Vancouver – With a positive feasibility study in hand, junior gold producer Aurizon Mines (ARZ-T) moves one step closer to seeing its wholly-owned Casa Berardi project, located in northwestern Quebec, return to production.
The report, prepared by Met-Chem Canada, outlines probable reserves of 4.4 million tonnes grading 6.2 grams gold per tonne (868,000 ounces) within the West Mine area, above the 700-metre level.
Pre-production capital expenditures of $84-million over about 18-months were calculated to place the operation into production. The proposed underground mine would see expected output of 150,000 ounces of gold annually over a projected 5.5 year mine life. Cash costs would be in the order of US$233 per ounce of gold with a 3.5-year payback period.
The feasibility study outlines a 5.5-year start-up plan for Casa Berardi based on the reserves above 700-metres. Company President David Hall describes the study as “a base-case, start-up scenario.”
Hall continued “Just to put it in context, Casa Berardi is a property that is 37 km long. The area of previous mining activity, between the West Mine and East Mine, is 5 km long, and the feasibility study really relates to ounces contained within one kilometre of the West Mine area and only down to a depth of 700 metres. It’s based on reserves, above that elevation, of 868,000 ounces, which is approximately 30% of the total ounces on the project today. The purpose of designing the feasibility study in this manner is to put the property into production as quickly and as cheaply as possible.”
Certain technical problems encountered prior to the mine’s closure in 1997 have been addressed in the new study.
An additional scoping study, also prepared by Met-Chem, reviewed indicated resources in the high-grade 113 Zone, below 700 metres depth. Underground drilling in late-2004, on 35-metre intervals, contributed to an updated calculation of 838,000 tonnes grading 13.7 grams gold, representing about 369,000 ounces. The resource is not included in the feasibility study.
In the East Mine area, Geostat Systems International prepared a new mineral reserve estimate on near-surface ore remaining in the crown pillar. A probable reserve of 594,000 tonnes grading 4.2 grams gold is outlined as mineable through conventional open pit methods. About 40-metres of overburden would require stripping prior to proposed mining.
Aurizon plans further exploration starting in February, when drilling can begin from a crosscut on the 550-metre level. An extension of the 550-level drift to the east will allow detailed drilling on two other new zones, the 118 and 122.
The Casa Berardi mine operated for about ten years, from 1988 through 1997, producing 688,000 ounces of gold from underground mining at the East and West Mines. The fully mine permitted project has an existing 2,200-tonne-per-day processing plant, building complex, power infrastructure and underground ramp-access.
Aurizon has a market capitalization of about $170 million, given its 103 million shares outstanding and recent trading price of $1.65 per share.
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