Standard Bank will underwrite US$40 million and arrange the balance of funds, while completing all loan documentation through the syndication process. Meanwhile, Vancouver-based Sutton has advised Placer Dome Technical Services and Kilborn Engineering Pacific to resume work on design engineering, which is now 45% complete; commitments for long-term delivery items are being reinstated; the earthworks contract is on schedule; and the first concrete was poured in December 1998.
The Bulyanhulu project comprises 52 sq. km and lies 65 km southwest of Mwanza, Tanzania’s capital, on the southern shore of Lake Victoria. The mine site is 126 km, by road, from the nearest railhead at Isaka. Sutton has upgraded the 75-km stretch from the property to the paved section of highway that connects to the town of Isaka, to the east.
Through its wholly owned subsidiary, Kahama Mining, Sutton owns an 100% interest in Bulyanhulu. Once the government of Tanzania issues a mining permit, it will be entitled to a 3% net smelter royalty and a 15% equity interest in Kahama Mining.
Herdsman first discovered gold at Bulyanhulu in 1976. A gold rush by artisinal miners followed, and it is estimated that as much as 1 million oz. gold was extracted from the oxide zone.
Between 1977 and 1979, the Tanzanian Ministry of Water, Energy and Minerals conducted geological mapping and sampling, and drilled nine holes. In 1980, the Tanzanian State Mining Corporation acquired the ground and drilled an additional 17 holes, following which it entered into a joint venture with Finland’s Outokumpu and Krone Engineering and continued drilling. An economic evaluation was produced by 1994. No further work was done until 1989, when the Tanzanian government declined to renew the Outokumpu joint venture. The government then entered into an option agreement with
Sutton entered the scene immediately after Placer’s departure. However, the company did not start work on the property until 1994. Over an exploration history of 20 years, more than 500 diamond drill holes were put down on the property, of which Sutton drilled in excess of 300.
A positive bankable feasibility study by Kilborn Engineering Pacific estimates that the cost of constructing a mine would be US$211 million. The study envisions a 2,500-tonne-per day underground mine, with ramp and shaft access, capable of producing 300,000 oz. per year via a multi-stage milling circuit. Total cash costs are expected to average US$163 per oz. over a mine life of 11.3 years.
The feasibility study is based on a diluted proven and probable reserve, in the Reef 1 deposit, of 10 million tonnes grading 11.65 grams gold per tonne, equivalent to 3.75 million contained ounces. Gold recoveries are projected at 92.5%.
Reef 1 contains an additional inferred resource of 5.9 million tonnes grading 13 grams, or 2.47 million oz., which could extend the mine life to 18 years.
Reef 1, the main mineralized zone, is a steeply dipping tabular body that averages 4.4 metres wide and extends along strike for 1,400 metres and vertically for 1,100 metres. Mineralization is hosted in a sheared, quartz-rich, graphitic and argillaceous unit, sandwiched between two volcanic units. The Reef 1 deposit remains open along strike and at depth.
Running parallel to Reef 1 and situated 500 metres to the north is the Reef 2 zone, which consists of a series of en echelon vein structures in sheared, intermediate volcanics. The structure is now estimated by Giroux Consultants to contain an indicated and inferred resource of 1.6 million tonnes grading 11.63 grams, or 597,000 contained ounces.
The resource estimate is the cumulative tonnage from eight sub-parallel veins, which range in attributed size from 11,000 to 550,000 tonnes. The average true width of the veins is just over 2 metres.
During the first two years of operation, ore will be trucked to the surface via a decline. Beginning in year three, miners will gain access to the ore via a 958-metre-deep vertical shaft. Owing to the narrowness of the deposit, Bulyanhulu will be mined from several stopes simultaneously. The dominant mining method will be long-hole stoping with shrinkage stopes in the narrower sections. Mined-out stopes will be filled in with paste backfill consisting of cemented tailings. On-site mining costs are expected to range between US$45 and $59 per tonne.
Bulyanhulu’s mineralization is said to be relatively complex for a gold deposit, and metallurgy thus far has been the most contentious issue surrounding the project.
Sutton’s processing flow sheet is expected to proceed in the following way: Run-of-mine ore will be crushed to minus-150 mesh and then undergo primary grinding and report to a gravity circuit. Sutton projects that 42% of the gold produced will be recovered in dor bars on site; the remainder will be put through a flotation circuit that will produce a concentrate containing 20% copper and 300 grams gold per tonne. About 43% of the total gold will be recovered to the copper concentrate.
Tailings from the flotation circuit will be leached in a 6-stage carbon-in-leach circuit, with gold recovered in electrowinning cells. Recoveries from this circuit are pegged at 7.5% of the total gold. When tallied, the total recovery weighs in at 92.5% gold, 85% copper and 85% silver. Test work from a 35-tonne bulk sample yielded recoveries of 95.7% gold, 87.8% copper and 89.4% copper. Gold recoveries were 41.2% to gravity bullion, 46% to copper concentrate and 8.5 to carbon-in-leach bullion.
In related news, Sutton has discovered additional gold mineralization 400 metres north of the Reef 1 and 0 deposits. Hole 528 intersected 31 grams gold over a true width of 2.5 metres; other assays are pending.
At last report, Sutton had 40.1 million shares fully diluted and working capital of US$40 million.
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