Gold Reserve produces prefeasibility study at Las Brisas

A detailed prefeasibility study has branded the Brisas gold-copper project in southeastern Venezuela uneconomic, Gold Reserve (GLR-T) reports.

Independent consulting firm JE MinCorp, a Denver-based division of Jacobs Engineering, completed the assessment of the property for the company.

Assuming long-term prices of US$375 per oz. gold and US$1 per lb. copper, the study pegs reserves at Brisas at 249 million tonnes grading 0.7 gram gold and 0.14% copper (or 0.84 gram gold-equivalent), for a contained 5.6 million oz.

gold and 747 million lbs. copper.

Assuming less optimistic long-term prices of US$350 per oz. gold and 90cents per lb. copper, the reserves decrease only slightly, to 5.5 million oz. gold and 723 million lbs. copper.

Using prices closer to current market conditions of US$300 gold and 80cents copper, the reserves dip to 177.5 million tonnes grading 0.8 gram gold and 0.12% copper, for a contained 4.6 million oz. gold and 454 million lbs.

copper. The stripping ratio would be 1.67 to 1.

The capital cost of mine construction is estimated at US$293 million.

The operation would be a large open pit using standard truck-and-shovel methods to process 55,000 tonnes per day. The average annual production would be 335,000 oz. gold and 38.3 million lbs. copper over a mine life of 14 years.

The project would have an estimated pre-tax internal rate of return of 11.8% and a payback of about seven years. Production cash costs are projected to be US$222 per oz. gold; total costs (excluding sunk costs) would be US$295 per oz., net of copper credits.

After taxes, the cash costs hit US$231 per oz., total costs rise to US$304 per oz. and the internal rate of return falls to 8.2%.

The predominantly sulphide ore would be sent through a primary crusher and a semi-autogenous grinding mill before going through gravity separation to recover coarse gold. It then goes through a flotation circuit, before the cleaner tailings are treated with cyanide.

Metal recoveries would be 83% for gold and 73% for copper.

The final product on site would be gold dor and copper concentrate (containing some gold), which would be shipped to a smelter for final processing.

Gold Reserve is already looking for ways it can enhance the economics of the project through changes in pit design and mine planning. The company is also looking at possibly crushing the ore in the pit and conveying the waste, which could reduce capital costs, as well as evaluating the feasiblity of an on-site copper refinery.

Meanwhile, Gold Reserve has been granted the mining title to the Brisas hardrock concession. The conditions of the title are a term of 20 years, with two 10-year extensions, and a tax of 4% on the gross value of gold and 7% on copper. Gold Reserve also must submit a feasibility study to the Venezuelan Ministry of Energy and Mines within 24 months and submit an environmental impact statement to the Ministry of Environment.