Placer and Golden Star may develop Guyana gold

An agreement should be completed within weeks that could see Placer Development and Edmonton-based Golden Star Resources develop a gold property in Guyana, South America. The mineral potential of this much- maligned nation has largely been untested but, with a pro-business government in place, this is expected to change.

The two companies recently obtained government approval for the project and Placer says it will commence exploration work immediately, including some drilling on the Omai property in north- central Guyana. Golden Star’s consulting engineers, SNC Inc. of Montreal, have already completed a comprehen sive development program and exploration study on the Omai property which was based on drill and bulk sample data compiled by Anaconda in the late 1940s.

Reserves are described as “conservative” by Golden Star which notes there are 18.7 million tons of indicated reserves in the primary zone grading 0.046 oz gold per ton. About 11 million tons there is classified as inferred at 0.038 oz and a weathered zone exists with some 13.2 million tons of inferred material averaging 0.042 oz.

According to James Stewart, Golden Star’s vice-president operations, the weathered surface deposit at Omai is analogous to Placer’s Kidston deposit in Australia which was used to optimize production in the early production stages. Such a production scenario could also be applied to Omai, he says.

The SNC feasibility study completed last October only involved surface alluvial material which would have required processing by conventional cyanide and carbon- in-pulp recovery methods. The gold is locked up in gravel components and quartz so mechanical (gravity) recovery methods are not applicable for this material, he says.

The study contemplated a production rate of 450,000 tons per year initially or 40,000 oz, but expansion to five million tons is contemplated at a later date. Mr Stewart admits that what he termed public “misconceptions” about Guyana prevented financing of the project exclusively by Golden Star and he says Placer’s entry will certainly add needed credibility to the Guyana development. The country is a democracy, English-speaking with an English system of government, and a portion of the population is American and Canadian.

He says Placer doesn’t want to “sterilize” the deposit by high grading it, so the exploration emphasis will be on the surface and alluvial reserves with a view to blocking out sufficient tonnage for an intermediate-sized plant. In terms of capacity that would be around one million tons per year. Ideally, such a decision would be made within six months.

Both parties would have an equal working interest in the plant (47.5%) and the government of Guyana would have 5%. In the event that a larger 5-million-ton plant was constructed, which would yield in excess of 200,000 oz per year, Golden Star would retain a 23.75% carried interest, Placer 71.25% and the government 5%. But Placer would have to attend to all financing, construction and operating requirements.

Golden Star has spent $2 million on the project already, most of which was funded by private interests in Edmonton. Placer’s current program will involve confirmatory drilling on several zones and also some development drilling. Alluvial material will probably be tested with a sonic drill to depths of approximately 30 ft and a diamond drill will be utilized for deeper holes.

The agreement with Placer is exclusive to the Omai deposits but Golden Star retains a 100% working interst in the Arakaka, Baramita and Million Mtn. gold properties in Guyana. All these properties have exhibited strong gold potential, says Golden Star.