Taror prefeasibility nears completion

Depressed gold prices and lower production translated into a 1999 loss for Nelson Gold (NLG-T).

Net losses totalled US$1.5 million on revenue of US$13 million, compared with US$66.64 million on US$18 million in 1998. The 1998 period included a US$67.6-million writedown on the company’s investment in Zeravshan Gold, operator of the Jilau gold mine in Tajikistan. Nelson holds a 44% interest in Zeravshan; the Republic of Tajikistan holds 51%; and International Finance Corp. holds 5%.

Zeravshan cranked out 79,500 oz. gold at US$230 per oz. last year, significantly less than in 1998, owing to lower headgrades. However, milling costs dropped by 22% to US$10.11 per tonne, as the costs were spread over a larger volume of ore.

The company realized US$277 per oz. for its gold in 1999, compared with US$295 in 1998. In 2000, Zeravshan is expected to produce 80,000 oz. at US$210-225 per oz.

Meanwhile, at the nearby Taror sulphide deposit, an feasibility study is expected to be completed in the first quarter of 2001. Situated 10 km from Jilau, the deposit saw some underground development last year, though this was suspended in order to preserve consumables, such as cyanide and diesel, for Jilua.

Taror contains a resource of about 10.8 million tonnes grading 5.35 grams gold and 16.45 grams silver per tonne, plus 0.85% copper. The metals will be won either by low-temperature, low-pressure oxidation (called Activox) or by biological leaching.

So far, bench-scale tests have shown that bioleaching is superior, with overall recoveries of 79.1% for gold and 58.9% for copper.

Elsewhere in Tajikistan, Zeravshan is carrying out a prefeasibility study at the Chore project, where refractory-sulphide resources are pegged at 7 million tonnes grading 4.5 grams gold. The study is assessing the viability of processing Chore ore at a nearby antimony mill and then trucking a flotation concentrate 145 km west to Taror, where it would serve as feed for the proposed bioleaching plant.

In other news, Nelson plans to raise US$12.5 million by issuing 130.6 million treasury shares to a Kazakhstani-based company. If approved, the deal would more than double the company’s current number of outstanding shares to 249.4 million.

The deal, which is still subject to final documentation and regulatory approval, would see 72.9 million warrants granted as well. The first 12.9 million would be exercisable at 13.9 each, and the remainder at 27 each; in certain cases, the warrants could be exchanged for an equivalent value in oil or gold properties.

Funds are earmarked for the Zeravshan joint venture and for the acquisition of new properties in Central Asia. Towards that end, Nelson plans to change its name to Nelson Resources.