Blue Note and First Gold to dewater Croiner gold mine in Q4

A new prefeasibility study for the Croinor gold project near Val-d’Or, Que., spells out a five-year mining plan for a 500-tonne-per-day underground gold mine that would produce up to 45,000 oz. gold per year.

Blue Note Mining (BNT-V), the operator, and 50-50 joint venture partner First Gold Exploration (EFG-V) plant to start dewatering the past producing mine in the fourth quarter of this year, provided it gets government approval.

The study, done by InnovExplor Inc., with help from Golder Associates, says the Croinor project has an undiscounted 97% internal rate of return and a net present value of $47.4 million. With a 7% discount rate, the NPV is $35.9 million and using the three-year trailing average (undiscounted) the NPV is $24.9 million and the IRR is 52%.

The mine would bring in revenue of $182 million and generate a net cash flow (pretax but after royalties) of $47.4 million.

Capital costs would amount to $26 million, including $7.4 million in sustaining capital.

Average cash operating costs were estimated at US$572 per oz. while total cost per oz. gold came in at US$715.

The study was based on proven and probable reserves of 690,000 tonnes grading 8.35 grams gold per tonne for a total of 185,000 oz. gold.

The companies would mine via a 300-metre ramp while a 200-metre-deep shaft will be reconditioned and used as a ventilation raise and emergency escape way.

Ore will be shipped to Val d’Or for custom milling. Blue Note and First Gold have had some talks with local mills but have yet to work out a deal with one.

If the company can raise enough money, dewatering of the mine will start in the fourth quarter and is expected to take about 14 months to complete. During this time about 42,000 tonnes of ore will be processed and 10,000 oz. gold will be produced, starting 10 months after dewatering begins.

Plans to improve the project numbers include a current 6,000-metre drill program with the intent of expanding resources and reserves.

Blue Note and First Gold also say that further drilling of the vein structure could increase the ratio of lower cost long-hole stoping to room-and-pillar mining.

A small open pit west of the existing open pit mined between 2003 and 2005 could add to production as well as remnant ore from the existing pit.

The companies will also consider gravity separation to reduce mill operating costs.

Gold mineralization is associated with metasomatic pyrite located in quartz vein walls and in strongly altered host rock material of tectonic breccia. The actual gold occurs mostly as inclusions within and along the edges of pyrite grains and sometimes free gold is found in quartz veins of shear zones and in strongly metasomatized walls.