Positive Scoping Study For Inter-Citic’s Dachang

A scoping study for the Dachang gold project in China’s western Qinghai province estimates gold production averaging more than 165,000 oz. a year, Inter-Citic Minerals (ICI-T, ICMTF-O) reports.

The scoping study was based on an updated resource estimate and used an open-pit mine delivering 2 million tonnes of ore a year to a fully integrated flotation, Biox and carbon-in-leach circuit.

The study examined an operation processing an estimated 17.8 million tonnes averaging 3 grams gold per tonne.

Dachang is 170 km southeast of the city of Golmud, on the southern Qinghai plateau. Dachang is a sediment-hosted gold deposit in an underexplored district, which over the past two centuries has been the site of extensive gold placer mining in streams.

At a gold price of US$750 per oz. gold, the study estimated an aftertax internal rate of return (IRR) surpassing 40% and an after-tax net present value (NPV), at a 5% discount rate, of more than US$198 million. At a gold price of US$800 per oz., the after-tax IRR jumps to 47% and the NPV exceeds US$241 million.

The study also predicts a total of 1.5 million oz. gold would be produced at the mine over its estimated nine-year lifespan.

Cash operating costs were calculated at an average of US$404 per oz. and the project capital cost is expected to be in the US$104-million range.

At a cutoff grade of 0.6 gram gold per tonne, estimated measured and indicated mineral resources equal 12.4 million tonnes grading 3.37 grams gold for total contained gold of 1.34 million oz.

Inferred resources stand at 14.3 million tonnes grading 3.28 grams gold for 1.5 million contained ounces gold.

Of the inferred resource, 11.9 million tonnes grading 3 grams gold (1.14 million oz.) comes from the Dachang main zone, and 2.4 million tonnes grading 4.82 grams gold (370,000 oz.) comes from the NR-2 and other areas.

Last year, drilling in the main zone tested continuity of mineralization along the fault structures that were defined along a strike length of 2.5 km. Drill sections were spaced 20 to 80 metres apart and a total of 268 holes (for 39,560 metres) were drilled on the main zone.

The drill program extended the strike of both the eastern and western limits of the main zone such that the fault is now defined along 4 km of strike.

In August 2006, Inter-Citic received a 27-year business licence. At presstime, Inter-Citic was trading at 61¢ per share in a 52- week trading range of 17¢-$1.17.

The company has 82.5 million shares outstanding.