Bolivar sees production potential

The indicated and inferred resource in three zones at the Tomi concession in Venezuela’s El Callao region is now believed to exceed 2.7 million tonnes grading 5.42 grams gold per tonne.

Bolivar Goldfields (VSE), which is earning a 100% interest in the property, is optimistic an open-pit mine can be developed.

Since acquiring the option in 1993, the company has carried out 12,000 metres of drilling and more than 8,200 metres of trenching. Based on this work, it estimates the indicated resource in the McKenzie, Charlie Richards and Milagrito prospects to be 1.6 million tonnes grading 6.85 grams. The estimate is based on a maximum depth of 60 metres and a cutoff grade of 0.7 gram. The three zones remain open to depth and are contained within a 1.15-by-0.35-km area. The zones plunge at 45-60 to the southeast and each measures about 330 to 500 metres in length, 8 to 20 metres in thickness and 30 to 280 metres in width.

A further resource consisting of 293,000 tonnes grading 3.17 grams and 55,600 tonnes grading 1.43 grams is inferred at the Fosforito and Esperanza zones, respectively. Both are open along strike, as well as at depth, and additional drilling is under way.

Metallurgical work is returning positive results, with a second test on a large suite of oxide and sulphide material returning an average gold recovery of 96%.

Preliminary economic analysis suggests the indicated resource could support open-pit production of up to 53,300 oz. per year for eight years at a cost of less than US$120 per oz.

The analysis is based on an initial production rate of 500 tonnes per day, from which would be mined material averaging 7.5 grams per tonne. Yearly production is projected at 1.2 million grams (39,300 oz.), and, as the deposit is not covered by overburden, no stripping is required. Daily production would expand to 1,000 tonnes after 18 months, from which would be mined material averaging 5.2 grams.

Preliminary estimates put startup costs at US$11.1 million for the carbon-in-pulp operation; additional expenditures of US$5.2 million over the next three years would result in a total cost of about US$16.3 million. The estimate is based on the acquisition of all-new equipment, and President Ian Gray stresses that Bolivar may consider other options.

He says additional work is required before a startup date can be projected, adding that it is unlikely to take place before 1996. Gray does say, however, that, if pushed, Bolivar could begin limited production to generate cash flow within six months.

He says he is distressed by what he sees as the market’s failure to recognize Bolivar’s value and is at a loss to explain recent declines in the share price.

The company is well-funded, with about US$12 million in working capital and just over 30 million shares outstanding.

Vengold (TSE) holds an option to back-in for a half interest in Tomi for a 60-day period, following delivery of a positive feasibility study. If exercised, Vengold would be obligated to reimburse all costs incurred by the acquisition, exploration work and the feasibility study. It would also be required to arrange all financing for the project.