3 Bluffs Resource UpgradeThe reason to sell the Redemption JV is now clear.
They were coming up with a huge resource upgrade at Three Bluffs that they could turn into production quickly.
Plus, Three Bluffs is in the heart of Committee Bay's property.
Hence, it is the key to the infrastructure development and cash flow needed to unlock the value of the entire district.
They want to put a mill and mine at the heart of the district into production near-term.
They had to do a scoping study to flesh out whether there are issueswith metallurgy, mining or with potential return-on-capital.
My bet is a 750 tonne per day open pit mining and millingoperation.
They have the resource levelrequired in order to begin making decisions.
Though additional drilling willbe required to take the project to the bank, it is clear that today's resource upgrade bodes well for investors.
The major assumptions and results for a 750 tonne per day open pit case might looks as follows:
Production rate: 225,000 tonnes/year (300 days of operation)
Gold grade: 5.5 grams/tonne (at 2.0 gram Au/tonne cut-off)
Gold recovery: 92% (SWAG- actual will come from metallurgical tests)
Gold produced: 36608 oz Au/year
Gold price: $1000/ounce
Gold/ounce costs: $422/ounce (cash costs)**
Annual Margin: $16.7 million (CF after cash operating and G&A costs )
Capital Costs: $22 million (twice the costs of a mill with new equipment,
contract mining per US Gold Corp comparable see
https://www.secinfo.com/duV3y.13x.d.htm#1stPage)
** By comparison, the cost estimation for Metanor for labour, consumables and overhead was $24.97/t for an
operation at 500
tons per day and $20.15/t for an
operation at
750 tons per day.
... www.metanor.ca/FichiersUpload/CommuniquesDePresse/Fichiers/pr30102007ang.doc -
Three Bluffs is surrounded by areas that have had some great grabs and some that have had some excellent drill results.
This is the beginning of the development phase of the entire Committee Bay property.
It will be interesting to see what the mining engineers determine.