The preliminary feasibility study on the Baley gold deposit in the Chita region of eastern Russia has provided more encouragement to Armada Gold (ASE).
The company believes the study is conservative, and will proceed with a bankable feasibility study leading to a production decision.
The study, conducted by Davy International, determined that the cost of a 15,000-tonne-per-day, open-pit operation would be US$147 per oz.
It also found that the optimum pit design had a minable reserve of 55 million tonnes grading 3.41 grams gold per tonne, with a cutoff grade of 0.7 gram.
Processing capacity could be designed for 5 million tonnes of ore annually, and a recovery rate of 86% would allow for annual production of 470,000 oz. The proposed mill would have a flotation circuit, with gold recovered by pressure oxidation and carbon-in-pulp precipitation.
Capital costs are estimated at US$297 million (including a US$45-million contingency) for the whole operation. With gold prices at US$385 per oz., the payback period would be three years.
Armada also announced that a $7-million financing — increased to $7.5 million to meet heavy demand — has been completed.
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