Sonora, Pathfinder project After two years of delay, Jamestown to

Milling of ore at a rate of 6,000 tons per day from the Harvard open pit is scheduled to begin this week at Sonora Gold Corp’s Jamestown gold mine in California.

For the management of Sonora, the announcement undoubtedly comes with a sigh of relief. At the end of a maze of bureaucratic red tape and environmental restrictions, which have delayed gold production for more than two years, Sonora is finally on the verge of gold production. Acquired from New Jersey Zinc Exploration in September, 1983, the large tonnage, low grade gold deposit has been burdened by strict environmental regulations enforced in the state of California. “We had to walk the coals on this project,” James T. Alexander, a spokesman for Sonora tells The Northern Miner. “The end result is probably the most environmentally safe mine in the world.”

Since the acquisition, Sonora has seen the project delayed by two years, witnessed capital costs escalating from $65 million to more than $117 million and has had to give up 30% of the project to Pathfinder Gold Corp, the wholly- owned subsidiary of Cogema Inc., a French nuclear fuels company.

Despite the headaches, Sonora’s Jamestown project is expected to be a money maker; churning out 130,000 oz of gold per year at a cost of $200(US) per oz of gold. Silver production will hover around 70,000 oz per annum. The first seven years of production are slated to come from the Harvard pit, which hosts open pit reserves of 14.3 million tons of ore grading 0.073 oz gold per ton. Total open pit reserves in six deposits are 29.8 million tons grading 0.066 oz gold per ton. Reserves amenable to underground mining total 12.9 million tons grading 0.136 oz gold per ton.

The company had approximately 500 workers on site this fall working on meeting the production date. Managed by Bechtel Civil and Minerals Corp., the giant U.S.-based consulting engineering firm, the project will produce a gold concentrate from a conventional ball mill facility.

Final pouring of dore bullion, however, will have to take place in Nevada where Sonora has purchased a cyanide leach plant. A novel application of thiourea leaching, which Sonora initally proposed to use, will not be avaibale for at least one year, Mr. Alexander says. Unable to use thiourea, Sonora had to opt for cyanide which is not allowed in California. Hence the need for the Nevada plant — and a resultant $15 hike in production costs per oz of gold, due to trucking expenses.

The acquisition costs, which are included in the final mine bill of $117 million, were approximatey $30 million. Of this, New Jersey Zinc received $21 million. Property permitting required almost $3 million and plant and construction costs exceeded $80 million. Part of the funding came from a Sonora- held bank loan of $35 million.

Royalties on production include a 15% net profits interest to New Jersey Zinc and a 5% net smelter on production from the Harvard pit. The other deposits on the property carry net smelter royalties ranging from 4%-5%. Another $2 per oz is payable to the Sonora Agricultural School, which used to have buildings on the mine site. Maximum payments to the school will not exceed $6 million.

The bottom line during the first seven years of operation is expected to see average fully diluted earnings per share for Sonora of 71 cents . This assumes a gold price of $400(US) per oz.