Green light flashes for Armada Gold’s Baley

An engineering study commissioned by Armada Gold (AAU-T) has concluded that the Baley gold project in southeastern Russia can be mined at a profit.

The study, conducted by Snowden Associates of Perth, Australia, envisages an economic open-pit operation at the Taseevskoe deposit. As a result, resources in the portion of the deposit amenable to open-pit mining have been reclassified as reserves.

Proven reserves at the initial open pit were calculated by Snowden to be 9.2 million tonnes grading 5.21 grams gold per tonne, whereas probable reserves were pegged at 19 million tonnes of 2.26 grams. The proposed pit also includes an inferred resource of 3.6 million tonnes grading 3.66 grams.

(The reserve calculations were based on a cutoff grade of 0.88 gram per ton.) Plans for the first phase of an open-pit operation call for the extraction of 2.9 million oz. of the 5 million-oz. resource. The company will attempt to convert the remainder of the resources to reserves in anticipation of future mine expansion.

The reserve figures provide the basis for a bankable feasibility study, which is being conducted by Kvaerner Metals. Armada President Derek Fisher describes the Kvaerner study, which is nearing completion, as “the next major step in our definition of what is already a viable project. ” Armada Gold holds an 85% interest in Balgold, the joint-venture company developing the Baley gold project, which is situated in southeastern Siberia.

Other than Taseevskoe, Balgold holds three additional deposits at Baley, which, according to a Russian resource calculation, contain an additional 3 million oz.

Fisher believes future production from those deposits can potentially be combined with that of the Taseevskoe, and processed through the proposed Taseevskoe mill.

Armada recently engaged Levesque Beaubien Geoffrion as its financial advisor.