Vancouver — Junior
Based on 2,252 metres of drilling in 10 holes and a subsequent in-house scoping study, the new resource is pegged at 275,000 tonnes grading 5.61% nickel at a cutoff grade of 3% nickel. The new calculation compares favourably to the previous estimate, by Outokumpu Oy, and can be separated into two portions: the Northern Pod, containing an indicated resource of 217,000 tonnes grading 5.62% nickel; and the Southern Pod, with an inferred resource of 57,300 tonnes grading 5.6% nickel. A small portion of the total resource is in oxidized rock, and if this is excluded from the scoping study, the total in situ minable resource is roughly 241,000 tonnes grading 5.63% nickel. Mineralization is typically massive pentlandite and pyrrhotite, and is said to be free of commercially deleterious components.
The study indicates favourable economics and recommends more drilling and a full feasibility study. The internal rate of return is pegged at more than 30%; positive cash flow, at A$23 million. Project capital and operating costs are calculated to be A$37 million, with an estimated net revenue of A$60 million, or A$250 per tonne of ore. The study is based on recovery rates of 44% for nickel, which would be achieved by directly shipping a 5% nickel ore to a smelter. A nickel price of A$11,000 per tonne was used. Underground production would be carried out at the rate of 300 tonnes of ore per day over a mine life of 31 months. Allowing for mining dilution, the operation would extract 237,000 tonnes of 5.16% nickel. Processing would be done off-site on a contract basis.
Viceroy is earning a 75% working interest in base metal deposits and a 100% interest in precious metal deposits on lands under option from Outokumpu.
As part of its full feasibility study, Viceroy plans to explore other nearby nickel resources, which, if combined with New Morning, could support a processing facility. The latest round of drill results are as outlined in the accompanying table.
Viceroy intends to use material from the program for bench-scale metallurgical work. Also, the company believes the Bounty and Outokumpu tenements contain other known nickel resources, as well as favourable exploration targets.
In other news, depressed gold prices pushed Viceroy Resource deep into the red in 2000.
“While we are pleased with the increased production at the Bounty and Castle Mountain mines in 2000, the financial performance of Viceroy has been disappointing,” says President Clynton Nauman.
During the year, Viceroy tabled a loss of $45 million (or 78 per share) on sales of $116.5 million. Writedowns, primarily on the Brewery Creek gold mine in the Yukon, contributed to the loss. Excluding $32.9 million in writedowns and adjustments to inventory, Viceroy lost $12.1 million (21 per share).
“We see no immediate relief in sight in the current depressed gold market,” Nauman says. “Viceroy intends to continue with optimization of mine operations in 2001.”
The company cranked out 263,462 oz. gold in 2000, or 80% more than in 1999. The increase reflects Viceroy’s first year as operator of the Bounty mine. Average cash operating costs amounted to US$233 per oz., a 10% improvement over 1999.
On the down side, Viceroy tabled a negative operating cash flow of $200,000, despite having increased throughput at the Castle Mountain mine in California. The company finished the year with $21.4 million in its till; of that, $9.9 million is “restricted.”
Gold production at the Bounty mine jumped by 26% to 126,366 oz., and cash operating costs were pegged at US$232 per oz., a 20% decrease over 1999.
Exploration at the Bounty mine succeeded in replacing and increasing reserves and resources. The first phase of underground exploration increased underground reserves and resources by 167,000 oz., or 30%.
The Castle Mountain mine poured its millionth ounce of gold last April. During 2000, Viceroy’s share of gold production at the mine was 89,048 oz. (25% higher than in the previous year) at a cash operating cost of US$222 per oz. (15% lower). The junior owns a 75% stake in Castle Mountain. The remainder is held by
The Brewery Creek mine cranked out 48,048 oz. gold, which is close to what it produced in 1999. Cash operating costs decreased by 16%, to US$243 per oz., compared with the previous year. The operation will continue heap leaching year-round; however, seasonal mining will not resume until the price of gold increases.
Meanwhile, surface exploration at the Gualcamayo project in Argentina’s San Juan province has doubled the length of the mineralizing system to greater than 3 km. Results from reverse-circulation drilling are being used to update the current resource. The resource at the Quebrada del Diablo and Amelia Ines zones consists of 12.1 million tonnes grading 1.1 grams gold in the measured and indicated category, and 25.1 million tonnes of 1.15 grams gold in the inferred category.
Viceroy acquired the remaining 40% interest in the project from Mincorp Exploraciones in July.
Be the first to comment on "Viceroy adds to New Morning resource"