Gold Reserve expands Brisas (May 23, 2005)

A successful round of exploration drilling this year by Gold Reserve (GRZ-T) at its large, low-grade Brisas gold-copper deposit in southeastern Venezuela has added 1.4 million oz. gold and 229 million lbs. copper to the resource base.

Based on a lower cutoff grade of 0.4 gram gold-equivalent and prices of US$350 per oz. gold and US$1 per lb. copper, Brisas’s measured and indicated resources now stand at 582 million tonnes grading 0.66 gram gold and 0.13% copper, or a whopping 12.4 million contained ounces gold and 1.6 billion lbs. (736,000 tonnes) copper.

In the inferred-resource category are another 129 million tonnes at 0.59 gram gold and 0.122% copper, for 2.4 million oz. gold and 346 million lbs. copper.

Pincock Allen & Holt of Denver is updating the deposit’s proven and probable reserves, which are expected to be announced in late May.

Aker Kvaerner Metals completed a bankable feasibility study at Brisas in January 2005. That study envisages a massive open pit that would use conventional truck-and-shovel mining methods to process up to 70,000 tonnes of ore per day, resulting in average annual production of 486,000 oz. gold and 63 million lbs. copper.

Initial capital costs and cash-operating costs are pegged at US$552 million and US$154 per oz. gold (net of copper byproduct at US$1 per lb.), respectively.

In the January study, proven and probable reserves stood at 414 million tonnes grading 0.69 gram gold and 0.13% copper, for 9.2 million oz. gold and 1.2 billion lbs. copper. Plant recoveries are estimated at 83% for gold and 87% for copper.

With a 2-year construction period anticipated, Brisas could be in production by 2007 if all outstanding permits are obtained without a hitch.

Brisas is near Crystallex International‘s (KRY-T) large, high-profile Las Cristinas gold deposit, and the two could conceivably be developed in tandem. However, in the past few years, the two companies have developed considerably different mine plans, with Gold Reserve seeking to process both gold and copper ore and Crystallex ignoring its byproduct copper potential and sticking with gold production.

Reserves at Las Cristinas stand at 246 million tonnes grading 1.3 grams gold per tonne, or more than 10 million contained ounces gold.

Crystallex hopes to be in production at Las Cristinas next year at a base-case level of 20,000 tonnes per day. If the company goes ahead with a proposed 40,000-tonne-per-day mine, Las Cristinas could be cranking out 500,000 oz. gold annually during the first five years of operation at that rate.