Output, revenue down for Nelson

Junior Nelson Gold (NLG-T) has slipped into the red as a result of declining production from its operations in Tajikistan.

For the nine months ended Sept. 30, Nelson posted a loss of US$1.4 million (or US1 per share) on revenue of US$9.6 million, compared with income of US$575,000 (US1 per share) on revenue of US$13.3 million in the corresponding period of 1998.

The company ended the latest 9-month period with US$4.9 million in assets, US$5.5 million in liabilities and US$10.7 million in long-term debt.

Nelson Gold is active in Tajikistan through its 44%-owned affiliate, Zeravshan Gold, which itself is owned 51% by the Tajikistani government and 5% by International Finance Corp.

During the recent 9-month period, Zeravshan produced 59,524 oz. mined at an operating cost of US$235 per oz., or US$10.07 per tonne. By comparison, Zeravshan mined 74,007 oz. in the first nine months of 1998 at US$195 per oz., or US$12.85 per tonne.

At Nelson’s flagship mine, Jilau, a main access ramp in the open pit was relocated in response to ground control problems, causing production to fall. Also, head grades declined due to the milling of a low-grade stockpile.

In mid-September, the Uzbekistani government closed a border post between Uzbekistan and Tajikistan through which Nelson transported materials to the Jilau and Taror mine sites. The government’s move is described as a reaction to Uzbek rebels, who are thought to be operating from bases in Tajikistan.

Nelson estimates that the use of an alternate supply route will add US$20 per oz. gold to Zeravshan’s production costs.

Meanwhile, 10 km from Jilau at Zeravshan Gold’s new underground Taror mine, 7,776 tonnes grading 3.3 grams gold per tonne have been mined. However, development work was suspended in November in order to preserve consumables, such as cyanide and diesel, for use at Jilau.

Taror contains a resource of about 10.8 million tonnes grading 5.35 grams gold and 16.45 grams silver per tonne, plus 0.85% copper. In an ongoing feasibility study at Taror, Nelson Gold has been evaluating two methods for recovering gold, silver and copper from flotation concentrates: a low-temperature, low-pressure oxidation process named Activox; and biological leaching.

So far, bench-scale tests have shown that bioleaching is superior, with overall recoveries of 79.1% for gold and 58.9% for copper.

The bioleaching option will be tested by Mintek at a pilot plant in South Africa. A feasibility study for Taror is expected in the fourth quarter of 2000.

Elsewhere in Tajikistan, Zeravshan is carrying out a prefeasibility study at the Chore project, where refractory-sulphide resources are pegged at 7 million tonnes grading 4.5 grams gold.

Nelson Gold is looking into the viability of processing Chore ore at a nearby antimony mill and then trucking a flotation concentrate 145 km west to Taror, where it would serve as feed for the proposed bioleaching plant.

In Mali, West Africa, Nelson has submitted a tender to the government to acquire the Kalana gold mine. A decision is expected before year-end.