NEVADA SPECIAL — Production recommended for Tonkin Springs

Consultant Behre Dolbear has recommended that the Tonkin Springs gold project in Eureka Cty, Nev., be advanced to production.

The 33-sq.-mile Tonkin Springs property is owned 60% by Gold Capital (GOCP-O) and 40% by U.S. Gold (USGL-Q). Vancouver-listed Royalstar Resources (RYQ) owns 51% of the former.

The report called for an operating period of five years, based on proven and probable reserves of 9.8 million tons grading 0.056 oz. per ton (equivalent to 554,000 oz. gold). Cash operating costs are projected to be US$243 per oz., and the internal rate of return on a pretax basis would be about 63%. At full production, the project would turn out 100,000 oz. gold per year, with payback expected in two years.

The operation would consist of open-pit mining by a contractor, followed by 3-stage crushing for sulphide milling and sulphide heap-leaching.

The sulphide ores will be pretreated on a bio-oxidation pad to improve gold recovery. After bio-oxidation, the milling ore would be sent to the existing carbon-in-leach mill. The lower-grade ore would be moved to another pad for conventional heap-leaching, and the oxide run-of-mine ore will go directly to heap-leaching. Since the project already has a US$50-million mill on site, working capital and startup costs are estimated at only US$8 million.

Behre Dolbear recommends a working capital provision of US$800,000.

Regulatory approvals for the construction of a bio-oxidation leach pad have been received, and production could begin before year-end.