Undaunted by environmental and ownership issues,
Olympias, with proven and probable underground reserves of 11.5 million tonnes averaging 8.97 grams gold and 137.6 grams silver per tonne, plus 4.6% lead and 6.09% zinc, first went into production in 1976. Its original owner, Hellenic Chemical Products, went into bankruptcy, whereupon the mine was seized for debt by the National Bank of Greece.
The latest study, led by U.K.-based Kvaerner Metals, recommends an initial mining rate of 1,650 tonnes per day, starting in 2003. By 2007, the daily capacity would be expanded to 2,700 tonnes. Current reserves support a mine life of about 15 years.
The mill is designed with a 3-stage grinding circuit followed by differential flotation to produce galena and sphalerite concentrates, to be sent for smelting, and a pyrite concentrate, to go to a gold recovery plant. An initial bio-oxidation phase feeds a pressure-oxidation circuit, which is followed by conventional cyanidation. Recoveries from the oxidation circuits are around 95%.
During the first 11 years of production, the new gold plant will also process a stockpile of pyrite concentrate that contains 284,646 tonnes grading 22.92 grams gold and 24.5 grams silver. Over the first six years of operation, tailings from Olympias’ existing impoundment will also be fed to the gold plant. These tailings total 2.4 million tonnes averaging 3.42 grams gold and 14.3 grams silver.
Annual precious metal production over the first five years is expected to total 254,000 oz. gold in dor and 2.3 million oz. silver contained in lead concentrate.
With byproduct credits from silver, zinc and lead, the cash cost during the first five years is expected to be $91 per oz. gold. Over the total mine life, this is projected to fall to $87 per oz. The study was based on prices of US$325 per oz. for gold, US$5.50 per oz. for silver, US$1,215 per tonne for zinc and US$550 per tonne for lead.
Cash flow projections for the project give a net present value of US$172 million, based on a 5% discount rate. The project’s internal rate-of-return is 17%.
The capital cost has been estimated at US$248 million, with up to 35% of the capital expenditure coming from the Greek government in grants. TVX is putting up US$72 million in cash and will get US$130-million in limited recourse debt financing from Deutsche Bank. Deutsche is also kicking in a US$40-million bridging loan to permit work to begin before the government grants are available.
Permitting and environmental issues have been a major headache at Olympias, causing clashes between local demonstrators and police. Also, a terrorist group that firebombed a government office in Athens in late 1997 claimed its attack was provoked by TVX’s Greek projects.
TVX has several permit applications to submit over the next few months, but has received site pre-approval from the ministry of environment and will have its environmental impact study ready for government scrutiny this month. The revised feasibility study did conclude that the project can be operated in compliance with Greek and European Union regulatory standards.
The Kasandra property has also been the object of legal wrangling among TVX, Alpha Group and 1235866 Ontario (the successor to bankrupt Curragh Resources) and two companies associated with the numbered company. The Curragh companies recently agreed to pursue only Alpha’s carried 12% interest and its right to earn an additional 12% in its suit.
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