Positive pre-feasibility for Golden Band’s La Ronge

Vancouver – Golden Band Resources (GBN-V) has taken another step towards production with a positive pre-feasibility study for its La Ronge gold project in northern Saskatchewan.

The 750-sq. km La Ronge property near the town of Brabant is home to 12 separate gold deposits. Eight of those deposits carry resources compliant with National Instrument 43-101 regulations; of those, three boast proven or probable reserves. The new pre-feasibility study only considered the reserve-level deposits and concluded that open-pit mining operations two of those deposits – Komis and EP – combined with underground mining at the third– Bingo – could combine to create an economically viable operation.

The three mines would all feed the Jolu mill, a remnant of a previous operation that Golden Band would upgrade to 700-tonne-per-day capacity from its current 500-tonne-per-day ability. A four-year mining operation would chew through proven mineral reserves totaling 80,000 tonnes grading 7.27 grams gold per tonne plus probable reserves of 682,000 tonnes grading 6.09 grams gold to produce 141,400 oz. gold.

The La Ronge pre-feasibility study attributed a base case net present value of $8.5 million, using a 7% discount rate, for an internal rate of return of 24.9%. Preproduction capital came in at just $26 million, allowing payback in two years. Total capital cost over the life of the project, including preproduction capital, is $32.1 million.

Operating costs are expected to average $111.87 per tonne of ore or US$528 per oz. gold produced. The project is expected to generate a net cash flow of $14.4 million after tax.

The project’s economics are underpinned by easy accessibility to grid power, water, labour, and provincial highways as well as by the existing infrastructure at La Ronge, of which the most important is the Jolu mill. The key components of preproduction development needed at La Ronge are prestripping the Komis and EP deposits in preparing for open pit mining, development work for the Bingo underground mine, increasing the Jolu mill capacity, construction of a 25-kv grid power line to the mill, and construction of infrastructure such as offices, workshops, and work force accommodations.

The Jolu mill uses conventional crushing, grinding, gravity separation, and cyanide leaching with carbon in pulp to produce gold dore bars. Metallurgical recovery is expected to average 93%. The mill sits 75 km southwest by highway of the Komis and EP deposits and 51 km northeast of Bingo, a distance also covered by provincial highways.

Golden Band has its sights set on achieving gold production before the end of the year. In the near term the company plans to conduct definition drilling to upgrade other resources to reserve status. The company recently submitted an environmental impact statement to the Saskatchewan Ministry of Environment and the Canadian Environmental Assessment Agency. It also signed a memorandum of understanding with the Lac La Ronge Indian band, on whose traditional lands the project is located.

A preliminary economic analysis for La Ronge completed in February, 2008, was not limited to reserves but considered measured, indicated, and inferred resources from five deposits at La Ronge. That analysis predicted an 8-year mine life for La Ronge.

Golden Band certainly does not see its mining operations at the project wrapping up in just four years, as the pre-feasibility study suggests. Rather, the company expects to start with the three deposits considered in the study but to steadily add reserves to keep operations going for many years.

On news of the pre-feasibility study Golden Band’s share price remained unchanged at 17.5¢. The company has a 52-week trading range of 10.5¢ to 52¢ and has 130 million shares outstanding.