Granduc Mines and Cazador Explorations have merged to form Granduc Mining (TSE) and the new entity is looking to expand its Keystone gold project in Manitoba.
Granduc is earning a 50% interest in the project from Black Hawk Mining (TSE) and is now milling about 1,100 tons per day. It hopes to increase this to 1,600-2,000 tons per day next year.
Ore is mined by open pit at the BT deposit and then trucked about eight miles to the Lynn mill, near Lynn Lake.
Between startup on Sept. 12 and Oct. 31, 2,015 oz. gold were poured. A further 2,750 oz. are scheduled to be poured in November.
Annual production is projected at 40,000 oz. gold at a cash production cost of US$203 per oz.
Granduc expects to complete a feasibility for the plant expansion by the end of the year.
The expansion, which involves equipping the existing mill with grinding capacity, could be completed by April, 1994.
Open pit reserves at the BT deposit are estimated at 1.4 million tons grading 0.083 oz. gold per ton, giving the operation a mine life of about 30 months. Further reserves are available at the nearby Farley Lake deposit, which contains about 1.8 million tons grading 0.11 oz. gold.
Granduc has signed a letter of intent with Manitoba Mineral Resources to buy its 55.2% controlling interest in the Farley Lake project.
Golden Band Resources (VSE), through Mingold Resources, controls the remaining 44.8% interest in Farley Lake and also has a right of first refusal on Manitoba Mineral’s interest.
According to Granduc and Cazador’s amalgamation agreement, one share of Granduc Mines was exchangeable into one share of the new Granduc Mining while one share of Cazador was exchangeable for a 0.6 share of the new company. As a result, the new company has about 11.1 million shares outstanding. To date, Granduc has completed between two-thirds and three-quarters of the required $10 million in project expenditures to earn a half interest in Keystone.
On completion of the earn-in, cash flow will be split 70% to Granduc and 30% to Black Hawk until the $10 million is recovered. Cash flow is then split 70% to Black Hawk and 30% to Granduc until a further $10 million is paid out. Granduc also receives an operator’s fee of 5% of net cash flow.
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