Etruscan breaks ground at Youga (May 09, 2005)

Earth-moving and general site preparations have begun at Etruscan Resources‘ (EET-T) 90%-owned Youga gold project in Burkina Faso.

Early work includes upgrading the main access road and clearing and terracing of the main plant site.

The terraced plant site will eventually host a 130-tonne-per-hour ball mill, which the company has agreed to buy from the Louvicourt copper-zinc mine in Val d’Or, Que. After it is decommissioned at the end of June, the mill will be dismantled, packaged and shipped to Youga.

Louvicourt is owned 45% by Novicourt (NOV-T), 30% by Aur Resources (AUR-T), and 25% by Teck Cominco (TEK-T).

Youga is expected to begin producing at an annualized rate of 88,000 oz. gold by mid-2006; cash operating costs are expected to average US$255 per oz. over the operation’s 5.5-year lifespan. The open-pit operation will target 5.5 million tonnes in minable reserves grading 2.9 grams per tonne, based on a gold price of US$400 per oz.

A contractor will mine the ore via three open pits. The material will then be processed in a 1-million-tonne-per-year gravity/carbon-in-leach plant. The average gold recovery is estimated at 93%.

The capital cost at Youga is estimated to be US$34 million, excluding working capital. The projected internal rate of return is set at 26%, based on 100% equity financing. Etruscan plans to raise funds to build the mine early this summer.

Meanwhile, exploration continues elsewhere on the surrounding, 29-sq.-km Youga exploitation permit, which is part of the 175-sq.-km Zerbogo concession. Two additional pits are being drilled to determine a resource figure.

Etruscan also plans to drill the A2 Village anomaly, 2 km southeast of the proposed mill site. The anomaly is associated with two parallel zones of gold mineralization.

The company also plans to follow up on two areas of interest identified via an induced-polarization survey over the Youga exploitation permit. The survey was designed to pick out additional Tarkwaian sedimentary rock packages similar to those that host the Youga deposit.

To the south, Fugro Airborne Surveys has been contracted to fly 8,500 line-km worth of detailed airborne magnetic and radiometric surveying over the area between the Youga deposit and the village of Zerbogo to the south, on the Ghanaian border. Previous soil geochemical surveying, geologic mapping, and rock sampling identified Tarkwaian arkose and the potential for gold mineralization.

The government of Burkina Faso holds the remaining 10% of the project.

Etruscan recently posted a first-quarter loss of $1 million from its equity interest in the Samira Hill mine in Niger. The company and Semafo (SMF-T) each own half of a local company that holds an 80% interest in the US$27-million mine, which opened last fall. The government of Niger holds a 20% interest and a 5.5% production royalty.

The mine produced 17,553 oz. gold in the latest fiscal quarter and 35,575 oz. since the start of commercial production. Samira Hill is expected to produce 120,000 oz. this calendar year from the processing of 1.9 million tonnes averaging 2.2 grams gold per tonne.

At the end of 2004, reserves for Samira Hill and the adjacent Libiri deposit totalled 9.6 million tonnes averaging 2.2 grams gold.

In nearby Mali, Etruscan is exploring its recently expanded land package for gold deposits. The company also owns 51% of the Tirisano diamond mine in Ventersdorp, South Africa, which produced 4,600 carats in the 9-month period ended March 31, 2005.