Partners rework Tonkin Springs plan (January 24, 2005)

Encouraged by bioleaching tests, BacTech Mining (BM-V) will submit a new operating plan for its 55%-owned Tonkin Springs open-pit gold project in Nevada.

A coarse grind of 300 microns from the TSP-1 deposit’s refractory gold-bearing sulphides was found to be amenable to bioleaching, with recoveries running 86-95%.

BacTech’s in-house plans call for the TSP-1 deposit to be mined by contractors at the daily rate of 1,500 tons. Annual production is pegged at 30,000 oz. gold, based on 85% gold recovery. At last count, the TSP-1 was home to 2.6 million tonnes grading 0.07 oz. gold per ton, or 184 oz. gold.

Initially BacTech would pull oxide material from the Rooster deposit at the daily rate of 2,000 tons, then place it on the heap-leach pad. Annual production would be 17,000 oz. gold, assuming 65% gold recovery. Thereafter, the deposit’s refractory sulphides would be mined at 1,500 tons per day.

The oxide portion of the Rooster deposit is pegged at 3.2 million tonnes 0.04 oz. per ton; the sulphides amount to 1.7 million tonnes at 0.05 oz., or, combined, 205,000 oz. gold.

The new plan, which envisages eight years of production, carries a price tag of US$9.7 million, including remaining acquisition costs of US$375,000, working capital of US$1 million, and a contingency of US$1.3 million. The price includes costs related to upgrading the mill, bioleaching, cyanidation and gold refinery circuits. The tailings facility and heap-leach pad also require upgrading.

The estimated capital cost is 69.2% less than that previously outlined in a feasibility study by Micon International. The net present value stands at more than US$20 million (US$18 million previously); the internal rate of return, at more than 30% (28% previously).

Some 2.3 million tonnes of mineable reserves grading 0.09 oz. gold per ton in the previously defined O-15 pit have been excluded from the latest study, owing to a lack of mine planning and metallurgical information. Initial leaching tests have shown 84-88% gold recovery at a coarse grind of 300 microns, and 87-90% at a finer grind of 100 microns.

The limestone cap overlying O-15 could be used to neutralize the acidic leach liquors produced via the bioleaching of TSP-1 ore. Inclusion of O-15 would require additional drilling, metallurgical testing and engineering, and an increase the grinding circuit capacity.

Micon previously estimated the project’s total reserves at 10.7 million tons averaging 0.06 oz. gold per ton, or 646,000 oz. gold.

BacTech acquired its stake in the formerly producing Tonkin Springs project from U.S. Gold (USGL-O) for US$1.7 million in July 2003. The project covers 36 sq. miles immediately south of the Cortez joint venture between Placer Dome (PDG-T) and Rio Tinto (RTP-N). Placer is the operator and 60%-owner of that joint venture.

Shares in BacTech were 2 higher at 27 in mid-afternoon trading in Vancouver following the news on Jan. 14; U.S. Gold was 3 higher at 40 in over-the-counter trading.