Vancouver — Looking to take advantage of the existing infrastructure on its Sao Bento gold operation, Eldorado Gold (ELD-T) has inked a deal to acquire the neighboring Brumal property in the Brazilian state of Minas Gerais.
In a letter agreement with Companhia Vale do Rio Doce (CVRD), Eldorado can purchase the property by spending US$1.5 million over 2.5 years and then paying US$5 million in four installments, with the final payment due on the second anniversary of production. CVRD retains a sliding scale net smelter royalty of 1-to-4% on any output greater than 500,000 oz.
“The Brumal project provides an exciting opportunity to profitably leverage our excellent infrastructure and operating team at Sao Bento,” says Eldorado’s president, Paul Wright. “We have great expectations for this project.”
Located only 3 km southeast of Eldorado’s mine site, Burmal hosts replacement-style gold mineralization associated with banded iron formations, similar to Sao Bento. The gold zone has been traced for 600 metres along strike with drilling cutting the mineralization down to depths of 475 metres below the surface. The deepest hole drilled to date returned 13.3 grams gold per tonne over 3.6 metres. Preliminary metallurgical work indicates that the ore is non-refractory.
Based on a similar style of mineralization to Sao Bento, the company envisions the prospects of outlining a 250,000-to-500,000-oz. resource that could be treated at its existing mill. Early next year, Eldorado plans on launching a drill program aimed at confirming the mineral continuity.
For the nine months ended Sept. 30, the Sao Bento mine produced 79,841 oz. at a cash operating cost of US$222 per oz. In the third quarter, the operation averaged 9.16 grams gold per tonne, a significant increase from the 8.31 grams reported for the year-ago period. Gold production for 2001 is slated to be 94,000 oz.
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