Vancouver — Junior
Situated 400 km south of Tucson, Ariz., the 151-sq.-km property has received more than $50 million in exploration spending by the majors since 1993. Placer held a 70% interest and Kennecott the rest.
“With the lowest gold price in three decades, mining this property was uneconomical for ownership divided between two gold mining giants,” says National Gold President Albert Matter. “It does, however, present an incredible opportunity for our junior company to enhance the property’s value.”
A 1997 feasibility study pegged the measured and indicated resource at 68.3 million tonnes grading 1.57 grams gold per tonne using a cutoff grade of 0.8 gram gold. Included in this is a higher-grade core of 11.5 million tonnes grading 3.2 grams gold.
A 1999 feasibility study on the property envisioned a 17,500-tonne-per-day open-pit operation. Capital costs are estimated at US$120 million, with operating costs hitting $5 per processed tonne at a gold recovery rate of 66% for the heap-leach operation.
Financial models completed by National Gold suggest that capital costs could be brought down to US$90 million and that recoveries could exceed 70%.
Mineralization is hosted in a large high-sulphidation gold system that is found preferentially stratabound in felsic volcaniclastics and porphyritic flows. Alteration is well-zoned, going from a gold-bearing core of quartz and pyrophyllite, grading outwards to kaolinite-illite-dickite clays and finally to a propylitic zone.
“We will spend up to $10 million on additional exploration in the hope of doubling known reserves,” says Matter.
Under the terms of the deal, $3 million is payable in the first year, with the remaining $7.5 million secured by a debenture and payable at the end of the fourth year. The debenture carries a 7% interest payable semi-annually. The deal is slated to close on Feb. 28.
National Gold has 8.2 million shares fully diluted and $250,000 in cash.
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