Vancouver —
The study points to an after-tax internal rate of return of 32.6%, with an after-tax net present value of US$255 million. That NPR is based on a 0% discount rate; using a 10% discount rate, the after-tax NPR drops to US$85 million. These figures assume a base case gold price of US$325 per oz. and total production costs of US$203 per oz.
For an initial capital-cost outlay of US$54.4 million, the payback period is pegged at 2.6 years.
Eldorado expects Kisladag to start producing by the end of 2003, following permitting and financing. Environmental approval should be received by mid-year.
Plans call for a conventional open-pit/heap-leach operation. Annual production during the first four years is projected to be 5 million tonnes. In year five, this will rise to 7.5 million tonnes, and in the following year, to 10 million tonnes, where it will remain until the end of the mine’s 15-year life.
Initially, Eldorado will contract-out the mining operation, then take over just prior to the first production increase.
Based on current resources, Eldorado will mine a total of 115 million tonnes of ore and 106 million tonnes of waste, resulting in a life-of-mine stripping ratio of 0.92.
Cash operating costs in the first four years are pegged at US$3.97 per tonne of ore, equivalent to US$138 per oz. gold. Life-of-mine cash operating costs are expected to be US$3.82 per tonne of ore, or US$152 per oz. gold produced. Total production costs, which include depreciation, amortization and closure, amount to US$203 per oz.
The study estimates total initial capital costs will be US$54.4 million, which includes infrastructure (US$9.4 million), crushing (US$10.9 million), leach pad conveying (US$3.6 million), heap-leach pad and ponds (US$4.7 million), desorption facilities (US$3.3 million); rock dump (US$327,000), mining (US$381,000), indirect costs (US$9.5 million), owners’ costs (US$7.5 million) and contingency allowances (US$4.7 million).
About US$39.4 million in “expansion capital” will be spent in years 4 and 5. Included in the figure are costs for infrastructure (US$812,000), crushing (US$8.1 million), leach pad conveying (US$1.1 million), heap-leach pad and ponds (US$429,000), desorption facilities (US$26,000), mining (US$25.8 million), indirect costs (US$2.1 million) and contingency (US$885,000).
“Sustaining capital costs” are estimated at US$37.2 million over the life of mine, breaking down as follows: heap leach pad and ponds (US$15 million), mining (US$14.8 million), and closure (US$7.4 million).
These estimates are based on the use of new equipment and expressed as fourth-quarter 2002 U.S. dollars with no provision for inflation.
Hatch Associates performed the feasibility study. The updated estimates for resources and reserves were based on 29,900 metres of drilling and trenching, and assume a gold price of US$325 per oz. and cutoff grades of 0.35 gram gold per tonne for oxide ore and 0.5 gram gold for primary ore.
Proven and probable reserves are pegged at 115 million tonnes averaging 1.23 grams gold per tonne, or 4.5 million contained ounces. Of this, 27.2 million tonnes grading 0.93 gram gold, or 811,000 contained ounces, are oxide ore. The remaining 87.9 million tonnes grading 1.32 grams gold, or 3.72 million contained ounces, are primary ore.
There is also a measured and indicated resource of about 166 million tonnes averaging 1.13 grams gold, and an inferred resource of 69.1 million tonnes grading 0.81 gram gold, or 1.8 million contained ounces.
“We have recently completed 2,650 metres of shallow drilling around the perimeter of the deposit,” says Eldorado President Paul Wright. “The program was designed to define the limits of the mineralization. We have added approximately 180,000 ounces to the measured and indicated category around the pit rim, which will be included in the final pit design.”
Upgrade
In the months ahead, crews will drill 2,200 metres in order to upgrade 7.4 million tonnes of the inferred resource that are currently regarded as waste. “Those 7 million tonnes are estimated to contain about a quarter of a million ounces of gold,” said Wright. “If we are successful, the upgrading will lower the stripping ratio and enhance the performance of the project.”
Forty-five column-leach tests performed by Kappes Cassiday & Associates have determined that a fine crush size (80% passing 6 mm), combined with a leach period of 90 days, results in gold recoveries of 81% for the oxide material and 60% for the primary sulphide material. Percolation tests indicate that the Kisladag material does not require cement agglomeration and that heap heights of up to 60 metres are practicable.
Ore will be mined conventionally from the open pit, with trucks hauling it to a primary gyratory crusher. Waste rock will be hauled to a dump area 1.5 km southwest of the pit. Processing will occur in a standard heap-leach facility consisting of a 3-stage crushing and screening circuit, an overland conveyor to the heap leach pad, mobile conveyors, and a stacker for placing the ore.
A carbon adsorption facility will be installed for recovering the gold. The carbon will be treated on-site in a refinery to produce gold dor.
The initial design throughput will handle 5 million tonnes per year of predominantly oxide material for the first four years. During the fifth year, production will be doubled as more primary material is processed.
The leach pad will be built 1.5 km north of the open pit and expanded in four successive phases as mining progresses. The ultimate stack height is expected to be 50 metres.
Kisladag is a porphyry-style gold deposit that is centered on a series of sub-volcanic latite intrusions exposed by erosion near the centre of a stratovolcano. Mineralization forms a horseshoe-shaped body wrapping around the northern, eastern and southern sides of a weakly mineralized intrusion.
The gold mineralization is associated with at the following phases of partially overlapping stockwork veining and brecciation: intense quartz-tourmaline stockwork veining; quartz flooding of the host rock; multiple phases of quartz-pyrite veining; and lesser amounts of late sulphide-rich quartz veining.
Oxidation varies from 20 metres to more than 100 metres in depth, and tends to be deeper around the flanks of the deposit. The oxidation decreases toward weakly mineralized intrusion that cuts the centre of the deposit.
A 30-km, dedicated 10-MVA power supply will be installed from the city of Usak to a substation adjacent to the mine site. Process water for the project will be supplied from a well field 13 km southeast of the mine. Supplies and services are available in Usak, 35 km to the north. The mine will employ 360 persons, most of whom will be locals.
On the permitting front, Encon Engineers of Ankara has prepared and submitted an environmental impact assessment for Kisladag to the Turkish Ministry of Environment. The government agency is currently reviewing the EIA, and Eldorado expects to receive an environmental positive certificate by mid-2003.
“There are two milestone permits in the permitting process for industrial development in Turkey,” says Wright. “One is the site selection permit, which we have in hand; the second is the positive certificate, which is granted by the Ministry of Environment upon the acceptance of the EIA. Subsequent to that, there are several other permits required, none of which can be applied for until we have the positive certificate.”
Some of these subsequent permits include the water usage permit, the blasting permit and a construction permit.
“We have assigned a period of six months after the positive certificate for gathering these other certificates,” Wright adds. “It is just a matter of going around to the different agencies and submitting an application for them.”
Sao Bento
Meanwhile, at its Sao Bento mine in Brazil, Eldorado plans to deepen the existing shaft by about 370 metres. This is ex
pected to cost US$12 million, with construction getting under way sometime in the second quarter. The shaft is expected to be commissioned in December 2004.
The project will provide a bottom working level 1,300 metres below the surface at the mine’s 28th level. In October 2002, Eldorado inked a deal with AngloGold South America that provides Sao Bento the opportunity to explore and develop resources below the 30th level. Subsequently, Eldorado completed an extensive definition and exploration drilling campaign totalling 17,500 metres with the goal of increasing reserves and extending Sao Bento’s resource base.
Proven and probable reserves at Sao Bento now weigh in at 1.8 million tonnes averaging 9.22 grams gold, or 531,355 contained ounces. The measured and indicated resource amounts to 1.8 million tonnes averaging 12 grams gold per tonne, or 706,063 contained ounces. An additional 840,000 tonnes grading 11.8 grams gold are classified as inferred.
Last year, Sao Bento produced 103,533 oz. gold at a cash cost of US$184 per oz. The 2003 forecasted production is 105,000 oz. gold at a cash cost of US$190 per oz.
This year, Eldorado plans to drill 12,000 metres at a cost of US$360,000, from a hangingwall drift of the 27th level. The program will try to extend and upgrade resources above the 34th level.
“The combination of improved metal prices and exploration success at Sao Bento has provided the opportunity to extend the profitable life of the mine,” says Wright. “This investment will enable the maximum recovery of the existing resource and provide infrastructure for extension beyond the existing resource base.”
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