BASE METALS — Feasibility gives thumbs-up to Varvarinskoye gold-copper project

With a positive feasibility study now in hand, Kazakhstan Minerals (KMC.U-T) plans to seek financing for its 86%-owned, past-producing Varvarinskoye gold-copper deposit.

The study outlined a minable reserve in the proven and probable category of 20.8 million tonnes grading 2.98 grams gold-equivalent per tonne, for 2 million gold-equivalent oz.

Situated in the Southern Urals gold belt of northern Kazakstan, the property is expected to yield 182,000 oz. gold-equivalent per year for the first three years; over an 11-year mine life, the average annual production rate is pegged at 120,000 oz. gold-equivalent.

Cash operating costs over the first three years are estimated at US$156 per oz. gold-equivalent, whereas life-of-mine costs are expected to average US$188 per oz. The payback period for the US$87.4 million startup capital costs is estimated at 3.4 years.

The study recommends that ore be mined from five pits, with 70% of the tonnage coming from a single, central pit. The annual mining rate is estimated at 1.5 million tonnes, using a stripping ratio of 5 to 1.

Kazakhstan Minerals reports that the primary fresh sulphide material is amenable to a combination of flotation and cyanide leaching that would yield gold and copper recoveries approaching 77% and 78%, respectively. A flotation concentrate averaging 22% copper and 37 grams gold per tonne will be produced and railed to a smelter.

Four million tonnes of chalcocite-rich powder are to be treated by bacterial heap leaching. Bench-scale testing of powder ore at a Canadian laboratory has indicated that a copper recovery of 80% is possible, which would result in the production of an additional 16,100 tonnes of the red metal annually.

The likelihood of delineating additional reserves of powder ore is deemed high.

Following its discovery in 1936, Varvarinskoye yielded several million ounces of gold. However, the deposit was not systematically explored until 1985. Between 1985 and 1990, more than 100,000 metres of core drilling and several prospect shafts were completed in an effort to evaluate the resource. Most of this work was performed by the former Soviet Union’s geological survey. Between 1995 and October 1997, Kazakhstan Minerals completed 30,700 metres of diamond drilling in 174 holes.

Mineralization is strongly fault-controlled and hosted by

Devonian-Carboniferous volcanics, sediments and porphyritic intrusions.

The Kazakstani government holds a 14% interest in the project.