Since entering into an agreement with
These permits contain existing gold deposits and target the structural extensions of known gold-bearing zones of adjacent claims. High River Gold initially acquired a 10% share holding in Jilbey by vending-in two properties: Nongo Fayere and Taranga. (High River has since boosted its equity holding in Jilbey to 15%.) Both adjoin the eastern property boundary of Taparko, where High River is developing an open-pit mine/ milling operation that is scheduled to come on-stream in late 2005. The mine is to process 1 million tonnes of ore annually and average 90,000 oz. per year over a lifespan of 7.6 years at a total cash cost of US$204 per oz.
The Taparko-Bouroum project is in Namantenga province, 200 km northeast of the capital, Ouagadougou, and accessible by paved and gravel roads. A bankable feasibility study in June 2004 evaluated the potential for building a mill and infrastructure on the Taparko property for the purpose of processing ore from the Taparko gold deposits and the nearby Bouroum deposits, 49 km northwest of the planned Taparko mill. High River owns 90% of the Taparko project, with remainder held by the government of Burkina Faso. The company bought the neighbouring Bouroum deposits from
At an estimated capital cost of US$51.9 million, the Taparko-Bouroum project offers an internal rate of return of 15.5% and a payback of four years based on a gold price of US$350 per oz. At a higher price of US$400 per oz., the internal rate of return jumps to 24.6%.
A series of six pits, ranging from 30 to 110 metres deep, will be mined using a small fleet of two 75-to-85-tonne excavators, two front-end loaders, two bulldozers, and eight to ten 54-tonne haulage trucks. Ore will be trucked directly to the processing plant. Waste rock will be stockpiled adjacent to open-pit operations. The processing plant will utilize a crushing and semi-autogenous (SAG) grinding circuit, followed by secondary grinding in a ball mill. Free gold will be recovered using a gravity concentrator. Final gold extraction will be achieved by carbon-in-leach (CIL) and electrowinning.
Using a US$350-per-oz. gold price, SRK Consulting established reserves of 604,270 oz. for three pits on the Taparko property, with an additional 110,000 oz. outlined in another three pits at Bouroum. Minable reserves total 6.8 million tonnes grading 2.78 grams gold per tonne for Taparko at an overall stripping ratio of 4.4-to-1, and 861,000 tonnes grading 3.97 grams for Bouroum at a 7.2-to-1 ratio.
A sensitivity study, using a gold price of US$400 per oz., more than doubled the in-pit gold resource to 1.3 million oz. for the three pits on the Taparko property. High River has engaged SRK to review the pit models using US$400 per oz. “We are looking at the possible implications of increasing production to gain access to those additional resources,” High River President David Mosher said during a presentation at the Denver Gold Show.
The reserve calculation for Taparko is derived from a database that includes 412 core holes and 189 reverse-circulation (RC) holes for nearly 47,000 metres of drilling, along with 182 surface trenches totalling more than 10,000 metres. At Bouroum, the drill database included 244 RC holes totalling 29,000 metres, plus 5,000 metres of core in 56 holes.
Tailings will be placed as slurry, and solids settled out in an impoundment area. The facility will include a perimeter dam. Water will flow to a return-water reservoir and be pumped back to the processing plant for re-use.
Process and potable water for the project will be provided from a new reservoir on the Taparko property, fed from the overflow of the existing Yalogo reservoir, 9 km from the mine property. Potable water will also be provided from wells drilled on the Taparko and Bouroum properties. Electrical power will come from on-site diesel generators, with a total operating capacity of 8.4 MW. Other facilities to be constructed on-site include a main entrance security building, mine maintenance shop, warehouse, administration building, security and change house building for the process plant, fuel and lubricants storage and distribution, explosives magazine, water collection and treatment networks, and sewage treatment facilities. A camp to accommodate and provide meals for the employees will include kitchen, catering and recreational quarters.
The mine is expected to generate 293 jobs, with contractor employees totalling 99.
High River is well-funded with approximately $50 million in the treasury. That will cover not only the equity portion of developing Taparko but also construction of the Berezitovy gold project in Russia. In October 2004, the company closed a $60-million bought-deal financing priced at $1.85 per unit. The offering was made through a syndicate of underwriters led by Sprott Securities and Dundee Securities, and which included CIBC World Markets, Paradigm Capital and Orion Securities. The company has secured a US$36-million debt-financing package for the Taparko-Bouroum project from the Absa Bank of South Africa.
Construction of the camp at Taparko is under way, and a fleet of nine haulage trucks was purchased.
The project is in the early Proterozoic Birmian greenstone belts of the West African Craton. The two gold deposits are on opposite limbs of the Y-shaped Bouroum-Yalogo greenstone belt and hosted by volcanic-sedimentary rocks, such as amphibolitic schists, mafic lavas, pyroclastics, and argillaceous sediments. The package has been intruded by large bodies of diorite or quartz-diorite composition, and by diabase dykes.
Gold at Taparko occurs predominantly in the northwesterly oriented Taparko shear, which is focused on a thin band of metasediments and metavolcanic rocks enclosed by granodiorite. The shear zone is traced for more than 10 km and dips 40-50 to the northeast. Although gold mineralization has been found throughout the Taparko shear zone, economic accumulations are restricted to several discrete zones known as GT, 2N/2K and 3/5, which occupy a strike length of about 2 km and extend to depths of at least 150 metres.
Gold at Bouroum occurs in relatively small, structurally complex zones of which the Bissinga, F-12 and Welcome Stranger are defined as economic.
The Taparko and Bouroum gold deposits are characterized by shear-hosted, sulphide-poor quartz veins. Graphite is spatially associated with the gold mineralization, which has a faint base-metal association. While the ore mineralization includes oxide, transition and sulphide, it exhibits no refractory characteristics. Feasibility tests by Lakefield Research of South Africa suggest that overall processing plant recoveries for oxide, transition and sulphide material will be 97.5/97.4%, 94.1/90% and 90.5/84.3% for Taparko and Bouroum ores respectively.
High River has designed the processing plant with a longer-term operation in mind in the belief that there is excellent potential for defining additional satellite deposits within trucking distance of the mill. Previous exploration uncovered 16 prospective gold targets on the Taparko property alone.
High River now controls, directly and indirectly through agreements with Jilbey and AXMIN, close to 4,700 sq. km of property holdings within trucking distance of the planned Taparko mill. High River and Halifax, N.S.-based Jilbey have an agreement that provides Jilbey with a defined access to the Taparko mill and provides High River with a 50% back-in and operatorship rights on Jilbey’s discoveries within trucking distance of the mill and a right-of-first refusal on discoveries outside trucking distance.
Jilbey holds 11 permits covering 2,629 sq. km inside the trucking distance to Taparko, plus 16 permits
totalling 2,784 sq. km outside the trucking distance, where the junior is focused on its Bissa concessions, having drilled off a 157,000-oz. resource on the Bissa Hill deposit. Measured and indicated resources are estimated by SRK Consulting at 1.4 million tonnes grading 3.33 grams, equivalent to 147,250 oz. at a 0.5-gram cutoff. A further 9,970 oz. contained in 106,000 tonnes grading 2.89 grams per tonne are inferred. A core, 140-metre section of the deposit, known as the “Sacred Mountain” area, remains poorly tested and was excluded from the resource model.
The Bissa Hill deposit was discovered in 1997 and partially drilled by
Bissa
The permits are positioned at the centre of Jilbey’s existing Bissa area holdings, which total 1,700 sq. km and lie 150 km southwest of High River’s planned Taparko mill. In addition to drilling off the Bissa Hill deposit to a measured and indicated category, Jilbey tested several prospects on the 30-km-long Sabce shear zone. In stepout drilling, two core holes 750 metres southwest along strike from Bissa Hill returned 8.56 grams across 13.7 metres in one of the holes, and 19.4 grams across 3 metres, followed by 2.95 grams over 20 metres in the second hole. Follow-up RC drilling has cut 6.13 grams across 34 metres, including a 5-metre section of 23.9 grams in hole ZBR-2, 40 metres west of the two core holes. Hole ZBR-2 was undercut by RC hole ZBR-7, which intersected 2.25 grams across 17 metres, followed by a second intercept averaging 2.64 grams across 23 metres. Further stepout drilling has encountered 61 metres of 2.11 grams in hole ZBR-8 and 52 metres of 1.66 grams in hole ZBR-11.
The regional Sabce shear zone is defined by a regional geochemical anomaly for most of its length and hosts the large Guibare artisanal gold workings at the southwestern end. Previous drilling by Delta Gold along this structure returned some promising results. Jilbey initially tested prospects with wildcat holes, returning 2.5 grams across 31 metres at the Bouly target on the Liliga shear, 10 km southeast of Bissa Hill. In addition, Jilbey hit 4.13 grams across 16.3 metres at the Gougre prospect on the Yilou shear, 12 km southwest of Bissa Hill. Follow-up trenching in the Liliga area yielded 31 metres grading 4.06 grams and 11 metres of 13.04 grams.
Jilbey has been carrying out rotary-air-blast (RAB) drilling to provide a quick pass over some of the target areas. This drilling intercepted a zone of 15.91 grams over 6 metres about 3.5 km northeast and along strike of the Bissa Hill deposit. Other significant hits from the same drill fence included 1.78 grams over 4 metres and 1.87 grams across 2 metres.
In November 2004, Jilbey raised $6 million through a private placement priced at 50 per unit. The financing was completed through a syndicate of underwriters led by Dundee Securities and Paradigm Capital. Jilbey is sitting with 34.7 million shares outstanding, or 48.8 million fully diluted.
Siberia
High River owns a share of two mature underground gold mines in Siberia through a controlling interest in
High River has been in Russia since 1995 when it purchased an initial 30% equity stake in Buryatzoloto through a government privatization auction.
Buryatzoloto owns and operates the Zun Holba and Irokinda gold mines in southern Siberia, north of Mongolia. The combined production from both mines is 150,000 oz. per year. In 2003, Buryatzoloto produced 153,754 oz. from its operations at a total cash cost of US$195 per oz.; however, cash costs are on the rise, averaging US$248 per oz. for the first nine months of 2004. Reserves at both mines are limited — less than 1 million oz. — which equates to three years of mine life at Irokinda and 5-8 years at Zun Holba. Irokinda has consistently replaced production on an annual basis, and High River management believes this will continue to be the case going forward.
High River is developing the 99%-owned Berezitovy project in the Amur Oblast of southern Siberia. A bankable feasibility study indicates a 4,800-tonne-per-day open-pit mine and mill capable of producing 100,000 oz. annually over a 9-year life at a total cash cost of US$192 per oz. Reserves are estimated by Micon International to total 13.9 million tonnes grading 2.32 grams gold and 11.71 grams silver, for a little more than 1 million oz. contained gold and 5.2 million oz. silver.
High River has reached an arrangement with the European Bank of Reconstruction & Development to provide a debt financing package of up to US$32 million for the construction of the project. Capital costs are pegged at US$59 million, including a recoverable value-added tax of about US$9 million. The internal rate of return at US$350 per oz. gold is 16.2%, or 21.9% at US$400 per oz.
A used mill in Nevada was purchased from Newmont Mining, along with a jaw crusher and overland conveyor system for relocation to Russia. The mill components are expected to arrive during the first quarter.
High confidence
“There will be some capital savings, but installing a proven plant in Russia reduces the risk and enhances our confidence substantially,” says High River President David Mosher.
Construction of a power line connecting the project to a regional power grid is well-advanced and scheduled to be commissioned in March. Access to low-cost hydroelectric power is key to the economics of the project, Mosher told analysts during a presentation at the Denver Gold Show. Startup is planned before year-end.
Back in September 2004, High River and
Overall, High River’s share of production in 2003 was 118,000 oz. at a total cash cost of US$234 per oz. For the first nine months of 2004, High River’s attributable production was 86,750 oz. at a total cash cost of US$260 per oz., compared with 91,216 oz. at US$225 per oz. for the same period in 2003. The company recorded a net income of $4.2 million (or 4 per share) for the nine months ended Sept. 30, 2004, versus $164,000 in the comparable period of 2003. Operations generated a cash flow of $14.5 million for the 9-month period.
High River maintains access to grassroots discoveries by investing in several well-managed junior exploration companies. It currently holds a 10% stake in
als
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