Bulyanhulu proves larger than expected

The Bulyanhulu gold deposit in northwestern Tanzania is now estimated to exceed 5 million oz. — an increase of almost 1.6 million oz. over the previous calculation.

In light of this sizable increase, Sutton Resources (STT-V) has begun revising its preliminary production plans.

The company holds an 85% interest in the project, while the Tanzanian government retains the balance.

Earlier scoping studies indicated potential for constructing a 1,500-tonne-per-day underground mine and mill operation capable of producing as much as 200,000 oz. annually at a cash cost of US$125 per oz. (net of silver and copper byproduct credits) over a mine life of at least 15 years.

Capital costs were pegged at US$135 million.

Company spokesman Patrick Soares says the company is now looking at a daily production rate of up to 2,500 tonnes and annual production as high as 360,000 oz.

“All factors are ideal for Bulyanhulu to become an excellent, low-cost, large-scale gold mine,” says Sutton’s chairman, Roman Shklanka.

The deposit is a quartz-sulphide shear-vein (reef) system hosted in an Archean greenstone belt in the Lake Victoria goldfields.

The main Reef 1 system, comprising Reefs 1 and 0, is a stratabound deposit in a sedimentary exhalative unit occurring at the contact of intermediate and felsic volcanics.

Reef 2 lies 500 metres northeast of Reef 1 and consists of a series of en echelon vein structures hosted in sheared intermediate volcanics.

Based on 261 diamond drill holes completed up to Dec. 31, 1996, Bulyanhulu is estimated to contain 10.5 million tonnes grading 14.92 grams gold per tonne.

Reef 1 hosts approximately 95% of the resource, based on a cutoff grade of 5 grams over a minimum width of 1.5 metres. During 1996, 51 new drill intercepts expanded the system to a strike length of 1,500 metres and to a depth of 800 metres. The deposit remains open in all directions.

As part of a US$20-million development program aimed at advancing the project to the final feasibility stage, three diamond drill rigs are being used to expand Reef 1, as well as test Reef 2 and adjacent zones.

Reef 2, which has seen only limited drilling, hosts an inferred resource of 713,900 tonnes grading 11.66 grams.

In addition, a 10,000-metre program of reverse-circulation drilling is testing the open-pit potential of near-surface oxide mineralization overlying Reefs 1 and 2.

Underground development on the Reef 1 system will form the basis of a full feasibility study, scheduled for completion in early 1998. Overburden is currently being removed in preparation for underground work, to commence in April. The workings will be accessible via a decline.

Sutton has entered into an agreement to raise $29.1 million through the sale of 1.2 million special warrants at $24.25 each. A special warrant will be exercisable into one share without further consideration.

Proceeds will be used to accelerate exploration and development at Bulyanhulu and to explore the Kabanga property, which hosts 31 million tonnes grading 1.5% nickel and 0.11% cobalt.