Update Brigus Sandstorm has a gold stream agreement to purchase 12% of the life of mine gold produced from Black Fox and 10% of the life of mine gold produced from the Black Fox extension (which includes a portion of the Pike River concessions) at US$500 per ounce of gold. Sandstorm made an upfront payment of US$56.3 million to acquire the stream in November 2010.
Brigus has the option, until the end of 2012, to repurchase 50% of the gold purchase agreement by making a US$36.6 million payment to Sandstorm, upon receipt of which, the percentage of gold Sandstorm is entitled to purchase shall be decreased to 6% for the Black Fox mine and 4.5% for the Black Fox extension.
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Brigus today announced that it revised and optimized its production and development priorities. This requires more resources in the short term. 3Q production will be less than previously estimated. This is wonderfull news for Sandstorm as this for the short term means lower production and higher cash outflow, the chances they opt for the buy back will be lower. The long term perspectives as result of this change of plans will be much better and Sandstorm will benefit from it for the MAX.
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Halifax, Nova Scotia; September 6, 2012 (NYSE MKT: BRD; TSX: BRD) – Brigus Gold Corp. (“Brigus” or the “Company”) provides a corporate update for the third quarter of 2012.
Production
Brigus Gold has revised and optimized production and development priorities at the Black Fox Mine. Gold production continues to increase, but the Company is making adjustments to mining and development plans in order to develop new ore zones which will enable growth and higher production levels for the long term. Brigus is currently in the process of allocating more resources and work crews for the development of a large ore block on the western side of the underground mine. This ore zone extends deeper and is larger than indicated by historical drilling and therefore requires more resources in the short term to meet current development schedules. While development of this zone is progressing, mining in other areas will be marginally reduced. Production will commence on schedule during quarter four, as previously reported. To compensate for reduced tonnage from underground in the short term, the Company is processing lower grade stockpiled material from the open pit. Grades from the underground continue to meet expectations.
As a result of revisions to the Company’s work plan, gold production in quarter three will be incrementally higher than quarter two but will be less than previous estimates. Cash flows and operating profitability will increase in quarter three and cash costs per ounce will continue to trend lower.
The ore zone under development on the western side of the orebody has an average grade of approximately 6.0 grams per tonne. To properly develop the long-hole stope it is important to begin mining from the bottom of the zone to prevent a significant quantity of ounces from being sterilized. While the development of the long-hole stope is very positive for the future of the Black Fox Mine, there is a modest impact on gold production in the short term. Brigus made the decision to allocate more time and resources to develop this ore zone in order to maintain its production timelines for quarter four as planned. The long-hole mining method will result in lower costs and higher ore recovery rates than traditional cut and fill mining methods. It is expected to provide 400 to 500 high-grade tonnes per day for at least 18 months once it is fully operational.
The Company is also pleased to report that diamond drilling on the eastern side of the underground is producing encouraging results. Drilling is in progress from a new exploration drift at the 9674 metre level and is targeting the eastern down plunge of the orebody. Initial drill results indicate that the eastern zone extends at depth and remains open for expansion. The Company will report on its progress as drilling continues.
"The large ore zone on the western side and the initial diamond drilling results on the eastern side indicate a positive future for the Black Fox Mine” said Daniel Racine, Brigus newly appointed Chief Operating Officer. “We are working hard to balance short term objectives, while investing for the future with a long term corporate plan that will provide the best return for our shareholders.”
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