Cumberland makes steady gains at Meadowbank

Vancouver — When it comes to developing new mines in Canada’s North, the race is almost never to the swift, but rather to the steady. Cumberland Resources (CLG-T, CLG-X) appears to be making steady progress in its multi-pronged efforts to develop an open-pit gold mine at the Meadowbank project near Baker Lake, Nunavut.

The Vancouver-based company currently has two drill rigs on-site as part of a 9,000-metre program aimed at boosting gold resources and reserves at the Cannu zone and other priority targets identified along a 25-km-long gold trend.

Cumberland has a completed bankable feasibility study in hand for the advanced Portage, Vault and Goose zones, which collectively host proven and probable (diluted) reserves of 21.32 million tones grading 4.2 grams gold per tonne, or about 2.89 million contained ounces gold.

The company recently reported an initial resource for the Cannu zone, a high-grade, near-surface zone north of the proposed Portage open pit. Based on 64 intersections from 34 holes drilled prior to and during 2005, the Cannu zone hosts an inferred resource of 440,000 tonnes at 6 grams gold, or about 85,000 contained ounces gold.

The bowl-shaped Cannu zone is described as “a potential 350-metre northern extension to reserves defined in the proposed Portage open pit.” This year’s drilling program will include both infill and step-out holes to better define the zone and allow for an eventual reserve estimate.

Cumberland is also making steady progress on the permitting, engineering and financing fronts at Meadowbank. Earlier this year, the company signed an agreement-in-principle for an Inuit Impact and Benefits (IBA) Agreement with the Kivalliq Inuit Association (KVA). The IBA outlines the benefits that will flow to KVA during the proposed 12-year mine life, starting with construction through to reclamation and closure. The benefits include employment, training and business opportunities, and “special considerations and compensation” regarding traditional, social and cultural matters.

On the engineering front, the company announced improvements to the project that resulted from an independent due diligence review completed for bank financing. Annual gold production is now forecast at 330,000 oz. gold over an 8.1-year mine life. Total cash costs are estimated at US$201 per oz. Production in the first year would be significantly higher, at 451,000 oz. gold, with lower total cash costs of US$155 per oz.

In late March of this year, Cumberland announced it had received and accepted commitments from various banks to arrange and underwrite a 7-year gold-loan facility for up to 420,000 oz. gold, representing about 15% of the Cumberland’s total proven and probable reserves. At a gold price of US$600 per oz., the monetized value of the gold loan is about $250 million.

Preproduction capital costs at Meadowbank are estimated at $313 million, or US$235 million. The project has a pretax internal rate of return of 17.6%, which is reduced to 12.8% on an after-tax basis.

Cumberland recently completed all necessary public hearings related to its mine proposal, and hopes to begin production in the second half of 2008, assuming all permits, licences and financing are in place on a timely basis. The company has other projects in Nunavut, including a 22% carried interest in the Meliadine West gold project, and a 50% interest in the Meliadine East gold project.