A threefold increase in production is in store for the Armenian gold projects of
The junior miner and its joint-venture partner, state-owned Armgold JSC, have decided to expand their tailings recovery plant to accommodate resumption in open-pit mining at the rail-connected Zod mine. That mine is one of two past-producers held by the companies (Meghradzor being the other) and provided most of the country’s output between 1976 and 1997.
Annual production is pegged at 80,000 oz., with cash costs projected at less than US$180 per oz. The plant currently churns out 25,000-30,000 oz. yearly by treating 1.5 million tonnes of tailings. The tailings are left over mainly from the Soviet era, when the country processed all gold deposits mined in the Caucasus region.
Capital costs are tagged at US$10 million, which will cover the mining fleet and plant expansion to 2 million tonnes. (As of Dec. 31, 1998, First Dynasty had US$10.6 million in deferred aquisition and exploration expenditures tied to Zod and Meghradzor.)
Funding will be provided by a combination of equity, debt, cash reserves and cash flow. The external portion will include a US$3.5-million credit facility with the company’s largest shareholder, Twin Star Holdings, and a US$1.8-million private placement set to close Oct. 29. The loan will bear interest at LIBOR (London Interbank Offer Rate) plus 2.5% and is dependent on completion of the equity deal, which will see 27.6 million shares issued at 9.5 cents each.
At last report, Zod hosted open-pit reserves of 4.3 million tonnes grading 7.42 grams gold per tonne. Another 1.7 million tonnes at 6.36 grams are deemed minable by underground methods. (Meghradzor’s reserves are pegged at 838,000 tonnes grading 9.58 grams gold and are minable by underground methods.)
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