Cusac nabs Taurus

Vancouver — Cusac Gold Mines (CQC-T, CUSIF-O) is consolidating its grip on the historic Cassiar mining region of B.C. with the purchase of American Bonanza Gold’s (BZA-T, ABGFF-O) Taurus gold project for $11 million and 3 million Cusac shares.

The Taurus project consists of 46 claims covering the majority of the Taurus deposit, which hosts a National Instrument 43-101-compliant inferred resource of 32 million tonnes grading 1 gram gold per tonne. Cusac already held the 30% of the Taurus deposit not included in the 46 claims.

“The deposit was chopped up — anyone looking to do something with the project had to consolidate it,” says Cusac president David Brett. “And we weren’t going to sell, so it had to be us.”

The agreement requires Cusac to pay 1.5 million common shares immediately, $6 million over two years, and $3 million on completion of a feasibility study or production, whichever comes first. Another 1.5 million shares are payable in two years. If gold closes at US$800 per oz. for 100 consecutive days, Cusac will have to pay Bonanza another $1 million in two years and $1 million at feasibility, unless Cusac completes the purchase within 12 months.

Bonanza came to own the Taurus project through a merger with International Taurus Resources in early 2005. The site had already seen considerable exploration: various previous owners conducted over 25,000 metres of diamond drilling on the property in the 1990s, including 12,700 metres between 1994 and 1996 by Cyprus Canada, which became part of Phelps Dodge, recently acquired by Freeport-McMoRan Copper & Gold (FCX-N).

Busy with other projects in Quebec, Nevada, and Arizona, Bonanza had left the Taurus project idle for the two years. Brett says Cusac had eyed the Taurus project and gradually moved in.

“It made a lot of sense for us to take it on, with our expertise in this area,” he says. “It took a good two months to put the agreement together.”

Cusac holds more than 170 sq. km in the area and calls the entire holding the Table Mountain property. The property is host to a number of different deposits and prospects, including the historic Cassiar gold camp.

In the past, gold was mined from high-grade quartz veins in Table Mountain, which has a cap rock of argillite that acted to concentrate gold in the veins. The Taurus project mineralogy is different: it is down in the valley where the argillite cap is removed and thus the gold-bearing rock has altered, creating broad zones of disseminated, low-grade mineralization.

Brett says the project is an obvious open-pit site with a relatively low stripping ratio. Some previous metallurgical testing indicated good recoveries from heap leaching but other tests came back inconclusive, so the extraction method is still being worked out.

“If we can show it’s heap-leachable, then of course the economics are much better,” Brett says.

Before any development can proceed, however, Cusac has to work out an updated resource estimate.

“One of our key objectives is to try and ratchet the grade of the deposit up,” Brett says.

Until recently, the entire Table Mountain area was viewed only as a high-grade quartz vein system, so only the vein segments of drill cores were sampled, leaving the wall rock untouched.

“That means there are a lot of zero intervals in the resource estimate that could well be one gram or half a gram gold,” Brett says.

Cusac also intends to continue exploring the Table Mountain site. The Taurus deposit remains open to the west and south. The company recently acquired a number of claims in a nearby canyon.

“It’s what miners like to call a ‘massive quartz blowout,'” Brett says. “It’s probably been prospected by every prospector in the area, but there has been limited drilling in the area, so we’re going in to explore.”