Athabaska to purchase Chevron’s interest in Nicholas Lake project

Based on the results of a recently completed prefeasibility study at the Nicholas Lake gold project north of Yellowknife, N.W.T., Athabaska Gold Resources (TSE) plans to buy Chevron Minerals’ 40% stake in the joint venture. The purchase, which Athabaska hopes to complete by the end of the year, would give Athabaska a 100% interest in the project. The company is currently seeking financial support to follow through with its plans.

Studies completed by a number of independent consultants indicate that the Nicholas Lake deposit contains preliminary reserves of 1.21 million tons grading 0.42 oz. gold per ton, including 606,100 tons in the drill-indicated category.

Based on a throughput of 121,000 tons per year and a 95% recovery, the consultants estimate initial production costs of US$227 per oz. and operating costs, including ongoing development and administration, of $117 per ton.

At a $US400 gold price, the mine would have a 2-year payback period and a 26.1% discounted rate of return over an estimated 10-year life. Capital costs would be $18.2 million.

Assuming Athabaska is able to finance the purchase, the company will begin an underground program next year to confirm the grade and continuity of the ore and obtain a bulk sample for further metallurgical testing. The joint venture has already received permits for the program and a 100-km winter road.

Chevron is in the process of selling a large package of mineral exploration interests, including all of its Canadian holdings.