Feasibility study begins for Bulyanhulu deposit

A feasibility study is in full swing at the Bulyanhulu gold project in northern Tanzania.

Sutton Resources (STT-V) is driving a decline into Reef 1, where about 20,000 tonnes will be test-mined. Infill drilling in the area has confirmed the structure’s uniformity and stratabound nature.

Beginning in January, a shaft will be sunk at Reef I to an initial depth of 973 metres.

Road construction has already improved 75 km of a secondary road connecting Bulyanhulu southward to the main highway and onwards to a railway; water surveys and well-drilling are under way; and Sutton is considering building a 34-km water pipeline to Lake Victoria. Also, environmental permits are at the advanced stage.

Early results from the feasibility study support estimates that Bulyanhulu is capable of producing about 300,000 oz. gold annually at a cash cost of US$150 per oz. gold.

Significantly, several holes drilled on Reef 1 intersected gold mineralization outside of the April 1997 resource-calculation zone that yielded 13.4 million tonnes grading 13.01 grams gold per tonne (or about 5.6 million ounces of contained gold).

A new resource calculation, incorporating drill results from up to July 1997, will be part of the upcoming draft, and a further update to this resource figure will be calculated in early 1998 upon receipt of all outstanding drill results.

Two rigs will soon begin a new round of exploration and stepout drilling on Reef 1 and Reef 2 (Reef 2 is parallel to, and 500 metres north of, Reef 1).

Reef 1 is still open along strike and at depth. Near-surface, high-grade gold intercepts encountered at Reef 2 indicate potential for an expanded resource.

Sutton holds an 85% interest in Bulyanhulu, with the Tanzanian government holding the remainder.

Recently, in at attempt to encourage mining investment, the government reset the corporate income tax rate at 30% and confirmed the duty-free importation of mining equipment and supplies. Depreciation is accelerated and a capital allowance has been added.

Tanzania is revising its Mining Act in accordance with the new fiscal policy.