Montreal-based junior Fairstar Explorations (FFR-T) and Cyprus Canada have received a positive prefeasibility study for the Discovery zone in their jointly held Fenelon A gold project on the eastern extension of the Detour Lake break in northwestern Quebec.
CHIM International, a Montreal-based consulting firm, estimates the Discovery zone contains a resource of 252,000 tonnes grading 14.2 grams gold per tonne, equivalent to 115,000 contained ounces.
A 70-metre-deep open-pit mine is envisaged for Discovery, with a waste-to-ore stripping ratio of 15.6 to 1. Mining is expected to yield 137,000 of 17.5 grams gold, or 77,000 oz.
The recommended daily mining rate is 4,000 tonnes over a mine life of about three years. Operator Fairstar says all installations would be temporary and provided by contractors.
Based on a gold price of US$320 per oz., the study arrived at an operating cost of US$187 per oz. (including refining charges and royalties). A financial analysis indicates a cash flow of $8 million, a pretax rate of return of 67% and a net present value of $5 million, using a 12% discount rate. The payback period would be 17 months after startup.
Permitting, now under way, is expected to last six to seven months, and Fairstar is seeking flow-through share financing to fund a summer bulk-sampling program of 300 to 400 million tonnes.
The company has acquired roughly a 70% working interest in the Fenelon A project by spending $1.9-million on exploration of the 55-sq.-km property.
Cyprus Canada, a subsidiary of Cyprus Amax Minerals (CYM-N), holds the remainder.
The 1996-97 program at Fenelon A consisted of 77 holes totalling 15,866 metres, with half of the holes (6,496 metres) drilled in the Discovery zone.
The zone comprises six east-west-oriented, en echelon gold-bearing structures associated with a gabbro sill that has an overall northwest-southeast orientation. The mineralized zone, in which there is a strong nugget effect, has been investigated over a strike length of 250 metres and to a depth of 200-metres.
Among the uncut high-grade intersections encountered in the Discovery holes are the following:
* 0.7 metre (from 50.3 to 51 metres) grading 83.4 grams gold per tonne in hole 104;
* 0.6 metre (from 54.1 to 54.7 metres) of 74.2 grams in hole 105; * 1.6 metres (from 74.6 to 76.2 metres) of 124.7 grams in hole 123; * 4.3 metres (from 81.7 to 86 metres) of 109.5 grams in hole 135; * 0.9 metre (from 30.4 to 31.3 metres) of 37.5 grams in hole 137; * 0.4 metre (from 140.4 to 140.8 metres) of 74 grams in hole 147; and * 0.6 metre (from 189.4 to 190 metres) of 76.1 grams gold in hole 148.
As well, a geotechnical study determined that overburden at the site is fewer than 10 metres thick.
In November, Fairstar arranged a private placement of 1.6 million shares at 75cents each, resulting in proceeds of $1.2 million.
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