Exploratory drilling beneath the Verde deposit at the Refugio mine in northern Chile is intersecting potential ore-grade gold mineralization some 250 metres below the planned pit floor of the extended base-case model.
Ownership of the open-pit, heap-leach mine is shared equally by Amax Gold (AU-N) and Bema Gold (BGO-T). Refugio produced 147,086 oz. in 1997, of which 73,543 oz. is attributed to Bema at a cash cost of US$320 per oz. Bema’s share of production in 1996 was 30,611 oz. at a cash cost of US$245 per oz.
Production levels were hampered in both the second and third quarters of 1997 by a series of intense winter storms, resulting in
higher-than-projected cash costs.
Bema recorded a loss of US$5.9 million for 1997 (or 7cents per share) on US$28 million in revenue, compared with a loss of US$2.7 million (8cents per share) on $10.8 million in 1996.
Bema realized an average gold price in 1997 of US$391 per oz. The company employs a hedging program utilizing purchasing put options. Based on an average spot gold price of US$300 per oz., Bema expects to realize an average price of US$382 per oz. in 1998.
The mine is designed to produce an average of 233,000 oz. annually at an cash operating cost of US$240 per oz. over an initial life of nine years.
The current mine plan is based on a minable reserve, within the Verde deposit, of 102 million tonnes grading 1.03 grams gold, equivalent to 3.3 million contained ounces. The stripping ratio averages 1 to 1.
The final feasibility study identified an extended base-case minable reserve of 185 million tonnes grading 0.9 gram, containing 5.3 million oz. The stripping ratio under this plan is 0.9 to 1. At the current production rate of 30,000 tonnes per day, the mine life would be extended by 8.2 years.
The recent 16-hole drill program was designed to determine if the Verde deposit continues at depth. Previous drilling had tested the deposit to a maximum depth of 280 metres.
Highlights of the first nine holes include: 386 metres averaging 1.06 grams in hole 2, a 200-metre extension below the extended base-case pit floor in East Verde; a 188-metre interval averaging 0.87 gram in hole 5, 250 metres below the projected East Verde pit floor; and 410 metres averaging 1.08 grams in hole 9, about 200 metres below the projected East Verde pit floor.
Bema believes these results confirm the potential for additional reserves at depth.
Results for the final seven holes are pending.
The drilling is also providing material for further metallurgical testwork.
Refugio is currently processing oxide ore material and is not scheduled to begin mining the sulphide portion for another year or two. Although the sulphide mineralization is heap-leachable, gold recoveries are expected to drop to an average of 58%, compared with 73% for the oxidized ore.
Metallurgical tests will examine, among other things, how a finer crush improves recoveries on the sulphide material.
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