Samax, Resolute to cut ribbon on Tanzanian gold mine

Having signed a formal agreement with government officials, equal partners Samax Gold (SMX-T) and Resolute Samantha of Australia are proceeding with construction of the Golden Pride open-pit gold mine in the Lake Victoria Goldfields district of northwestern Tanzania.

Construction and development will begin in August and continue over the following 14 months. Preproduction is slated to start in mid-1998, which, if met, would make Golden Pride the first large-scale gold mine to start up since since Tanzania gained independence from Britain in 1961. The mine is expected to crank out 170,000 oz. gold per year at a cash cost of US$210 per oz.

Over an estimated mine life of 10 years, the stripping ratio is projected to be 6-To-1.

Proven reserves stand at 8.5 million tonnes grading 3.3 grams gold per tonne, with probable reserves pegged at 1.3 million tonnes grading 3.09 grams gold.

These reserves lie within a total geological resource of 27.7 million tonnes grading 2.6 grams gold, based on a cutoff grade of 1 gram gold.

Capital costs are expected to total US$50 million, with the first US$18 million funded by Resolute.

As project manager and future operator, Resolute is also required to obtain non-recourse project financing for the outstanding balance. Samax’s share of the project debt is estimated at US$16 million, which will be repaid out of its half-share of operating revenue.

“This is a start of a significant buildup for us across Africa,” says Michael Martineau, Samax’s chief executive officer. “It will catapult us from one of the smaller companies in Africa to one of the larger ones.”

Although Samax does produce gold from its 50.4%-owned Prestea Sankofa tailings project in Ghana, that is a much smaller operation, producing about 20,000 oz. per year.

Golden Pride occurs within a transgressive shear zone in the Archean-Aged Nzega greenstone belt. The main orebody comprises three parallel strands of the main shear zone and is hosted by siltstones and volcanic ash tuffs within a sequence of shales. Each shear zone, in turn, contains a higher-grade core consisting of silica breccia.

Gold mineralization occurs predominantly as fine-grained disseminations in pyrite veins, except in the higher-grade cores, where it occurs in free form.

About 15% of the total gold content in the three shear zones occurs in native form and will therefore be extracted by gravity methods. The remaining material will be processed using conventional carbon-in-leach methods. The two methods are expected to yield recovery rates in excess of 90%.

Mineralization is open both along strike and at depth.

While development progresses, the partners will continue to explore for additional resources. Samax currently has exploration rights to 3,750 sq. km of surrounding ground and will spend US$1.5 million exploring several previously identified targets, as well as carry out property-wide reconnaissance work. Resolute will provide the funding as part of its requirements to earn a 50% interest.