The U.S. Bureau of Land Management has decided in favor of allowing Golden Queen Mining (GQM-T) to begin construction of the Soledad Mountain mine, 130 km north of Los Angeles, Calif.
Construction will begin after the company has completed its final feasibility study and arranged financing for the US$65-million project, says President Steven Banning.
In September, the company received most of the land use permits necessary to proceed with construction; two minor permits are still awaited.
Construction could begin sometime in the first quarter of 1998, with startup projected for the second quarter of the following year.
Soledad Mountain is envisaged as an open-pit, heap-leach operation with a stripping ratio of 4-to-1. Proven and probable reserves stand at 1.6 million oz. gold-equivalent (47.7 million tonnes grading 0.87 gram gold and 12.8 grams silver per tonne, equivalent to 1.3 million oz. gold and 19.7 million oz. silver).
The operation is expected to produce 125,000 oz. gold and 1.5 million oz.
silver annually at a cash cost of US$200 to US$210 per oz. The final feasibility study is due my mid-December.
In terms of financing, Golden Queen is considering three options: joint-venturing the project; merging with another company; and developing the mine on its own. Banning says current low gold prices are making financing difficult.
He adds that the project has considerable upside potential, as little work has been done outside the resource area. The company has identified 14 veins and begun sampling the reopened underground workings. Follow-up drilling on this and other targets is planned.
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