European Mnrls funds work at Varvarinskoye

Vancouver — London-based European Minerals (EPM-T) will use the proceeds of a $97.5-million financing to develop an open-pit mine at its 86%-owned Varvarinskoye gold-copper deposit in northern Kazakstan.

A syndicate led by Canaccord Capital and including Haywood Securities and Pacific International Securities arranged the financing.

Capital costs for the mine are estimated at US$115 million, including prestripping, processing plants, and infrastructure.

Varvarinskoye is a gold-copper skarn deposit with predominantly pyrite and chalcopyrite mineralization, hosted in a Paleozoic volcano-sedimentary sequence. The project is in an industrial area near the village of Varvarinka and the cities of Kustanai, Rudny and Lisakovsk.

In the spring of 2004, European Minerals commissioned two consulting firms to update a 1998 bankable feasibility study by Bateman Engineering. Arizona-based Mintec focused on reserves and resources, mine scheduling, and capital and operating costs, while South Africa’s MDM Ferroman managed the overall study and produced the final document, which was delivered to the company late last year.

The updated final study concluded that the project was “technically feasible and economically viable,” and recommended that it be advanced to production.

The proposed mine life is estimated at 15 years, based on a proven and probable reserve of 60.3 million tonnes containing 2.3 million oz. gold and 269 million lbs. copper. The processing plant, split between flotation and cyanide-leaching circuits, will treat 4.2 million tonnes annually. Total recoverable gold is estimated at 1.9 million oz., along with 216 million lbs. copper, over the mine life.

Cash costs per ounce of gold produced, including copper credits, should average US$87 in the first six years of production. Over the total mine life, however, cash costs will climb to an average of US$158 per oz.

AIM-listed Oriel Resources holds the remaining 14% interest in Varvarinskoye.