Placer Dome eyes gold project in Tanzania

The Placer Dome subsidiary recently signed an agreement with the Tanzanian government to conduct further exploration on the Bulyanhulu gold deposit in the Kahama district.

The agreement also calls for the completion of a feasibility study within two years. After that, the company will make a decision on development of the mine. The study will evaluate mining methods and the most economical means of gold production.

Hugh Leggatt, spokesman for Placer Dome, said Tanzania is a socialist democracy with a stable political history.

“Placer Dome doesn’t go into these things with its eyes shut,” he said. “We’ve done a country risk assessment and in the company’s judgment it’s a viable place to make a mining investment.”

Discovered it the late 1970s, the Bulyanhulu deposit was drilled extensively in the early 1980s. According to Placer Dome, a prefeasibility study by an unrelated third party outlined a resource of 4.33 million tons with an average cut and diluted grade of 0.38 oz gold per ton. The richest part of the deposit is reported to consist of 800,000 tons with a grade of 0.53 oz gold.

The deposit occurs as near- vertical, parallel zones averaging 14 ft in thickness within an Archean greenstone belt of the Tanzanian Shield. The mineralization extends from surface to more than 1,000 ft downdip and remains open to depth and along strike which the company said provides “excellent potential for additional reserves.”

Placer Dome has already started its initial work program at a minimum cost of $500,000(US) for the first eight months, including work to determine the metallurgical characteristics of the deposit.

Lawrie Reinertson, Placer Dome’s senior vice-president of exploration, said the resource would be an important addition to Placer Dome’s existing reserve base of about 20 million oz of gold if mine development occurs. The amount of contained gold attributed to the Bulyanhulu deposit is 1.64 million oz.

“The exploration agreement on this property fits Placer Dome’s global strategy of taking a position in attractive prospects at an undeveloped stage,” Reinertson said.

By granting a mining licence, the Tanzanian government will receive an initial equity of 10% in Placer Dome (Kahama). When the company recovers its investment and if an additional profits tax becomes payable, the government can decide to forego the tax in favor of increasing its equity to 35%. It also has a further option to increase total state ownership to 51%.

Placer Dome will be operator throughout the mine’s life and will retain management control for at least the first 10 years of mine life.

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