Resolute earns in at Etruscan’s Finkolo

Ongoing drilling by Etruscan Resources (EET-T, ETRUF-O) continues to deliver high-grade gold values from the Finkolo gold project in Mali, West Africa.

The latest batch of 15 holes were split between the Tabakoroni and Porphyry zones.

Highlights from seven holes on Tabakoroni include:

• hole no. 42 — 8 metres grading 27.3 grams gold per tonne, including 2 metres of 93.6 grams;
• hole no 45 26 metres averaging 1.7 grams gold, including 6 metres of 3.9 grams; and
• hole no. 128 6 metres of 90.5 grams gold, including 2 metres at 18.8 grams.

The intercepts are generally less than 130 metres deep.

So far, gold mineralization has been traced over 1.7 km at Tabakoroni. It remains open to the north, south, and at depth. The volcano-sedimentary host package has been outlined by induced polarization surveying over some 6 km.

The recent results represent infill drilling and the deepening of reverse-circulation holes.

At the Porphyry zone, drilling returned the following selected results:

• Hole no. 123 — 16 metres running 1.6 grams gold, including 2 metres of 6.7 grams;
• Hole no. 125 4 metres of 10.4 grams, including 2 metres averaging 19.7 grams, and 1 metre of 22.3 grams;
• Hole no. 126 25 metres of 1 gram gold; and
• Hole no. 127 4 metres at 5.8 grams, including a metre of 13.9 grams.

The highly fractured Porphyry zone trends to the northeast, and is believed to represent a sedimentary sequence intruded by a porphyry. The porphyry may be coincident with a northeast-trending structure. The zone may strike for more than 1 km.

Further infill and depth-extension drilling will target the Tabakoroni zone, with other holes planned to test strike extensions of both zones.

The ongoing drilling is being funded by Australian-based Resolute Mining (RMGGF-O), which has completed US$2 million worth of work to take a half-interest in the project. The Aussie miner can take another 10% by chipping in another $1 million or completing a feasibility study within two years. Etruscan says Resolute has informed it that it plans to exercise that option.

Finkolo is contiguous to the south of Resolute’s Syama gold project. In April, Resolute approved a US$120 million redevelopment plan aimed at producing 250,000 oz. of gold per year.

An updated feasibility study pegs the plan’s capital cost at US$96.6 million, up 18% from the previous estimate in 2004. The higher cost includes the addition of an in-wall ramp as part of the open-pit mine design. The ramp will allow early access to around 4 million oz. worth of underground resources immediately below the pit.

Estimated operating costs have increased 6.6% to $33.44 per tonne, and average cash costs are up 15.5% to US$336 per oz. owing to increased fuel and material costs. On the flip side, a higher gold price means dramatic increases in the net present value — $86.1 million (up from $20.3 million), and the internal rate of return at 25.8% (versus 11.9%). The latest study is based on a gold price of US$550 per oz., up from the original US$425 per oz.

A 2-year construction period is expected to crank up later this year, pending permitting.

The feasibility study pit design contains a reserve of 13.7 million tonnes grading 4 grams gold, based on a cutoff grade of 1.75 gram. That’s included in an overall resource of 66.6 million tonnes running 3 grams gold, based on a cutoff of 1 gram.

The project is expected to boost Resolute’s overall production to more than 500,000 oz. per year.

The company is considering its financing options, including conventional debt and equity raisings as well as the possible sale of other assets.