In a preliminary deal, Australian-listed junior producer
The study was already begun by Gammon, and once it’s completed, Bolnisi will be required to fund all development until production is reached, at the annual rate of at least 1.25 million tonnes.
Gammon will keep the remaining 40% interest in the concessions and continue to retain a 100% interest in the rest of the Ocampo mining camp.
As well, subject to due diligence by both companies, Bolnisi will pay $30,000 per month to Gammon until the project reaches the agreed-upon production rate.
If, in 18 months, the project is not running at that rate, Bolnisi will pay Gammon a penalty of $100,000 per month. If the property is still not up and running after two years, Bolnisi’s ownership stake in the concessions would be returned to Gammon.
Bolnisi will also have a right of first refusal to match any third-party offer to develop any of Gammon’s wholly owned concessions at Ocampo, though Gammon retains the right to develop these concessions on its own.
The agreement requires Bolnisi to cover 60% of Gammon’s payments due to Minerales de Soyopa under an existing deal to acquire 100% of that company’s Ocampo concessions. In return, Bolnisi will recoup the capital expenses incurred to bring the joint-venture project into production, from 60% of project revenues.
Preliminary development plans call for shallow portions of the Conico, Refugio and Plaza de Gallos zones to be targeted by a single, 1-km-long open-pit, with material being transported by truck or conveyor belt to leach pads built on nearby flats.
At last report, Ocampo hosted resources of 21.7 million tonnes grading 1.44 grams gold and 57 grams silver per tonne in the measured and indicated category (1.8 million contained ounces gold-equivalent) plus 5.8 million inferred tonnes of 1.7 grams gold and 86 grams silver (637,000 oz. gold-equivalent).
The Bolnisi-optioned concessions have a total resource of 21.5 million tonnes grading 1.29 grams gold and 50 grams silver, and there remains considerable potential to increase the resource base throughout the camp.
In January, Gammon reported results from 48 bottle-roll tests performed by Reno, Nev.-based Kappes, Cassiday & Associates that showed average recoveries of 97% for gold and 86% silver over 96 hours. Reagent consumption averaged a low 0.4 kg of sodium cyanide per tonne of material and 1.86 kg of lime per tonne.
Column tests
Previous column tests on crushed samples from the Refugio and Plaza de Gallos zones showed recovery rates of 88% for gold and 63% for silver during a 143-day leach of material, with 80% smaller than 6.3 mm. With finer grinding, recoveries rose to 91% for gold and 76% for silver after 117 days in the column.
In January, Gammon moved to release, in four tranches, some 4.4 million shares held in escrow since the late 1990s by Ocampo concession vendor Minera Fuerte Mayo and by Gammon officers and directors Bradley Langille, Fred George and Terence Coughlin and former director Burton Langille.
Bolnisi Gold is based in Sydney, Australia. While not well-known in Canada or Mexico, the company has has experience operating an open-pit, heap-leach gold mine in the Bolnisi region of Georgia in western Asia. There, by mid-2000, the company was producing gold at an annualized rate of 100,000 oz. and at a cash operating cost of just US$146 per oz.
However, like so many Western juniors that entered joint ventures in the former Soviet Union, Bolnisi has since become embroiled in a dispute with its local partner, JSC Madneuli. As a result of the dispute, Bolnisi personnel withdrew their technical expertise and production grinded to a halt in early 2001.
Bolnisi reports that the dispute was resolved in the March 2001 quarter.
In his most-recent letter to shareholders, Bolnisi Chairman Norman Seckold writes that it is “disappointing to report that our long-held view that Georgia’s political and legal institutions were approaching Western standards was perhaps overly optimistic.”
Bolnisi also holds an option to acquire a 70% interest in the Roseby low-grade copper-oxide project in the Mt. Isa region of northwestern Queensland. There, in 1999, Australia’s Pasminco delineated a resource of 62.3 million tonnes grading 0.75% copper.
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