Alamos defines new ‘stand-alone’ gold deposit in Turkey

Mid-tier gold miner Alamos Gold (AGI-T) has delineated a new gold zone near its Agi Dagi gold project in Turkey that it believes has the potential to develop into a “stand-alone” project, according to a news release dated June 16.

Called the Camyurt project, the new area of mineralization was found approximately three kilometres southeast of main Agi Dagi deposit, which is currently at the prefeasibility stage. Recently released assays from the zone include a 185.7-metre intersection grading 1.6 grams gold per tonne, as well as 89.6 metres grading 2.34 grams gold.

Alamos says gold mineralization at Camyurt is continuous for at least 700 metres along strike and at least 200 metres deep. It further notes the zone is open at depth and has a potential 600-metre southwest strike extension that is currently being drill tested. The company has now completed approximately 3,400 metres of a planned 10,000 metre drill program at Camyurt for 2011, part of a larger 30,000-metre program for all its projects in Turkey.

The Toronto-based miner, which also owns and operates the highly profitable Mulatos gold mine in northwest Mexico, acquired Agi Dagi and a few other Turkish projects in 2009 from Teck Resources (TCK-T, TCK-N) and the late Fronteer Development Group, which Newmont Mining (NEM-N, NMC-T) took over in early 2011. Alamos paid four million shares and US$40 million cash to buy the Turkish units, securing a decent price according to several analysts by purchasing the assets at a time when Teck was unloading its gold positions and Fronteer needed the money for its main projects in Nevada. Increasing political risk in Turkey may also have been a deciding factor.

The Camyurt zone was originally discovered by Teck and Fronteer in late 2007, when they drilled five widely spaced core holes there. Although the holes had poor core recovery and one was abandoned during drilling, significant mineralization was found, including 73.3 metres grading 0.65 gram gold per tonne with an average core recovery of 43%.

Alamos then drilled six core holes in the area during the fourth quarter of 2010 to follow up on the previous operators’ results, encountering 58.9 metres grading 1.33 grams gold in a hole twinned with the one listed above. Core recovery was much improved at 82%. The company has since decided to drill an additional 10,000 metres at Camyurt in 2011 to extend the strike length of the known body of gold mineralization and target areas it believed were undershot by previous holes, resulting in the recently released intersections.

Alamos says all the intervals reported thus far represent oxidized mineralization, except for a few minor intervals of sulphide near the end of the deeper holes. An encouraging 1,200-metre-long silica anomaly coincides with strong gold-in-soil values over the mineralized area, which is interpreted to be from sub-vertical oxidized volcanic and breccias structures. Outcropping rocks are intensely silicified, with vuggy silica present and numerous surface workings.

The company currently has two core drill rigs operating at Camyurt and hopes to include the zone in its year-end 2011 global resource and reserve statement, though it is unlikely to be included in the highly anticipated prefeasibility study for Agi Dagi and the nearby Kirazli gold project, expected later in the fourth quarter of 2011.

Alamos had originally planned to release the prefeasibility study during the second quarter of this year, but ran into delays in obtaining drill permits, among other things, such as needing to conduct additional geotechnical and condemnation drilling.

The delay has apparently not affected the company’s development timeline for the projects, which remains unchanged with initial production from Kirazli expected in the first quarter of 2013 followed by Agi Dagi a year later, assuming timely approval of environmental and mining permits.

A preliminary economic assessment for Agi Dagi and Kirazli completed by Alamos in early 2010 outlined an operation with annual production of approximately 135,000 gold oz. and 621,600 silver oz. over the first eight years. Using a base-case scenario of US$800 per gold oz. and US$13.5 per silver oz., Alamos expects the projects’ capex to run around US$235 million, with cash costs averaging just $314 per gold oz. (net of silver byproduct credits).

The company plans to provide an updated mineral resource estimate for Agi Dagi and Kirazli sometime in the third quarter, which will include all of the drilling completed at the projects up to the end of first-quarter 2011.

Shares of the mid-tier miner closed down 5¢ on 647,000 shares traded following the announcement, on a down day for the markets which saw a wide sell-off in both the S&P/TSX Global Gold Index and other equities.