Through an 85% owned subsidiary, Queenstake Resources (TSE) entered into an agreement with a South American firm to mine alluvial and residual gold deposits in eastern Venezuela.
The deposits are in the principal historic gold-producing creeks within a concession, two kilometres from a paved highway. The district is considered to be the most prolific of the placer mining areas in the country, where annual production of 200,000 oz. gold has been reported from shallow alluvial deposits.
The district, mined during the 1980s by thousands of small miners using primitive mining and recovery methods, is now under the control of a government agency seeking to develop a mining industry. The agency is already involved in a joint venture with Placer Dome (TSE) which plans to explore the alluvial and lode potential of a concession adjoining Queenstake’s area of interest.
Queenstake has considerable experience mining placer deposits in the Yukon and British Columbia, and plans to apply North American mining techniques and environmental protection measures to its proposed operations. The agreement requires the company to carry out an exploration program to evaluate the alluvial reserves and determine the best method to recover the fine gold lost in the tailings by the early miners. The primary reserve remnants have a high clay content requiring special treatment to liberate the gold, but Queenstake believes it should be able to use technology developed primarily in Malaysia to achieve maximum recovery at low costs. The company predicts it will be able to produce gold for under $200 per oz. (including a 15% royalty) because of the indicated reserve grade, low fuel costs of 8 cents per litre and low labor costs.
Subject to the results of an exploration program, Queenstake and its equal joint venture partner expect to begin production at the first unit by March, 1993, at a planned rate of 300,000 cubic metres per year.
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