Desert Sun confirms new zone in Brazil

The first hole of an underground drill program has confirmed the existence of a new zone at the past-producing Jacobina mine in the Bahia gold belt.

Desert Sun Mining (DSM-T) is in the midst of a 41,500-metre program aimed at bumping up known resources and testing new targets. The latest results come from the Canavieiras area, for which 6,500 meters have been allocated.

Hole CAN-18 targeted the Hollandez reef, cutting 7.2 metres (true-width) at 3.34 grams gold per tonne, including 3.96 grams over the first 5 metres. The mineralized interval begins 82 metres below surface and is similar to those encountered in wide-spaced, historic drilling, such as 6.75 grams over 11.3 metres.

Hole 18 was drilled from a crosscut on the east side of the mine.

The Hollandez reef sits 20 metres above the Piritoso and Liberino reefs, from which most of Canavieiras’ historic ore (458,247 tonnes grading 8.65 grams) was sourced. It varies from 15 to 20 metres in thickness, extends for 1 km along a northerly strike and is 200 metres wide.

Desert Sun also is targeting the Maneira, MU and LU reefs, as well as a possible high-grade extension to an old stope in the southern part of the mine. Like Hollandez, Maneira sits above the old workings, whereas MU and LU lie below them.

Based on an independent review, Canavieiras hosts 4.03 million tonnes of inferred resources grading 3.55 grams gold. Another 659,000 tonnes at 5.88 grams is classified as measured and indicated, with most falling in the latter category.

Owing to local folding and subsequent hydrothermal remobilization, gold grades in the Canavieiras area can be high relative to other areas at Jacobina. However, all the known gold is hosted by the same rock type — quartz-pebble conglomerate.

Canavieiras lies 3 km north of the old processing plant and, at last report, hosted 4.03 million tonnes of inferred resources grading 3.55 grams gold. Another 659,000 tonnes at 5.88 grams is classified as measured and indicated, with most falling in the latter category.

Desert Sun’s goal is to prove up Canavieiras and other areas (which, combined, host 29.5 million tonnes of inferred material grading 2.6 grams gold) in order to extend Jacobina’s proposed mine life. Last fall, an independent feasibility study concluded that existing reserves can support annual production of 100,000 oz. over 7 years. The reserves, tallied at 10.7 million tonnes grading 2.2 grams gold, are divided among the Jaolo Belo, Basal Reef and Sierra do Corrego areas.

Total capital costs are pegged at US$39.3 million, and cash production costs at US$189 per oz.

At a gold price of US$350 per oz. and a 5% discount rate, the project generates a net present value of US$127 million (using a 5% discount rate). The internal rate of return rings in at 49%.