Vancouver — A preliminary assessment of the Boka gold project has prompted
Southwestern holds a 90% stake in the Boka gold project situated in Yunnan province, China. The remaining interest is held by a Chinese partner.
The “first-pass” study includes initial resource estimates for the Boka 1 North, Boka I South, and Boka 7 zones, which collectively host indicated resources of 10.4 million tonnes averaging 2.88 grams gold per tonne, or almost 1 million contained oz. These zones host an additional 45.8 million tonnes at 2.75 grams, or about 4.05 million contained ounces, in the inferred category. A cutoff grade of 0.5 gram was used for the estimates, with high-grade values cut to 31 grams.
John Paterson, president, told analysts during a recent conference call that the purpose of the scoping study was to examine realistic operating parameters in China, and then apply them to Boka to evaluate the scope of future production.
“There are no foreign companies operating gold mines in China [that are direct comparables],” he said. “Even so, the Hatch study shows that most materials can be sourced there. We expect costs in China to be lower than in North America.”
Hatch examined an open-pit operation capable of producing about 200,000 oz. gold annually, at cash costs averaging US$143 per oz. Capital costs range from US$139 million up to US$235 million, reflecting the preliminary nature of the scoping study.
The proposed open-pit mine was based on indicated resources of 5.1 million tonnes at 2.93 grams, or about 480,000 contained ounces, plus a further 18.1 million tonnes at 2.93 grams in the inferred category, for an additional 1.71 million contained ounces. The strip ratio is estimated at 6.7:1 waste-to-ore over the proposed 10-year mine life.
The resource estimate was based on 67 holes drilled to April 25 of this year. Drilling since then is expected to expand existing resources at Boka 1 and Boka 7. At this stage, Boka 7 contains only inferred resources (14.5 million tonnes at 2.75 grams) and has not yet been drilled on a grid basis.
As Paterson notes, considerable infill drilling is required to upgrade resources (to categories higher than inferred) for incorporation into the prefeasibility study. Inferred resources are considered too speculative to have economic considerations applied to them.
As part of the prefeasibility study, the company plans to drive a large tunnel to access high-grade resources that could be developed into a potential underground mining operation. Once the tunnel is complete, an underground drilling program would test the high-grade zones on 25-metre centres for mine-planning purposes.
Metallurgical test-work was carried out on four 200-kg samples from Boka 1, resulting in recoveries of more than 90% at a coarse grind. Initial gravity tests showed that 45% of the gold could be recovered in a gravity circuit. The proposed milling process entails crushing, semi-autogenous grinding, and a conventional carbon-in-leach circuit.
“We don’t see any refractory gold at all in the Boka 1 system,” says Paterson. “We’ll do further gravity tests and look at incorporating a gravity circuit into the flow-sheet to reduce cash costs.”
Paterson sees no problems with infrastructure. A major highway will be constructed 6 km from the project area in 2006. Water is readily available and a power grid is located 1.5 km from the mine site.
Owing to terrain limitations, three tailings facilities will be located up to 6 km from the plant site. Two waste dumps were selected within 1-3 km from the mine site in order to minimize disturbance to the nearby town of Boka. Waste and sub-grade material from the pits will be transported by a series of overland conveyors.
The Boka project also hosts known zones and newly discovered targets that will be tested in ongoing exploration programs.
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