First year gold output 33,000 oz for Crown

Echo Bay is operator for the mine which will produce 110,000 oz per year during the first two years and about 85,000 oz thereafter. Mine life is seven years, but the joint venture feels there is plenty of room to expand existing reserves of 3.9 million tons grading 0.189 oz gold. Indeed, Echo Bay is planning both surface and underground drilling at Kettle River to increase those reserves.

Capital costs are estimated at $47 million(US) and Echo Bay has agreed to make a non-recourse loan to Crown and Gold Texas which will be repaid from 50% of their cash flow. The project will include two underground mines and a mill with a carbon-in-leach (CIL) plant capable of processing 1,500 tons of ore per day with a metallurgical recovery of 90%. At a $400(US) per oz gold price, Crown’s annual cash flow would be approximately $5.8 million in the first two years.

Shareholders of Crown and Gold Capital approved a merger of the two companies in the first quarter and a tender offer by Crown for Gold Texas resulted in the latter becoming a 65%-owned subsidiary. Because the validity of certain Gold Texas proxies was challenged, Crown was unable to take full control of the company. “Efforts are being made to complete the reorganization because the synergies that exist between the companies make this the next logical step toward our goal of becoming an industry leader,” said Paul Jones, president.

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