Crew ups resource at Nalunaq (September 12, 2005)

Exploration drilling at the Nalunaq gold mine in southern Greenland has allowed owner Crew Gold (CRU-T) to block out a significantly larger inferred resource.

The new resource, reviewed by consulting firm Snowden Mining Industry Consultants, amounts to 1.3 million tonnes grading 18 grams gold per tonne. The tonnage and grade are both uncertain, thanks to a strong nugget effect and the narrow mineralized structures, and the resource can only be classified as inferred.

The estimated grade of 18 grams gold per tonne was issued with “error bars” of 16 to 21 grams, reflecting the nugget effect.

The tonnage itself is an arbitrary “payable” quantity, taken to be 40% of the rock volume outlined in drilling. In all, about 3 million tonnes is indicated by drill intersections, but the widths of the veins are variable enough that only 40% is being taken into the resource. In early production since May 2004, about 60-80% of the drill-indicated rock volume was reliably mined, but Crew and Snowden adopted the lower call factor to be conservative.

Crew plans exploration drifting and bulk sampling to confirm the grades and the shapes of the zones.

The resource is in four mineralized zones, of which the South Block, with 1.6 million tonnes (520,000 payable) is the largest. Three other zones, the Target Block West, Upper Block and Mountain Block, range from 390,000 to 580,000 tonnes, all with gold grades averaging 18 grams per tonne.

The previous resource estimate at Nalunaq, dating from 2004, put the measured and indicated resource at 736,000 tonnes grading 18 grams gold per tonne, and the inferred resource at 355,000 tonnes grading 16 grams per tonne.

Crew has now drilled about 6,000 metres in 37 holes on the main resource in the South Block. The mineralized holes form a longitudinal section about 400,000 square metres in area, of highly variable thickness; the resource model assumes a 1.4-metre width would be mined, and dilution has been added accordingly.

The mining contractor at Nalunaq is driving an internal decline to the 250-metre level from the main haulageway at the 300-metre level. Access to the 200-metre level is being driven from an adit, and that level will be connected to the 250 level with an internal ramp.

While Nalunaq now ships direct to the El Valle plant of Rio Narcea Gold Mines (RNG-T) in Asturias province, Spain, permitting for a mill has started and once the economics of an on-site concrete plant have been evaluated construction could start. The planned structures would take about a year to build.