Black Swan seeking more Australian gold

After having achieved gold production within three years of a public listing — a rare enough accomplishment for a junior mining company — Black Swan Gold Mines (VSE) now expects to pay back its share of capital costs for the Australian Gabanintha mine project in less than one year.

And armed with cash flow from its first gold-producing operation, Black Swan also intends to expand its activities in Australia and to achieve a new production target of 50,000 oz gold per year by 1990.

The Canadian company had stated previously that it was drawn to Australia because of low operating costs, high exploration success ratios and, last but not least, non- taxable production revenues until 1991.

According to the company’s latest report to shareholders, Black Swan raised $4.4 million from public financings over its 4-year history, $2.8 million(A) of which was used to finance its 25% original contribution to the capital costs of the open pit mine located 760 km north of Perth in Western Australia. The company is projecting a yearly cash flow of $3 million from its share of gold production, enabling payback to be achieved within a year.

The Gabanintha mine was officially opened Oct 30, 1987, with the expectation to produce 45,000 annual oz gold in its first year at a cost of approximately $225(US) per oz.

Black Swan owns 25% of the mine and says its share of gold production will be 10,000 oz for 1988, rising to about 12,500 oz during 1989. The project has mineable reserves of two million tons grading 0.11 oz and the company reports that ongoing exploration within the 250-km Gabanintha lease area is continuing to identify additional ore reserves.

Like many new gold mining operations, the Gabanintha project has had its share of start-up problems. Initially the head-grade was below the long-term forecast of 0.11 oz which the joint venture attempted to offset by operating the mill at over 1,500 tons per day as opposed to the design rate of 1,200 tons.

According to Black Swan, this increased gold production but reduced the recovery rate from a forecast of 93% to about 85%. In February of this year the joint venture commissioned a modification of the mill which, as of April, permits operation of the mill at up to 1,500 tons per day at 93% recovery, thus raising the productive capacity of the complex to about 50,000 oz per year.

With production now running smoothly at Gabanintha, President Arthur Fisher said the company has three major exploration projects with Australian joint venture partners that have the potential to produce within two years. Black Swan recently increased its level of participation in these projects to 50% or more.

Fisher told The Northern Miner that the company’s 60%-owned Merriland property in Queensland, which is located within view of Pan Australian Mining’s producing Mount Leyshon heap leach gold mine three km to the northwest, is of particular interest in view of a recent major discovery made by Pan Australian.

The company’s initial drill program in this area was to evaluate the ore contained within one major volcanic vent system, which later contributed the bulk of the current mining reserves of approximately 9.9 million tons grading 0.067 oz.

Now Pan Australian says that subsequent drilling appears to suggest that up to three other vent systems may be present on the property; with a fourth possible 400 m to the southeast where recent encouraging gold values were interested.

Fisher said the discoveries are within a short distance of Black Swan’s property where about 110,000 tons of ore at an estimated grade of 0.35 oz have been outlined from a steeply dipping vein system.

Work programs are also planned for a number of less advanced projects in Australia, and the technically-oriented company said it intends to seek out further acquisitions in Australia and in North America, possibly with the proceeds of a gold loan.