BacTech gives Tonkin Springs a try (May 05, 2003)

Canadian-Australian junior BacTech Enviromet (YBA-V) has agreed to take a 55% interest in the past producing Tonkin Springs gold mine in Eureka Cty., Nevada.

To do so, BacTech must fork over US$1.75 million in cash, including a US$250,000 non-refundable payment on signing plus US$750,000 at closing and another $750,000 when gold production begin or in one year of closing, whichever comes first. Also under the deal, BacTech is required to solely fund the project up to US$12 million.

The deal is subject to due diligence and regulatory approval, and has a drop dead date of July 31.

Tonkin Springs first began production in late 1989 with bioleaching as a pre-oxidation process for the sulphide ores followed by conventional carbon-in-leach extraction. The uneconomic operation closed in the mid-nineties and has since seen a handful of failed revival attempts.

The 93-sq.-km Tonkin Springs mine is situated on the prolific Cortez Gold trend in Nevada. The mine is home to a known resources totalling around 28 million tonnes grading 1.54 grams gold per tonne (or 1.4 million oz. of gold).

The project also includes a 3,000-ton-per-day mill with a bio-oxidation circuit and complete infrastructure. In 2002, U.S. Gold licensed Newmont Mining‘s (NEM-N) commercially proven N2TEC flotation technology to concentrate Tonkin Spring’s gold sulphide mineralization. BacTech anticipates little retrofitting as it converts the operation to its proprietary bioleaching process.

U.S. Gold’s President William W. Reid said in a prepared statement, "bioleaching of the sulphide gold concentrates on site will result in the lowest operating cost compared to other processing alternatives which in turn will significantly enhance project economics.”

The pair plan to use cash flow from Tonkin Springs to further explore the property.

On May 5, U.S. Gold shares were 7 or 17.5% higher at 47 in over-the-counter trade. BacTech shares last traded at 40 per share in Vancouver in late April.