Veladero reserves upped

A second year of drilling at the Veladero property in Argentina has nearly doubled gold reserves and upped silver reserves by 60%.

Soon-to-be-merged Barrick Gold (ABX-T) (40%) and Homestake Mining (HM-N) (60%) jointly own the property. It is near Barrick’s Pascua-Lama project in the El Indio belt, which straddles the Chile-Argentina border.

The companies plan to combine the development of the two projects. This would result in gold reserves of more than 25 million oz. gold (2.4 million proven oz.) and 724 million oz. silver.

Pascua-Lama hosts proven and probable reserves of 17.5 million oz. gold and 594 million oz. silver (including the Filo Norte extension).

Veladero’s proven and probable reserves now stand at 168.6 tonnes grading 1.48 grams gold and 24 grams silver per tonne, or 8 million contained ounces of gold and 130.3 million contained ounces of silver.

When combined with Barrick’s Filo Norte deposit, which is contiguous with the Filo Federico deposit on the joint-venture property, reserves jump to 187.7 million tonnes running 1.47 grams gold and 23 grams silver, or 8.9 million contained ounces of gold and 139 million contained ounces of silver.

An engineering study at Veladero envisages the treatment of ore from two open pits, centred on the Filo Federico and Amable deposits, in a combination mill and heap-leach facility.

Under the study, mining would run at a rate of some 200,000 tonnes per day over a 11.5-year lifespan. Including pre-stripping, the lifetime waste-to-ore strip ratio is estimated at 3.2-to-1.

The current plan provides for a total of 11.5 million tonnes of ore grading 7.04 grams per tonne to be ground in a 3,500-tonne-per day mill. After leaching, the ore would be stacked on a leach pad, along with a daily 52,000 tonnes of crushed leach-grade ore averaging 1.1 grams.

The mill recovery of gold is expected to average 94%. Heap-leach gold recovery is pegged at 73%. Silver recoveries vary widely across the deposit and are expected to average 34%.

The total pre-production capital cost is estimated at US$608 million. Average annual gold output is forecast at 621,000 oz. at an average cash cost of US$117 per oz., after silver byproduct credits.

The study employed gold prices of US$300 and US$275 per oz. It used silver prices of US$5 and US$4.75 per oz.

The plan does not include an enlarged Filo Federico pit. This would incorporate the Cuatro Esquinas deposit, which is located halfway between Amable and Filo Federico on the Veladero property.

Further work is required at Cuatro Esquinas to convert into reserves the estimated mineralized inventory of 104.7 million tonnes grading 1.02 grams gold and 18.1 grams silver.

Homestake continues to investigate a 100% heap-leach or dump-leach operation at Veladero, with the aim of further reducing initial capital costs and improving the project’s economics.

The plan for the remainder of 2001 and 2002 is a program of underground tunnelling and drilling into Filo Federico and Amable, plus follow-up metallurgical tests, with a price tag of between US$25 million and US$30 million.

The proposed Barrick-Homestake merger is subject to approval by regulatory bodies and Homestake shareholders.

The combined company would have a market capitalization double that of its nearest competitor. It would be the world’s second-largest gold producer, boasting the lowest cash costs of any major producer.

It would have about US$900 million in cash.