Verena eyes Russian gold (August 08, 2002)

Venturing out from the cozy confines of Brazil, Toronto-based Verena Minerals (YVM-V) has inked an option deal to acquire a 60% interest in the Bamsky and Vladimirsky gold deposits in Russia.

Following a positive due diligence study, Verena can acquire its interest in the two deposits from Russian vendors Nordic Resource Group, Apsakan, Tokuringra Joint Stock Co., Techno Servece Ltd. and Riefey Ltd.

To do so, Verena will initially issue the vendors 5 million shares. Another 15 million shares will come on the heels of a positive feasibility study. The company has also committed to raising the cash required to complete a feasibility study and bring the Bamsky deposit into commercial production. Verena plans to incorporate a new wholly owned company called Verena Gold Corp. to focus on the deposits.

Once a positive feasibility study has been turned in, Verena can boost its stake in Bamsky to 76% and can acquire Vladimirsky outright.

The Bamsky deposit is situated in the northern Tyndinsky district of Amur Province, Siberia, and is a 220-km-long road trip from the city of Tynda, which is on the Baikal-Amur railway. The deposit is covered by a renewable, 25-year exploitation license that expires in 2017.

The property has been tested by 328 diamond drill holes for more than 60,000 metres, 42,000 metres of trenching and 7,000 channel samples. Significant widths of mineralization have been reported in more than 90% of all holes and trenches.

Apsakan, Vererna’s local partner, currently has an open-pit operation running on the N2 orebody. On-site facilities include haulage and access roads, primary and secondary crushers, a heap area, pregnant solution pond and tailings dam.

The crushing facilities are rated at 3,000 tonnes per day, and a 150,000-tonne-per-year mill is about 80% complete.

The operation is targeting gold mineralization in a ring-like structure in early-proterozoic biotite granites measuring 3 km in diameter.

Apsakan pegs Bamsky’s indicated resource (C1 reserves under Russian guidelines) at 4 million tonnes grading 3.92 grams gold and 12.7 grams silver per tonne, based on a cutoff grade of 0.6 grams gold. Another 8 million tonnes running 4.14 grams gold and 11.9 grams silver are classified as inferred resources (C2 reserves).

The Bamsky permit also covers two satellite deposits, the Silvercreek deposit 8 km to the southwest and the Des deposit 6 km south east of the Bamsky main deposit.

Metallurgical test work on bulk samples of Bamsky ore returned gold recovery rates of 60% via gravitation and cyanidation.

Verena and Apsakan figure it will take about US$6 million to bring the Bamsky deposit to a proposed production rate of 90,000 oz. of gold annually. That figure includes working capital and debt repayment. The two plan to repay a portion of an outstanding US$12.8-million loan from the Savings Bank of Russia with proceeds from the sale of about 24,300 oz. of gold currently contained in the property’s heap pile. The balance of the loan is being renegotiated.

Immediate plans at Bamsky call for technical, legal and financial due diligence, which will be conducted by Strathcona Mineral Services, Macleod Dixon and PricewaterhouseCoopers, respectively. On a positive outcome, the partners will launch a feasibility study prepared to western standards.

The Vladimirsky deposit, about 6 km from High River Gold‘s (HRG-T) Zun-Holba gold mines in the Buryatia autonomous region of Russia, east of Lake Baikal, is less developed than Bamsky.

Initial drilling has cut 4 mineralized veins 50 and 100 metres below surface. The veins averaged about 1.5-2 metres in true thickness and grade up to 31.5 grams gold and 17.1 grams silver. Seven other vertical and parallel quartz veins that stretch up to 4 km in length will face follow-up drilling.

Verena currently has more than 32.5 million issued and outstanding shares.