A scoping study for the Dachang gold project in China’s western Qinghai province estimates gold production averaging more than 165,000 ounces a year, Inter-Citic Minerals (ICI-T) 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(R) and carbon-in-leach circuit.
The model of the study was based on conceptually scheduling an estimated 17.8 million tonnes of mineral resources at an average grade of 3 grams gold per tonne.
Dachang is 170 km southeast of the city of Golmud, on the southern Qinghai plateau. It is a sediment-hosted gold deposit in an under-explored district, which over the past two centuries has been the site of extensive gold placer working in streams.
At a gold price of US$750 per oz. gold, the study estimated an after-tax internal rate of return (IRR) surpassing 40% and an after-tax net present value (NPR), at a 5% discount rate, in excess of US$198 million. At a gold price of US$800 per oz, the after-tax IRR jumps to 47% and NPV exceeds US$241 million.
The study also predicts a total of 1.5 million ounces of gold will 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 an economic cut-off grade of 0.6 gram gold per tonne, estimated measured and indicated mineral resources equal 12.4 million tonnes grading 3.37 grams gold per tonne for total contained gold of 1.34 million ounces.
The total inferred resource is 14.3 million tonnes grading 3.28 grams gold per tonne for 1.5 million ounces contained gold.
Of the inferred resource, 11.9 million tonnes grading 3 grams gold per tonne (1.14 million ounces contained gold) comes from the Dachang main zone, and 2.4 million tonnes grading 4.82 grams gold per tonne (0.37 million ounces contained gold) 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 meters apart and a total of 268 holes (for 39,563 meters) 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 a 4-km strike.
In August 2006, Inter-Citic received a 27-year business licence.
At press-time Inter-Citic was trading at 61¢ per share and has a 52-week trading range of 17¢-$1.170 per share.
The company has 82.5 million shares outstanding.
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