NEVADA AND THE WESTERN STATES — Golden Queen looks to improve Soledad Mountain

Golden Queen Mining (GQM-T) has initiated a program of underground sampling at the Soledad Mountain gold project, situated an hour’s drive north of Los Angeles, Calif., in hopes of improving the economics of the project.

Having completed one-fifth of its 10,000-metre sampling program, the company is already projecting an overall grade increase in the minable reserve of as much as 15%.

“An increase in the ore reserve grade will reduce cash costs per ounce and greatly improve project cash flow,” says Golden Queen President Steven Banning. Moreover, Banning adds, the improved economics that could result from a grade increase “will significantly enhance our prospects of raising project financing under current market conditions.”

The drill program follows several months of detailed mapping and data compilation that began in the fall of 1997.

Because previous reserve development targeted lower-grade haloes around high-grade veins, most of the vein material didn’t have adequate sample spacing to meet proven and probable reserve criteria, the company stated in a release. In addition, a large portion of the underground workings was not accessible until last year, limiting the amount of vein material that could be sampled. As a result, Golden Queen expects to expand the limits of the pit boundary to include these shallow workings.

Soledad Mountain contains minable reserves of 48.6 million tonnes grading 0.86 gram gold and 12.7 grams silver per tonne, for 1.56 million oz.

gold-equivalent. Metal prices of US$350 per oz. gold and US$5 per oz. silver were assumed in this calculation.

A bankable feasibility study completed in February determined that the operation could sustain annual production of 127,000 oz. gold and 1.5 million oz. silver over a period of nine years at a total cash cost of less than US$200 per oz. gold.

The study estimated capital costs to construct the operation to be US$64.7 million, plus an additional US$1.8 million for preproduction capital.

Golden Queen expects to have an updated minable reserve for the property by the end of the summer, at which time the company will seek project financing. Permits for the operation are already in place.