Defiance boosts Tasiast

With about 28,000 metres worth of reverse-circulation (RC) and core drilling under its belt, Defiance Mining (DM-T) has tabled an updated resource figure for its Tasiast gold project, 170 km east of the port city of Nouadhibou in Mauritania, West Africa.

ACA Howe International estimates that Tasiast’s measured and indicated resource consists of 10.1 million tonnes grading 3.1 grams gold, or more than 1 million contained ounces of gold. The estimate is based on a cutoff grade of 1 gram gold per tonne. About 65% of the tonnes are found in primary mineralization; the balance is oxide ore. An additional 14.4 million tonnes of inferred material runs 2.3 grams. The resources extend to a depth of 180 metres, and the deposit remains open at depth and along strike.

Earlier this summer, after a first pass of 155 RC holes, Defiance’s forerunner, Geomaque Explorations, estimated the deposit’s indicated resource to be 8.3 million tonnes grading 2.3 grams gold per tonne, or 611,000 contained ounces of gold. The inferred category included 21 million tonnes grading 1.8 grams gold (T.N.M., May 26-June 1/03).

The new figure will form the basis of an ongoing bankable feasibility study, which is expected to wrap up by the first quarter of 2004.

Tasiast comprises two main zones: the 4.8-km East Branch and the 2-km West Branch. So far, Defiance’s efforts have been focused on the East Branch’s central high-grade zone, known as Colonne Piment. Combined, the Colonne Piment and South Piment zones constitute nearly all the project’s previously tabled indicated resource and about two-thirds of the inferred resource.

Meanwhile, the company is reviewing the data obtained from infill drilling, plus exploration data acquired from previous owner Newmont Mining (NEM-N) in anticipation of a regional n exploration effort on its 16,000 sq. km of exploration licences in Mauritania.

To fund the exploration push, Defiance closed a private placement of 11.2 million units and 13.8 million subscription receipts priced at 50 apiece for gross proceeds of $12.5 million. Each share includes one share plus half a share purchase warrant. One warrant is good for one share at 80 per share for two years. Each subscription receipt is exchangeable for one unit at no cost.

Proceeds from the transaction will be held in escrow pending shareholder approval of the issuance of units for receipts, which will be sought at a special meeting of shareholders in late October.

During the three months ended June 30, Defiance incurred a loss of $2.8 million (or 10 per share), compared with a year-earlier loss of $1.8 million (13 per share). The increased loss is attributed to a $1.1-million one-time charge related deferred financing costs on the conversion of deferred financing fees into common shares. In the first half of 2003, the company incurred a loss of $4.1 million (17 per share).

During the recent quarter, the Vueltas mine in Honduras produced a record 11,652 oz. gold at a cash cost of US$265 per oz. The wholly owned mine is expected to produce 40,000 oz. in 2003.

At the end of June, Defiance had $3.4 million in cash, up from $328,000 at the end of 2002. The company’s working-capital deficit had been trimmed to $368,000 from $959,000, and long-term debt was down by $3.3 million at $2.7 million, excluding provisions for site reclamation.