With gold prices in a slump, Centurion Gold (TSE) has decided to sell its interest in the Zaca gold property in Alpine Cty., Calif. The company will receive US$2.4 million for its interest from partner Western States Minerals. Western had the right to earn a 50% interest in the property from Centurion by funding 100% of the development costs and 70% of the capital costs required to achieve commercial production.
Reserves on the property were last reported at 9.4 million tons grading 0.03 oz. gold and 0.50 oz. silver per ton. The companies had expected to begin production in 1991 at a rate of about 35,000 oz. per year.
Richard Ketchen, president of Centurion, was quoted as saying that the feasibility study on the deposit indicated marginal profitability from a mining operation. He also noted that because of its relatively small size and the weak market conditions which have delayed financing the project, the decision to sell was “an easy one.”
The company plans to use about US$2 million of the proceeds of the sale to reduce debt, while applying the balance to working capital.
As at Dec. 31, Centurion had working capital of about $630,000 and long-term debt of $4.3 million.
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