Nelson sustains Tajikistani output

Nelson Gold (NLG-T) has maintained production levels at its partially owned Jilau gold mine in Tajikistan while decreasing its losses in the third quarter.

The company is also a partner in the Taror copper-gold project, in the same country. Both projects are owned by Tajikistani company Zaravshan Gold (ZGC), which, in turn, is held 44% by Nelson, 51% by the Tajikistani government and 5% by International Finance Corp. (IFC), a division of the World Bank.

For the third quarter, Nelson reported a loss of US$113,000 (or 0.2 per share) on revenue of US$3.86 million, compared with a loss of US$936,000 (US2 per share) on US$65,000 in the corresponding period last year.

The third quarter of 1997 saw the the Jilau open-pit mine produce 19,443 oz.

gold from 226,272 tonnes with a head grade of 2.89 grams gold per tonne. The recovery rate was 92%. Comparative production in the first and second quarters was 19,753 and 17,900 oz., respectively.

Total production for 1997 is projected at 72,000 oz.

In the first nine months of 1997, ZGC suffered a loss of US$2.4 million (US3 per share) on revenue of US$11.79 million, compared with a loss of US$2.6 million (US4 per share) on US$176,000 in the corresponding period of 1996.

Output during the nine months amounted to 57,096 oz. gold, extracted from 646,385 tonnes of ore with a head grade of 2.99 grams gold. The recovery rate was 91%.

Nelson reports that the head grade remained below 3 grams gold as a result of two factors: the implementation of a revised mine plan for the Jilau mill and expansion of the carbon-in-leach (CIL) plant. The company expects head grades to be reduced further as the annual milling rate increases to 1.7 million tonnes from 840,000 tonnes.

The cash operating cost during the 9-month period was US$211 per oz. Total costs (including royalties, depreciation and amortization) amounted to US$293 per oz.

With capital expenditures for 1997 slated to reach US$12 million, Nelson reports that the commissioning of the CIL plant expansion is proceeding on schedule and within budget. Commissioning of the milling circuit and additional leach tanks is under way and should be completed by the end of the year. This will increase gold production to about 100,000 oz. annually, beginning in 1998.

During the third quarter, the Jilau resource model was reviewed, and reconciled with actual production.

Previously, Nelson considered that heap leaching would be the best treatment method for Jilau’s lower-grade ores. However, recent metallurgical testwork on lower-grade oxide, transitional and sulphide material indicated that only the oxide material is amenable to heap leaching.

Development options for the Taror deposit are being reviewed, and a scoping study is being prepared for the possible redevelopment of the Taror underground mine. It is proposed that sulphide material grading about 5 grams gold (which is amenable to cyanidation, with recoveries of about 80%) be mined and fed to the existing mill and CIL plant, which were developed for higher-grade ore from the Jilau deposit. Further metallurgical testwork and underground drilling are planned for the first half of 1998.

Expansion of the CIL plant was to have been financed from internally generated cashflow, but lower-than-anticipated gold prices have resulted in a cash shortfall. Nelson is negotiating with IFC for project financing to meet the shortfall.