Sadiola mine to pour gold by year-end

The Sadiola Hill mine in Mali is 75% complete and is expected to pour its first gold by the end of 1996.

“Even at this early stage in its development, Sadiola will rank amongst the top 25 gold mines in the world,” President Todd Bruce told shareholders of International African Mining Gold (IMG-T) at the recent annual meeting. “And, I believe, as do many others, that we have only begun to scratch the surface.” The company holds a 38% interest in the $300-million, open-pit operation, which is expected to produce an average of 386,000 oz. gold per year during its first six years of operation. Direct cash costs are expected to be US$138 per oz., while total costs should be US$169 per oz.

Anglo American, which also owns 38% of Sadiola, is responsible for funding, building and operating the mine. The government of Mali holds 18%, while International Finance Corp., a division of the World Bank, has a 6% stake.

The project has an overall resource of 8 million oz. gold. Of this total, proven and probable reserves within the oxide open-pit amount to some 4.5 million oz., contained in 49.2 million tonnes averaging 2.86 grams gold per tonne.

“It is a remarkable achievement, considering that six years ago Sadiola Hill was a grassroots project,” IAMGOLD Co-Chairman Mark Nathanson told The Northern Miner.

Nathanson’s longstanding interest in Africa’s gold potential crystallized during a visit to Spain, where he studied historic records showing the routes of ancient caravans that brought gold northward from ancient African kingdoms. This effort led him to Mali, where he sought the advice of locals to identify previously mined areas. Sadiola Hill came to the forefront. But because the Russians were still present in the country at that time (the late 1970s), Nathanson had to wait until 1988 before he could acquire ground in the country.

Having secured the rights to Sadiola, IAMGOLD’s founders spent US$7 million over the next few years to outline a 3-million-oz. gold deposit before inviting Anglo to participate.

With mine construction in full swing, shareholders were told that more than 35,000 tonnes of plant and equipment have been transported to the remote site in western Mali. An airstrip has been built, roads constructed and a 56-km-long water pipeline from the Senegal River to Sadiola has been completed.

With Sadiola about to start production, IAMGOLD has turned its attention to the potential of other nearby targets. The company and Anglo have budgeted US$3 million to continue exploring their properties, which cover 400-sq.-km.

and surround the minesite.

And, in 50-50 partnership with Ashanti Goldfields (AHD-T), IAMGOLD is working on 11 concessions, covering more than 11,000 sq. km, in Senegal, Guinea, Ghana and Niger.

Dennis Jones, IAMGOLD’s manager of exploration, said a better understanding of Sadiola’s geological setting is helping to guide regional exploration.

While most companies working in West Africa are pursuing deposits similar to those found in eastern Canada’s greenstone belts, Jones said Sadiola may resemble the Carlin-type deposits of Nevada, although deep laterization prevents this from being immediately apparent.

Sadiola is similar to the Carlin deposits in several respects. It is hosted in carbonate-rocks and is associated with typical pathfinder elements such as antimony, arsenic, molybdenum and tungsten. And like Carlin, it has micron-sized disseminated gold and a high gold-to-silver ratio.

And, as at Carlin, regional and structural features are important. Sadiola is related to the regional Senegal-Mali fault, while locally, a fracture zone has been traced for 1.8 km along the western side of the deposit.

“There is a lot of activity along the Senegal-Mali fault — Sadiola, BHP’s Lulu deposit and Nevsun’s property — and one day I believe people will talk about it in the same way they talk about the Cadillac Break,” Jones said.

This year, the partners plan to test Sadiola’s potential for sulphide resources at depth. The mine plan is based on oxide reserves, and the proposed pit floor is at the interface of the mixed and sulphide material.

Sulphide mineralization occurs both in saprolitic/argillically altered soft material and within the fresh carbonate bedrock.

“Soft” sulphide mineralization has been intersected to a depth of 150 metres below the mixed-sulphide interface. An indicated resource of 7 million tonnes at 3.1 grams has been calculated, plus an additional 2.6 million tonnes of 3.12 grams in the inferred category.

The potential for sulphide mineralization in the hard, calcitic marble bedrock remains almost completely untested. Based on a preliminary assessment, Anglo has calculated inferred hard sulphide resources to a depth of 250 metres below surface (the depth of deepest drilling) of 32.8 million tonnes at 2.08 grams gold per tonne.

“We have a large oxide cap that is 1.8 km long in the initial open pit,” Jones said. “You can’t have that big an oxide cap without a deep root zone.

But it will take time, just as it took a long time to make the jump from the surface deposits to the underground potential at Carlin.”

Drilling this year will also test extensions of the Sadiola oxide deposit, as currently defined. Bruce told shareholders that based on results of previous, limited drilling, the ultimate length of the oxide pit “could almost double to 3.5 km from the existing 1.8 km.”

He added that the company has “high expectations” for this oxide drilling program, as the resource would not be in a satellite deposit. “They are a direct extension of the Sadiola orebody, as now defined, and, as such, would be easily and inexpensively mined.”

Exploration will also test a number of promising gold anomalies on the ground surrounding Sadiola, held through the 50-50 Sadex partnership with Anglo.

Already, the partners have outlined inferred oxide resources at the Alamoutala prospect, 13 km along strike to the north of Sadiola. A large geochemical soil anomaly, second only in size to Sadiola, has been outlined at the Dinguilou prospect, 4 km west of Alamoutala.

Bruce also outlined progress to date at the “Alliance properties,” held in partnership with Ashanti. Bambadji, in Senegal, has been worked for two years and is the most advanced target. It is situated some 100 km south of Sadiola, along the same regional fault that appears to control Sadiola mineralization.

A 5,000-metre diamond drill program in under way in an attempt to test the large KA and KB anomalies.

In Guinea, a 10,000-metre, reverse-circulation drill program is testing a large anomaly on the Mandiana concession. Results are awaited from a 3,000-metre drill program at the Alliance’s Saoura concession in Niger. And drilling is planned for later this year at various early-stage prospects in Ghana.

IAMGOLD is also exploring a large land package in Ecuador, mostly in the north. Gold and gold-copper targets are being pursued, and a minimum budget of $750,000 is planned for this year.

On the corporate front, still pending is a lawsuit filed in 1991 by Kinbauri Gold (KNBR-C) whereby that company is seeking damages of $10 million related to an alleged amalgamation agreement with IAMGOLD. Last year, IAMGOLD filed a countersuit seeking $10 million in damages from Kinbauri and other parties for alleged breach of fiduciary and confidentiality duties.