The recent rise in the price of gold has made Equinox Resources (TSE) all the more hopeful that its Zenda project, near Bakersfield, Calif., can soon be brought into production.
President Ross Beaty would like to see the precious metal hold above US$375 for at least 2-3 months to prove the sustainability of the recent price surge. He does not want to repeat the experience of the Van Stone zinc mine in northeastern Washington state. Equinox re-opened the mine in August, 1992, after zinc prices rebounded but was forced to close it once again in January after they collapsed.
Zenda is already fully permitted for a 3-5-year operation producing 15,000 oz. per year at an estimated operating cost of US$186 per oz. Proven, minable, open-pit, heap-leach reserves are estimated at 1.2 million tons grading 0.051 oz. gold and 0.83 oz. silver per ton at a strip ratio of about 1-to-1.
Capital cost is estimated at US$3.5 million and the company would likely raise the funds through some sort of gold loan facility, Beaty said. He added that a move in the price of gold above US$400 would afford Equinox much flexibility in that it could buy gold puts with a US$375 strike at a reasonable price, creating a safety net for the operation.
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