Milling plans firm up at Albino

Crystallex International (VSE) has appointed consultants Paulo Abib and Kilborn Engineering to provide engineering and project management of a proposed mill at its Albino concession in Venezuela.

Eurus Resource (VSE) is earning a half interest in the property by funding development of the mill and covering all property payments.

Property payments total US$10 million, of which US$1 million has been paid. A further payment of US$500,000 is due Dec. 22, 1993, followed by three others: US$1.5 million in June, 1994; US$2 million in December, 1994; US$2 million in June, 1995; and US$3 million in December, 1995.

Cash flow from the project will be split between Eurus (80%) and Crystallex (20%), until development costs (not including property payments) have been recouped.

At that point, the Eurus interest will drop 5% for each additional 100,000 tons of ore milled, until cash flow is split equally.

The 400-tonne-per-day cyanide mill, which will process weathered surficial material, is expected to cost US$1.7 million.

The companies are evaluating a short list of leaching facilities suitable for shipping to Venezuela, and production is scheduled to begin in the second quarter of 1994.

To date, work on Albino has focused on the surface weathered material and existing tailings; this is because rights to the underlying hardrock concession have not yet been issued. Luca Riccio, chief geologist, expects to the hardrock permits to be issued in due course.

Initial feed for the mill will come from two zones — La Conductora and Aguao 2 — as well as an old tailings pile.

The tailings pile contains a proven reserve of 50,800 tonnes grading 15.3 grams gold plus a probable reserve of 23,800 tonnes grading 14.8 grams gold per tonne.

The tailings have already been re-processed once, Riccio noted. They were initially produced by sluicing and, at a later date, run through a gravity circuit. The ore is “clayey” and the gold is extremely fine, which explains the relatively high grade of the tailings, Riccio explained. Bench-scale tests on the tailings and the surface ore returned recoveries exceeding 90% gold, and these were subsequently confirmed by a 2,000-tonne bulk test at the nearby Oro Uno cyanide mill.

The deposit known as La Conductora contains a proven reserve of 43,000 tonnes grading 20.6 grams gold plus 20,000 tonnes at 20.6 grams gold in the probable category. Drilling tested the zone to a depth of 30 metres and it remains open to depth.

The other zone, Aguao 2, is open to depth and along strike. It contains an estimated proven reserve of 35,300 tonnes grading 6.7 grams gold plus a possible reserve of 33,600 tonnes at 6.7 grams gold per tonne. Initial production from La Conductora and the mill tailings is expected to produce almost a million grams (30,000 oz.) of gold in the first six months at a cash cost of US$3.22 per gram (US$100 per oz.)

Several of other lower-grade tailings deposits are on the property and, in addition, the company has identified gold anomalies south of the known deposits. Crystallex is awaiting permits to conduct further exploration to follow up these anomalies.

Eurus has about nine million shares outstanding and $1 million in working capital. Additional financing will be required to cover the December property payment, as well as the costs of developing Albino.

Crystallex controls Eurus’ board and owns 750,000 shares of the company plus warrants to buy an additional 750,000 shares at $1.75. Crystallex has about seven million shares outstanding and about $1 million in working capital.