Jumil may yield as much as 150,000 ounces of gold, Pincus said. Each mine could cost between $50 million and $100 million to build, he said.

Esperanza plans to spend $8 million on exploration this year, similar to 2007, Pincus said. He said partner Silver Standard Resources Inc. is helping to finance development of the San Luis project. Silver Standard reported last month that it spent C$8.2 million ($7.85 million) on exploration at San Luis in 2007. The company, also based in Vancouver, said in November that it planned to increase its stake in San Luis to 70 percent from 55 percent by paying to complete the feasibility study.

Mining in Peru

Peru, the world's largest silver producer and No. 5 in gold, is counting on $13 billion in mining investments to help drive economic growth of 7 percent in each of the next four years. Gold futures for June delivery advanced $11.30, or 1.2 percent, to $929.30 an ounce at 11:13 a.m. on the New York Mercantile Exchange's Comex division. The metal, up 31 percent last year, reached a record $1,033.90 an ounce on March 17. Silver futures for May delivery rose 56.7 cents, or 3.2 percent, to $18.275 an ounce in New York. The price jumped 19 percent this year before today, after rising 15 percent in 2007.

“We're seeing an upward tendency for prices,” Pincus said. “With the lack of confidence in the dollar, there's a real possibility we'll see prices far above what we're seeing right now.” Esperanza was unchanged today after declining 3 cents, or 2.3 percent, to C$1.26 yesterday in Toronto Stock Exchange trading. Silver Standard gained 48 cents, or 1.6 percent, to C$31.25 at 11:14 a.m. in Toronto.

--With reporting by Marisela Riveros in New York.

Editors: Ted Bunker, Kevin Orland.

To contact the reporters on this story:

Alex Emery in Lima at +511-222-6262 or aemery1@bloomberg.net

Karla Palomo in New York at +1-212-617-5189 or kpalomo@bloomberg.net

To contact the editor responsible for this story:

Steve Stroth at +1-312-443-5931 or sstroth@bloomberg.net

Esperanza Silver Corporation
570 Granville Street, Suite 300
Vancouver, British Columbia, Canada V6C 3P1