Carosue Dam gets nod

A positive bankable feasibility study on the Carosue Dam gold project in Australia paves the way for Teck‘s (TEK-T) 79%-owned subsidiary, PacMin Mining, to begin development.

Situated 110 km northeast of Kalgoorlie, the project is expected to crank out 110,000-140,000 oz. gold per year from three deposits over a 10-year mine life.

Infill drilling (part of the feasibility study) has resulted in a 17% increase in reserves. The total primary mill feed from all three deposits now stands at 15.5 million tonnes grading 2.18 grams gold per tonne, equivalent to 1.1 million contained ounces, plus low-grade material to the tune of 3.5 million tonnes grading 1.1 grams gold, or 130,000 contained ounces. Proven and probable reserves in each deposit are as follows:

– Karari deposit — Primary mill feed: 7.5 million tonnes grading 2.31 grams gold per tonne, or 553,701 contained ounces. Low-grade material: 1.1 million tonnes grading 1.12 grams gold, or 58,176 contained ounces.

– Whirling Dervish deposit — Primary mill feed: 5.7 million tonnes grading 2.04 grams gold, or 372,420 contained oz. Low-grade material: 1.2 million tonnes grading 1.1 grams gold, or 42,829 contained ounces.

– Luvironza deposit — Primary mill feed: 2.4 million tonnes grading 2.07 grams gold, or 159,606 contained oz. Low-grade material: 711,000 tonnes grading 1.1 grams gold, or 24,935 contained oz.

The feasibility study envisions a stand-alone operation yielding 1.8 million to 2 million tonnes per year. Initial cash operating costs are pegged at US$190 per oz. at startup, with the first gold pour scheduled for the first quarter of 2001.

PacMin intends to extend the existing mineralization downdip and down-plunge of the deposits.

Deep drilling at the Karari deposit identified a zone of thick, high-grade mineralization. Intercepts included: 18 metres grading 4.05 grams gold, 7 metres averaging 4.97 grams gold; and 7 metres averaging 4.93 gram gold. Drilling in this zone is widely spaced.

The payback period for Carosue Dam is expected to be 2-3 years, with capital costs slated at US$28 million. Financing will be derived from a combination of PacMin’s internal cash resources and an extension of the company’s banking facilities.

After the project enters production, PacMin’s combined total gold production from Carosue Dam and the nearby Tarmoola mine is expected to be 350,000 oz. per year (of this, Tarmoola accounts for 200,000 oz.).

PacMin purchased Carosue Dam and various other gold assets from Western Metals (wm-t) in December 1998 for an initial payment of $6.6 million cash plus 4 million shares. In July 1999, PacMin paid a further $1.9 million to Western Metals as an early pay-out of a deferred cash payment equivalent to $3.80 per oz. recoverable gold, up to a maximum of $3.8 million, payable on completion of a bankable feasibility study.

The Carosue Dam project, along with 800 sq. km of exploration tenements, covers a significant portion of the Pinjin area along the Keith-Kilkenny fault.