Anatolia achieves milestone at Copler

Anatolia Minerals Development (ANO-T, ALIAF-O) is fine-tuning a newly completed positive feasibility study of its 100%-owned Copler gold project in Turkey, with the objective of making a production decision by year-end.

Copler hosts an oxide gold resource of 2 million oz., overlying a much larger refractory sulphide resource containing 3.5 million oz.

“Given that we’re a small company, we have focused on the oxide potential of this orebody first,” says Timothy Haddon, Anatolia’s chairman.

Management believes its plan of attaining production from the current oxides is ideally suited for a new gold producer and is well within the company’s ability to finance.

The feasibility study, prepared by Colorado-based Samuel Engineering, touches only on the near-surface, oxide component of Copler. Metallurgical test work shows that gold recoveries better than 80% can be expected from the oxides, while the sulphides are generally refractory, and not suitable for cyanide leaching. A separate scoping study is currently assessing the sulphide potential and how best to integrate them at a later stage in the development plan.

“With a resource of plus-five-million ounces, we think that we can have a significant production level from both the oxide and sulphide over time,” said Haddon, who spoke at BMO Nesbitt Burns Global Resources conference earlier in the year.

The oxide feasibility study contemplates a large-scale, open-pit mine and both a mill and heap-leach component. The operation, with a 15,500-tonne-per-day capacity, would produce roughly 160,000 oz. gold annually at a cash operating cost of US$182 per oz., net of silver credits, and a total cost of US$295 per oz. over an 8.5-year life. The study is based on conventional open-pit mining of the oxide ore from three closely spaced deposits — Marble Contact, Main Porphyry and Manganese, which, together, host proven and probable reserves of 38.7 million tonnes grading 1.61 grams gold and 4.7 grams silver per tonne at an overall stripping ratio of 1.4:1. Recoverable ounces total 1.4 million oz. and 1.9 million oz. gold.

At an estimated capital cost of US$126 million, the project shows a payback period of 3.3 years and an after-tax internal rate of return of 22%, using a US$450-per-oz. gold price. Anatolia intends to use a mining contractor, so capital costs do not include the purchase of mining equipment or the construction of associated mining infrastructure such as a truck maintenance shop, offices, warehousing and storage for fuel and explosives.

Anatolia was founded by geologist Richard Moores, who continues to lead the Denver, Colo.-based junior. With a seasoned, in-country exploration crew, the company has focused exclusively on Turkey since its inception in 1996. Today, through its wholly owned Turkish subsidiary, Anatolia controls more than 20 project areas covering approximately 10,000 sq. km throughout the country.

Strategic alliance

Rio Tinto (RTP-N) struck a strategic alliance with Anatolia in April 2000 to search for base and precious metal deposits in Turkey.

“Rio Tinto liked our land position; they felt we had the most competitive land position in Turkey,” Haddon explained. That arrangement was extended another four years in November 2003. Rio Tinto is committed to spending US$500,000 each year towards project generation and grassroots exploration, as well as providing US$216,000 annually to offset Anatolia’s office and administration expenses, in exchange for a right of first refusal on a particular property.

Should Rio elect to earn an interest (of 66.7%) in a designated property, it must spend at least US$10 million, generate an order-of-magnitude study, and pay Anatolia US$1.5 million within a 6-year timeframe. Anatolia manages all the grassroots campaigns, as well as the first US$3 million spent by Rio on an earn-in property. A jointly governed technical committee approves all spending.

To date, Rio Tinto has spent US$18.5 million on the Anatolia alliance and is currently earning-in on four properties considered highly prospective for copper-gold porphyry mineralization: Tunceli, Bursa, Durusu and Gumushane. In March, Rio assumed operatorship of the district-sized Tunceli joint venture, 550 km southeast of Ankara in east-central Turkey, after spending more than US$3 million there. The immediate focus will be on the resumption of drilling later this year at the Cevizlidere prospect (formerly called Kizilviran), a grassroots discovery that is showing better than 1% copper in places within a secondary enriched chalcocite blanket.

The Cevizlidere prospect is exposed along a ridge top as a leached, phyllic altered cap, with widespread anomalous copper and gold over a 2 by 1-km area. Samples from the leached cap carry 0.01-0.1% copper, up to 0.05% molybdenum and an average of 0.2 gram gold per tonne. The base of the ridge returned values of up to 3.7% copper, 1 gram gold and 0.04% molybdenum from chalcocite zones exposed by spring runoff.

The joint venture tested Cevizlidere with a single hole in the summer of 2003 and intersected 580 metres of both secondary and primary mineralization averaging 0.39% copper, 0.14 gram gold and 52 parts per million (ppm) molybdenum, starting 13.8 metres from surface. Core recovery was low for this hole and it was retested to a depth of 100 metres by reverse-circulation (RC) hole 11, which cut a near-surface, 49-metre-thick chalcocite zone averaging 0.85% copper, 0.15 gram gold and 38 ppm molybdenum, beginning 17 metres down-hole.

The secondary enriched chalcocite blanket varies from 8 to 80 metres thick and is traced by drilling for more than 1,500 metres along strike and widths of 200 to 500 metres. It remains open along strike to the southeast where the farthest hole encountered the chalcocite-enriched zone at 82 metres down-hole, hitting a 15-metre section of 1.1% copper and 11 ppm molybdenum before bottoming in 43 metres of 0.71% copper, 0.09 gram gold and 26 ppm molybdenum.

Copler project

The Copler project covers 9.5 sq. km of a broad valley or bowl-shaped depression, at an elevation of 1,100 to 1,200 metres above sea level, and is surrounded by the Munzur mountain range that rises to more than 2,500 metres in the immediate area. The property is 6 km east of Ilic, a town of about 2,500 people, some 500 km east-southeast of Ankara, and 5 km east of the Euphrates River. Infrastructure is good to excellent, with access by paved highway or rail to within 3 km of the property. Power, labour and water are all readily available.

The small village of Copler, which consists of about 240 people, is in the licence area just northeast of the currently defined Main zone. The village will have to be moved. The relocation issue has been openly discussed with the residents. The feasibility study recommends a number of initiatives, including a village census, an assessment of socioeconomic impacts, the development of a public disclosure and consultation plan, and the development of a relocation action plan.

The main economic activity in the Copler area is livestock-related, with some wheat farming along the Karasu River, a major tributary of the Euphrates River.

The climate is comparable to parts of Canada, with cold winters and hot summers. During the winter months, temperatures at night will drop to minus 25 Celsius, although the average winter temperature hovers a few degrees below freezing. Mid-summer temperatures can reach 40 C. Snowfall is common from November through February.

Gold and silver mineralization at Copler is epithermal in nature and directly related to a composite diorite to monzonite porphyry stock that has intruded a package of metasediments and limestones/marbles. A corridor defined by two parallel east-northeast striking faults spaced roughly 400 to 500 metres apart transects all rock units in the project area.

The mineralization occurs as mostly disseminated sulphides in quartz veinlets and as quartz-pyrite replacements of limestone and marble. The gold is very fine-grained
and generally associated with arsenopyrite. There are five major oxide ore types.

Anatolia was first drawn to the Copler in 1998. The area is littered with hundreds of ancient workings and slag heaps, which date back some 9,000 years. It took Anatolia a year and a half to come to terms with the original licence holder, which operated a manganese mine there from 1979 to 1992.

Exploration

Copler was one of the original prospects included in the Rio Tinto strategic alliance. The first hole was drilled into the Main zone in November 2000; it intersected 80 metres of 1.61 grams right from surface. The first pass consisted of six widely spaced core holes drilled at 300-metre centres. Five of the holes yielded an average of 60 metres grading 2.3 grams gold, 9 grams silver and 0.1% copper. By late 2003, the joint venture had completed 16,200 metres of drilling in 109 holes, using both RC and core methods. Drilling had defined a 4-million-oz. inferred resource in three zones within a 2-sq.-km area.

Rio Tinto soon after relinquished all rights to the project in exchange for 4 million shares of Anatolia at a deemed value of US$5.6 million. The project wasn’t considered big enough to have a significant impact on Rio’s bottom line. At the same time, Anatolia bought out the original licence holder for US$4 million to own 100% of Copler, free of any royalties, earn-in rights or back-in rights.

Anatolia has since completed 47,000 metres of infill drilling to define 3.8 million oz. gold and 10.5 million oz. silver in the measured and indicated category, as well as 1.6 million oz. gold and 2.8 million oz. silver as inferred. A little more than half of the measured and indicated resource is oxide ore material.

The mine plan as outlined in the feasibility study calls for an 80% utilization of the design processing capacity, which translates into a throughput rate of just under 12,500 tonnes per day or 4.5 million tonnes of oxide ore annually. Mining will begin in the Manganese and Marble Contact zones, incorporating the Main zone in year three.

All of the ore will be fed through a 3-stage crushing circuit. Each day, 5,000 tonnes of higher-grade ore will go through the milling circuit, which will use conventional carbon-in-pulp processing, while an average of 7,500 tonnes of lower-grade ore will be loaded onto the heap-leach pad.

Proven and probable ore reserves to be milled total 15.4 million tonnes grading 2.57 grams gold and 7.53 grams silver, and contain a recoverable 1 million oz. gold and 1.4 million oz. silver, based on a predicted gold recovery of 79.3% over the life of mine. Heap-leachable ore reserves contain an additional 342,000 oz. recoverable gold and 495,000 oz. recoverable silver in 23.3 million tonnes grading 0.97 gram gold and 2.75 grams silver, based on an estimated gold recovery of 53%.

Anatolia is currently proceeding with tradeoff and optimization studies as it fine-tunes the final feasibility work, including examining different crushing options, higher density tailings and mining schedules. The company is continuing with further metallurgical test work to optimize the process. In terms of further exploration potential, little drilling has been done outside the three main zones and the Copler footprint remains largely unexplored.

The sulphide resource at Copler holds 2 million oz. gold in a measured and indicated 28 million tonnes grading 2.22 grams gold and 7.1 grams silver. A further 1.5 million oz. averaging 3 grams is inferred. Scoping studies are under way to determine the economic viability of bringing these resources on at a later stage of the mine’s life, should it prove feasible. Metallurgical test work on the sulphides indicates flotation and possibly bio-oxidation, roasting or pressure oxidation may be a viable option on higher-grade mineralization. “Metallurgical test work shows that this could be very economic,” said Haddon. “The strategy is; early cash flow from the oxides, then building the mine up to an intermediate producer-sized operation by utilizing the sulphides.”