Bolivar to extend life of Tomi

During a 1-year preproduction and ramping-up period, the Tomi gold mine in Venezuela’s El Callao district processed and sold 30,000 oz. gold and generated revenue of US$8.6 million. The open-pit operation reached full capacity in late April of this year.

Over the next seven years, operator Bolivar Goldfields (BVG-T) expects to mine 2.6 million tons grading an average of 4.8 grams gold per tonne, and produce 46,000 oz. annually at a cash cost of US$173 per oz.

Production in the next two years will be higher than average — 70,000 oz. at a cost of US$140 per oz. — owing to higher grades and lower stripping ratios. Looking ahead, Bolivar sees potential to expand Tomi’s mine life by developing reserves in four known zones, and in possible extensions at depth (which would require a shift to underground mining). The company is also negotiating to acquire three adjacent concessions.

Processing takes place at the nearby Revemin mill, which Bolivar purchased last year for US$8.25 million and 1 million of its common shares. The plant was built in the late 1980s to treat tailings and higher-grade material from nearby mines.

Bolivar says the acquisition allowed it to become a gold producer at least 18 months ahead of schedule, and at a lower cost, because it no longer had to build a separate processing plant at Tomi.

By June of this year, the company expects to begin repaying debt associated with mine development and the Revemin acquisition. A year ago, the company obtained a US$20-million loan from Barclays Bank and Standard Bank London for the development of Tomi and for the acquisition and refurbishment of the Revemin plant.

In conjunction with the debt facility, Bolivar hedged about 80% of gold to be produced by the end of the 2002 first quarter, at an average price of US$305 per oz.

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