Golden Band moves toward production

SITE VISIT

La Ronge, Sask. — After more than a decade of land acquisition and exploration on its La Ronge gold belt projects in northern Saskatchewan, the crew of Golden Band Resources (GBN-V, GBRIF-O) can almost taste the company’s forthcoming transition to producer status.

With its chairman, Ronald Netolitzky, having a background in Saskatchewan and the La Ronge area dating back some 30-plus years, the company saw the potential remaining in the historic gold camp a decade ago. Since the mid-1990s, Golden Band has embarked on a plan of strategically consolidating land in the 100-km-long Archean gold belt. It also acquired the fully permitted Jolu gold mill to serve as a production centre.

The Saskatoon, Sask.-based explorer now boasts 10 gold deposits in its 750-sq.-km property portfolio, four earmarked for near-term production expected to start in 2009.

The most advanced is its Bingo deposit, positioned in the southern end of the gold belt, where Golden Band recently began development of a decline to access the orebody.

A preliminary economic assessment earlier this year looked at higher-grade portions of Bingo, as well as the Komis and EP gold deposits about 80 km northeast, feeding the Jolu mill with expected ore throughput of 700 tonnes per day.

The scoping study predicted that an initial 4-year mining plan targeting the three deposits would be economically viable.

The report, released in the spring, projected initial capital spending of $17.1 million, although that is expected to rise with the company’s recently expanded development plans. Cost estimates include lease purchases of major mining equipment, refurbishment and expansion of the Jolu facility, and surface infrastructure installations. The payback period was estimated at 2.2 years.

Based on US$629 per oz. gold, operations are expected to generate net pretax cash flow of $11.3 million and provide an internal rate of return (IRR) of 24.9% with a pretax net present value (NPV) of $6.5 million using a 7% discount rate.

Total operating costs are pegged at $91.45 per tonne processed, or US$464 per oz. of gold.

With over 160 holes drilled on Bingo, Golden Band has tallied an indicated resource of 22,900 tonnes at 13.8 grams gold per tonne plus an additional 136,500 inferred tonnes at 12.7 grams gold in the deposit. The high-grade vein system is estimated to host just over 66,000 contained ounces gold, however, recent drilling has turned in wide, high-grade intercepts and also confirmed the interpreted down-plunge extension of the deposit.

Company president and CEO Rodney Orr says that between the latest near-surface high-grade mineralization and validation of the depth expansion model, there is lots of room to grow the Bingo deposit.

The deepest mineralization identified so far at Bingo is at about 220 metres.

Infill drilling is expected to upgrade a substantial portion of the near-surface inferred resource to the indicated category.

A 2-phase, underground development program is planned for Bingo. An initial 220-metre decline currently in development will be driven to the 350-metre level, about 50 metres below surface. That will be followed by about 130 metres of drifting along the strike of the deposit.

The second phase would see expansion to the 300-metre level along with another round of drift sampling along strike to get a handle on grade continuity. About 5,000 tonnes of bulk-sample material is expected to be extracted and will be stockpiled for eventual processing through the mill.

Greater Waddy Lake

Three open-pit projects located northeast up the belt comprise the other half of Golden Band’s development plans.

Lumped into an area dubbed the Greater Waddy Lake region, the deposits form satellite bodies that will feed the Jolu mill.

The Komis deposit holds a considerable portion of Golden Band’s current gold inventory with a measured and indicated resource of about 919,300 tonnes grading 4.04 grams gold, about 119,500 contained ounces, using a 1-gram gold cutoff grade.

“It’s a medium-sized open pit — it has around a four-year life based on the study, and it’ll get trucked down the provincial highway to the Jolu site,” says Golden Band’s chief operating officer and vice-president of operations, Gary Haywood.

A modelled pit at the smaller EP deposit contains roughly 24,000 tonnes of 6.4 grams gold, about 4,900 contained ounces, however, the company has noted a significant occurrence of copper mineralization associated with the zone that may add a credit.

Tower East is the recent addition to the company’s open-pit development plans and it kicks in considerable tonnage to the operation. The resource at Tower East stands at 4.8 million tonnes grading 2.07 grams gold, or about 318,600 contained ounces gold.

“What we’re looking at in our expanded scoping study is that the Tower East deposit will take us out to around a ten-year mine life — it’s a good base load of ore for us,” Haywood explains.

Golden Band says it may be able to blend higher-grade ore from Bingo with lower-grade feed from its Waddy Lake area open pits.

The company is leaning towards contract mining of the deposits, removing the upfront capital requirements.

Jolu mill

One of Golden Band’s big advantages is its licensed Jolu mill, complete with permitted tailings pond. The mill forms the backbone of its development plans.

It was built in the late 1980s with an operating capacity of 400-500 tonnes per day and underwent refurbishment in 1996 to process ore from Komis. But after processing just over 100,000 tonnes of ore, Jolu was shut down in 1997 due to the weak bullion price.

Golden Band gained a 30% stake in the project in 2003, boosting its ownership to 100% in 2004 in return for 1.2 million shares.

Jolu is centrally situated just off a paved highway and roughly halfway between Waddy Lake and Bingo.

During a recent visit to the project, a crew was in the process of cleaning and refurbishing the mill, which is in good condition — a testament to its previous orderly shutdown. If Golden Band had to build a new mill, costs could easily run into the $40-50 million range.

First Nations relations

Aside from being situated in a pro-development region of Saskatchewan, Golden Band has gone all out in working with the First Nations groups in the La Ronge region — holding community information sessions and moving to promote involvement at the development stage.

The project tour coincided with a recent signing ceremony between the company and the Lac La Ronge Indian Band, marking an agreement outlining the framework for a mutually beneficial relationship.

“Rather than always being on the outside looking in, we are involved in serving the needs of Golden Band from the first stages of development,” says Chief Tammy Cook-Searson. “To date, we have enjoyed great co-operation from Golden Band. Most of the environmental work today has been performed by Canada North Environmental Services, which we own. And even today, we have La Ronge Band members at the site completing initial work before the first shovel goes into the ground.”

The band’s business arm, Kitsaki Management, has also signed a general services agreement with Golden Band that covers the exploration stage through to mining.

Kitsaki has already established a joint-venture relationship with Procon Mining and Tunnelling and is developing the underground workings at Bingo and refurbishing the Jolu mill.

With about 101 million shares outstanding, Golden Band posts a $45-million market capitalization at its recent share price of 45. The stock has a 52-week price range of 34-68.