A joint venture is being arranged between California Gold Mines and Pegasus Gold for the purpose of placing the Stewart Outcrop zone into production on California Gold’s 100%-owned Zaca property located in Alpine Cty., Calif., about 60 miles south of Reno, Nev. The two firms have signed a memorandum of understanding, the terms of which call for Pegasus to complete a revised feasibility study and place the Zaca property into production within 18 months. Pegasus will pay for the first $12 million(US) in capital costs or development; thereafter, such costs will be shared equally with California Gold.
Once commercial production is reached, Pegasus will earn a 50% interest in the property; the two companies will then share equally in the profits and cash flow from production.
A geologic reserve of 13,459,000 tons averaging 0.025 oz gold per ton and 0.55 oz silver has been indicated.
Designed as an open-pit, heap leaching operation, the Zaca project is currently designed to produce an average of 31,000 oz gold and 395,000 oz silver per year. A net average operating cost of $200 per oz gold has been projected by California Gold.
The president of California Gold, David Reesor, expects the Zaca project to be brought into production quickly and be operated at maximum efficiency. “We anticipate Pegasus will place the property into production for less than $12 million, giving our company a free 50% carried interest,” he said.
Pegasus has already begun work on the property.
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