Kilborn Engineering Pacific reports that Reef-1 West contains about 2.9 million tonnes grading 11 grams gold per tonnne, equivalent to slightly more than 1 million oz. gold. The figures, which are based on six widely spaced drill holes and a cutoff grade of 5 grams gold, expands the total in situ gold resource at Bulyanhulu to 8.8 million contained ounces.
The Reef-1 and -0 deposits contain a measured, indicated and inferred resource of 16.8 million tonnes averaging 13.2 grams gold per tonne, or 7.1 million contained ounces, whereas Reef-2 contains a resource of about 1.6 million tonnes grading 11.63 grams gold, or 597,000 contained ounces.
A bankable feasibility study envisions a 2,500-tonne-per-day underground mine with ramp and shaft access, capable of producing 300,000 oz. per year via a multi-stage milling circuit. Total cash costs are expected to average US$163 per oz. over a mine life of 11.3 years.
The feasibility study is based on a diluted proven and probable reserve, in the Reef 1 deposit, of 10 million tonnes grading 11.65 grams gold, equivalent to 3.75 million contained ounces. Gold recoveries are projected at 92.5%.
The new Reef-1 West zone remains open both along strike and to depth. So far, the structure has been intercepted over a strike length of 800 metres and along 500 metres of dip length. The depth of mineralization ranges between 400 and 920 metres below the surface. Sutton believes the Reef-1 West zone is likely a continuation of the Reef-1 deposit.
“The very western part of the [Reef-1] zone pinched out, and now it has reappeared to the northwest, separated by a local topographic high,” says Patrick Soares, Sutton’s manager of investor relations. “There is quite a bit of potential to depth, and that’s where the growth area would be, as well as along strike to the northwest.”
Current drilling is aimed at increasing the resources of known deposits and testing for additional gold zones. Sutton has two diamond rigs on site, one of which is focused on the Reef-1 West zone.
Meanwhile, the company has amended its previously announced arrangement for US$130 million in debt financing facility.
Under the new agreement, Standard Bank London and Barclays Capital will act as joint arrangers of the debt package. Each of the banks has agreed to underwrite US$40 million. The remaining US$50 million will be raised through the syndication process.
Through its wholly owned subsidiary, Kahama Mining, Sutton owns an 100% interest in Bulyanhulu. Once the government of Tanzania issues a mining permit, it will be entitled to a 3% net smelter return royalty and a 15% equity interest in Kahama.
Sutton has working capital of US$40 million and 40.1 million shares fully diluted.
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