Number nailed on Segala

Preliminary reserve estimates at the Segala gold deposit in western Mali put the size of the deposit at 383,000 oz.

Estimates by Snowden Mining Industry Consultants, who were engaged by owner Nevsun Resources (NSU-T), calculate that the Segala deposit has 4 million tonnes grading 3 grams gold per tonne, based on a cutoff grade of 1.65 grams gold per tonne. The cutoff grade is based on a gold price of US$350 per oz. and on cost assumptions derived from feasibility work at Nevsun’s Tabakoto deposit, 5 km to the south, where a reserve of 3.2 million tonnes grading 5.5 grams gold per tonne has already been outlined. The two reserve figures taken together put 950,000 oz. of reserves on the overall project.

Preliminary pit designs go to a depth of 220 metres and include an inferred resource, additional to the reserve, of 50,000 tonnes grading 3.4 grams per tonne. The pit would include about 40 million tonnes of waste.

About 331,000 tonnes of the reserve are oxidized material grading 2.4 grams gold per tonne. The major part, just over 3.6 million tonnes, is primary material grading 3 grams per tonne. Metallurgical tests by the South African laboratories of Lakefield Research put the recovery at 94%.

A second estimate, using a cutoff grade of 1.75 grams per tonne, based on a gold price of US$325 per oz., puts the reserve at 3.2 million tonnes grading 3 grams, of which 301,000 tonnes grading 2.5 grams per tonne are oxidized material. Pit designs for that reserve put the waste figure at 30 million tonnes — roughly the same 10:1 stripping ratio as that of the lower-grade pit.

The proposed mining plan at Segala would see the pit developed near the end of the Tabakoto pit’s life. The Tabakoto plant could handle 870,000 tonnes of Segala ore per year, giving the project an additional four years of life. If a coarser grind still gives acceptable recoveries on Segala ore, the plant’s annual throughput rate might be increased to as much as 1.1 million tonnes.

Economic models now being studied also envision the two pits operating simultaneously, feeding the single mill.

Snowden has recalculated reserve figures for Tabakoto, where the reserve figure used in feasibility work was calculated using a gold price of US$325 per oz. At US$350 per oz., the reserve increases to 3.4 million tonnes grading 5.3 grams gold per tonne. About 220,000 tonnes of inferred resources, grading 8.6 grams per tonne, is also inside the pit envelope, though it was not brought into reserve.

The recalculation also indicated potentially economic resources that had not been included in the earlier pit design. These resources — on extensions of the Tabakoto mineralization north and south of the proposed pit — amount to 470,000 tonnes grading 3.6 grams gold per tonne to the north and 163,000 tonnes grading 6 grams per tonne to the south. If the pit is extended and those resources brought into reserve, the mine life could be extended to six from five years.

Nevsun is in negotiations for loans for the project, which it hopes to put into production by the end of 2004. The company concluded a deal with Randgold Resources (GOLD-Q) in May to investigate co-operative development of Tabakoto, Segala, and Randgold’s Loulo deposit.

Loulo is on a mining concession immediately west of Tabakoto. With a resource of 4.3 million tonnes grading 3.9 grams gold per tonne, it is on Randgold’s back burner while options for its development are clarified.