Aurizon buys out TVX royalty

Aurizon Mines (ARZ-T) has paid $5 million in cash for TVX Gold‘s (TVX-T) residual interest in the Casa Berardi property in northwestern Quebec.

The residual interest consisted of an outstanding $3.9-million payment to TVX, left over from the sale of the property to Aurizon in 1998, and a gold-indexed net smelter return royalty, which had had a range of 2-4% and was capped at $10 million.

As a result, Aurizon is now debt-free and owns a 100% unencumbered interest in the former-producing Casa Berardi mine and mill complex, which occupies a 120-sq.-km portion of the Casa Berardi fault.

Since 1998, Aurizon has paid TVX a total of $7 million in cash and about 2 million in Aurizon shares for the Casa Berardi property, which includes a 2,200-tonne-per-day processing facility, underground workings and a fleet of mining equipment.

Aurizon is in the midst of an 18,000-metre drill program in the West Mine area of Casa Berardi, where reserves are pegged at 6.9 million tonnes grading 6.7 grams gold, or 1.5 million contained ounces.

In the West Mine area, the company plans to use two drills to test the downdip extension of zone 113 and the eastern extension of zone 118.

Drilling on the western portion of zone 113 will target below the zone’s deepest intercept, which returned 14.8 metres running an uncut 19.3 grams gold. Aurizon will also test an area east of a hole on zone 118, which cut 10.9 metres of 26.4 grams gold (uncut).

Both zones 118 and 113 lie about 1,000 metres below surface and remain open laterally and at depth.

In 2000, a feasibility study concluded that the West Mine reserve could support annual production of 200,000 oz. over 7.5 years. Total cash costs were projected at US$145 per oz., and capital costs, which consisted largely of underground development, came in at $121 million.

The project also contains an undiluted mineral resource of 4.5 million tonnes grading 7.7 grams gold, equivalent to 1.1 million contained ounces.

Elsewhere in the Abitibi region, Aurizon is a 50-50 partner with operator Cambior (CBJ-T) at the Sleeping Giant underground gold mine. For 2001, Aurizon’s share of production from Sleeping Giant totalled 31,900 oz. gold at a direct mining cost of $221 per oz. This year, the partners hope to boost production to a total of 72,200 oz. gold (i.e. 36,100 oz. apiece) at a direct mining cost of US$215 per oz.

The forecast production boost will arise from a projected increase in the head grade to 11 grams gold in 2002 from 9.6 grams gold in 2001, resulting from the mining this year of the higher-grade zone 8, discovered along with two other zones during an exploration program in 2001.