Cheni to spend $7.5 million for feasibility on J&L deposit

As part of an effort to acquire new projects, Cheni Gold Mines (TSE) announced plans to spend $7.5 million to bring the J&L polymetallic deposit near Revelstoke, B.C., to feasibility in return for a 60% interest from owners Equinox Resources (TSE) and Pan American Minerals (TSE). Although the option agreement to earn this interest is still subject to regulatory approval, Cheni committed to an immediate $2.7-million underground tunnelling, drilling and metallurgical testing program that is expected to begin later this month. The work will be part of the 2-phase $7.5-million program designed to result in a bankable feasibility study. More than $8 million has already been spent on the advanced property in the past decade.

Viewed as one of the more technically challenging mineral projects in the province, the 18,250-acre J&L property contains a major arsenical gold, silver, lead and zinc deposit. Proven and probable reserves currently stand at 808,000 tonnes grading 7.2 grams (0.21 oz.) gold, 65.7 grams (1.9 oz.) silver, 2.5% lead and 5.2% zinc.

Mineralization has been traced on surface for more than 3,280 metres and underground for 990 metres horizontally and 500 metres downdip. The tabular zone averages 2.5 metres wide, extends up to 10 metres wide and is considered amenable to underground mining.

Cheni is aiming to establish a minable reserve base of three million tonnes by extending an existing drift some 400 metres and cometing an extensive underground drilling program. The company also plans to examine the exploration potential of the nearby A&E prospect which is reported to host similar massive sulphide mineralization with the same stratigraphic association as J&L.

Equinox’ latest program at J&L was focused at resolving the metallurgical complexity of the mineralization. Cheni said the results of this work were “very positive” in that salable zinc and lead concentrates could be produced, and in excess of 90% of gold could be recovered by oxidation pressure leach. Placer Dome (TSE) funded part of this test work; however, the major is reported to have subsequently backed out of the project because of environmental concerns.

Cheni’s parent company, BGRM of France, will participate in the J&L project by providing metallurgical and technical input. The first phase program should be completed by June of next year.

To earn the full 60% interest Cheni must fund all exploration and property maintenance costs, deliver a bankable feasibility study within three years, make a decision to place the property into production, and fund or arrange financing for 100% of capital costs.

The company is envisioning a 750-tonne-per-day operation with a minimum 10-year mine life that is capable of producing 51,000 oz. gold and 55,000 oz. gold-equivalent in zinc, lead and silver sales per year.