Bethlehem to reopen Goldstream copper mine

Bethlehem and Goldnev Resources (VSE) purchased the mine this summer from Noranda Minerals for $5.75 million. The joint venture estimates that the mine could be brought back into production for a total of $10 million; $5 million for capital expenditures plus $5 million for working capital purposes.

The property did produce for a short time in 1984 after Noranda spent over $70 million developing a mine and mill. At the time, reserves at Goldstream were stated at 4.3 million tons grading 3.69% copper, 2.63% zinc and 0.51 oz silver per ton. The mine was closed after less than a year due to low metal prices as well as poor zinc recoveries which approached 10%.

A study by Wright Engineers increased the copper cutoff grade from 2% to 3%, causing a drop in proven reserves to 1.86 million tons grading 4.81% copper and 3.06% zinc. The study also modified the mining method somewhat.

The mineralization is about 10 ft thick and dipping at about 30 degrees . Noranda had been drifting on mineralization, following the dip by benching down and drifting again. Bethlehem plans to drift on mineralization, leaving a 7.5-m pillar which will then be slashed out. This will reduce the dilution caused by a corner of the drift being in waste.

The study estimated a net cash production cost, including freight and smelting charges, of 85 cents (US) per lb of copper. Annual copper production is projected at 34 million lb. The study assumed that there would be no zinc production. The company believes that in the past much of the zinc reported to the copper concentrate because of secondary copper minerals causing the sphalerite to behave like chalcopyrite. (Smelters, however, do not pay a credit for zinc in a copper concentrate.) This type of mineralization is not expected to continue to depth. Zinc recoveries could approach 50%, resulting in 8-10 million lb of zinc production per year at a cost of about 40 cents (US) per lb.

A large portion of copper’s cash production cost (37-40 cents per lb) is attributable to freight and smelting charges. Because of this, Minproc, an Australian metallurgical firm, has proposed an on-site smelter which uses new technology allowing for a smaller, lower capital cost smelter.

The capital cost of an on-site smelter is estimated at $13 million and would have a 1-year payback due to savings in the smelting and transport costs as well as higher metal recoveries. Although the plan looks good on paper, the technology is new and has had limited testing as well as the more obvious permitting difficulties. Brian Kynoch, vice-president of engineering, indicated any smelter plans would likely wait until the project was up and running. The companies hope to finance partially the startup by selling a one-third interest in the project. Although a deal was worked out in September to sell the interest in the property to Gold Torch Resources (VSE) for $5 million, it did not close.

At Bethlehem’s recent annual general meeting, Patrick McAndless, vice-president of exploration, indicated that the joint venture was in final negotiations with three parties for the sale of the third interest. He also noted that the company was exploring a number of other financing alternatives which may include a forward sales agreement with an end user.

At fiscal year-end, July 31, Bethlehem had 14.3 million shares issued, working capital in excess of $2.5 million and no debt.

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