First Dynasty tallies Armenian reserves

Reserves estimates have been attributed to two past-producing gold mines in Armenia, moving project operator First Dynasty Mines (FDM-T) several steps closer to renewing production.

At the Zod mine, proven and probable reserves minable by open-pit methods stand at 4.3 million tonnes grading 7.42 grams gold per tonne, representing a 27% increase in grade and 7% boost in tonnage over earlier estimates.

Similar-type reserves amenable to underground mining are pegged at 1.7 million tonnes grading 6.36 grams gold.

An average cutoff grade of 2.15 grams was used for the open-pit design, whereas a grade of 4.51 grams was used for the underground material. In calculating the underground material, a dilution factor of 9.5% was used.

Zod also contains a resource of 20.1 million tonnes grading 5.5 grams gold, of which 10.6 million tonnes are classified as inferred. Drilling will attempt to bump up the resource to the proven and probable category.

At the Meghradzor mine, proven and probable underground reserves total about 838,000 tonnes at 9.59 grams gold, based on a 4-gram cutoff and an dilution factor of 28%.

Snowden Mining Consultants of Australia performed the calculations, which are based on a gold price of US$300 per oz.

All reserve estimates are being incorporated into ongoing independent feasibility studies of the two mines. The studies, launched earlier this year, and are part of an earn-in agreement enabling First Dynasty to acquire half-interests in Zod and Meghradzor.

Based on a prefeasibility study, the capital investment needed for returning Zod to production is US$63.3 million. A portion of the funds are required for building a gravity separation and cyanide-in-leach circuit, so that ore can be processed on site. During its previous operation, from 1976 to 1991, ore was railed northwest to a recovery plant at Ararat, which served as the former Soviet Union’s central processing centre for the region.

While attention initially was given to both the underground and open-pit reserves, First Dynasty says the new estimates are redirecting its focus to the latter.

Ore from Meghradzor will be shipped south to Ararat, where a newly built plant continues to process tailings left over from the Soviet era (T.N.M., June 1-7/98).

The operation will employ underground methods to produce 125,000 tonnes per year. The expected recovery rate of 90% is expected to yield 36,000 oz. per year, boosting total annual production at Ararat to 61,000 oz. gold.

Capital costs estimated in the prefeasibility study are US$22.8 million, a portion of which will go toward expanding the Ararat plant so that material from Meghradzor can be treated.

Operating costs are expected to average US$142 per oz.

Gold mineralization at Zod occurs as separate lenses in steeply dipping quartz veins that can be oxidized to depths of between 100 and 120 metres below surface. Fractures in the gabbroic host rock, which is commonly serpentinized next to the quartz veins, control mineralization.

Individual lenses can reach strike lengths of several hundred metres and typically average 20 metres in width, though widths can vary from 2 to 45 metres. The grade and size of the lenses increase at depth, where mineralization remains open.

Unlike Zod, mineralization at Meghradzor is associated with narrow veins that pinch and swell along strike, though they typically average 2 metres in width. The felsic volcanic host rocks are mineralized with pyrite and kaolin minerals (clay minerals derived from alteration of feldspars and micas).

The deposit strikes east-west and dips steeply to the north, where it is eventually cut by an east-westerly trending fault. Mineralization appears to continue to the beyond the fault, and is open at depth.