Gold Reserve steams ahead in Venezuela

Spokane-based Gold Reserve (GLR-T) is determined to overcome all obstacles in its effort to produce gold from the Las Brisas del Cuyuni concession in the Kilometre 88 district of eastern Venezuela.

While operating in Venezuela poses a variety of challenges, the most formidible for Gold Reserve will be to prove (to bankers and financiers) that its deposit is robust enough to support an economic mining operation.

The resource for the wholly owned deposit is enormous (some 258 million tonnes at last count), however the gold grade hovers only slightly below 1 gram per tonne. When copper credits are added, the gold-equivalent grade increases to 1.2 grams. The 7-Million oz. gold resource, though, is predominantly sulphide and would have to be milled.

Ben Hanson, a mining engineer on staff, generated computer models for the proposed mine and came up with an early estimate of 120 million tonnes of material that could be classified as reserves if a 0.5-gram gold-equivalent cutoff were used. The stripping ratio is estimated at 2.2-To-1. The proposed pit would be 800 metres wide, up to 2 km long and 300 metres deep.

At this stage, the company is only beginning its prefeasibility work on the deposit; it is due for completion in October. A final feasibility study is expected by April 1998, at which time the company will likely go to the market for project financing. Barring any difficulty, construction could begin by the second quarter of the year and last about 18 months.

Gold Reserve first envisioned a 12,000-To-15,000-Tonne-per-day operation.

However, Senior Vice-president James Geyer says the company is optimistic it can increase this to between 25,000 and 40,000 tonnes. “We looking at what this does to the economics, but that’s the whole point of the feasibility study,” he said.

.S12 to 14 years

Using the higher mining rates, the project would produce between 300,000 and 450,000 oz. gold-equivalent per year over a mine life of 12 to 14 years.

The milling process would include a primary grinding step with an initial pass through a gravity concentrator to catch any free gold. The ore would then be sent through a flotation circuit, thickened and reground to form a cleaner concentrate. The amount of grinding necessary to liberate the metals will be an important factor in determining the economics of the deposit.

Ore containing low-grade copper values (representing about 35% of the material) would report for direct gold leaching. It and the gold from the gravity concentrate would be used to produce dore bars on-site. The bulk of the material containing higher copper values would be re-Cleaned to produce a marketable copper-gold concentrate to be smelted off site.

Arturo Rivero, Gold Reserves’s metallurgical engineer, said the flowsheet is sufficiently flexible that different types of ore can be treated. The overall recovery is estimated at 82% for gold and 70% for copper.

Capital costs, based on the larger-size milling operation, are estimated at US$150 million. The mine would employ as many as 300 people, with a camp capable of housing 650.

Electricity for the operation is expected to come from hydroelectric power generated from the massive Guri dam, within 150 km from the site, along with two other sites near the town of Puerto Ordaz.

Before the company can make any production decision for Las Brisas, Gold Reserve has to secure the veta (hardrock mineral) rights for the property, application for which has already been approved by Venezuela’s mines ministry.

Meanwhile, the government has announced plans to create a new department to oversee mining operations in the country, to be known as the Superintendency, which will report directly to the mines minister.

Gold Reserve is not the only hopeful miner in the area. Placer Dome (PDG-T) currently owns a 70% interest in the neighboring Las Cristinas deposit, and another Vancouver company, Crystallex International (KRY-T), controls the adjacent Albino concession. (Crystallex has recently laid claim to Placer’s property, and the matter has been taken up by the Venezuelan Supreme Court.) These and other North American companies share the Kilometre 88 region with a host of local miners. The problem has presented unique challenges to companies that want to exercise their mineral rights but understand that local miners earn their livings from the few grams of gold they wash out of the rocks.

“Chasing them away isn’t the answer,” said Gold Reserve’s executive vice-president, Douglas Belanger. Some estimates suggest that as many as 100,000 local miners earn their living from illegal gold mining in Bolivar state. Many come from the neighboring countries of Brazil and Guyana.

“We are considering the idea of setting aside a small portion of our deposit — possibly the oxidized portion of the saprolite — for the local miners,” Belanger said. “But we also hope that we can employ a good many with our mine, too.”

.SGeology

The Las Brisas deposit is in a lower Proterozoic greenstone belt within the Guyana Shield. Gold mineralization is stratabound, in relatively undeformed, weakly metamorphosed crystal-poor tuffaceous rocks. The mineralization, believed to be the southward extension of Placer’s Las Cristinas deposit, strikes to the northeast and dips about 30 to the west. In fact, the southernmost limit of Placer’s pit is only 300 metres from the Gold Reserve boundary.

To date, Gold Reserve has intersected mineralization in more than 625 holes, exceeding 134 km of drilling. The northern part of the deposit, which includes the Pozo Azul pit and the Blue Whale structure, contains both copper and gold mineralization. Free gold is often associated with quartz-Calcite veins, while finer-grained gold is locked in pyrite and chalcopyrite grains.

The Blue Whale structure is believed to cut the stratigraphy at a relatively shallow angle and could be a feeder zone to much of the mineralization. The structure contains pyrite, chalcopyrite, bornite, tourmaline and covellite and can be traced downdip, where it appears brecciated, though thinning slightly. The Blue Whale appears to be absent in the southwestern part of the deposit.

Although the deposit bears a resemblance to stratabound volcanogenic massive sulphide deposits, Gold Reserve has yet to determine its origin.

In its latest resource calculation, the company has broken out of the northern and southwestern parts of the deposit into copper-gold and gold-only zones, respectively. The northern part contains some 150 million tonnes of mineralization grading 1.2 grams gold-equivalent (containing 3.1 million oz.

gold and 835 million lb. copper), based on a cutoff of 0.5 gram gold-equivalent.

The southwestern part of the deposit contains lower copper values while retaining a consistent but somewhat elevated gold content. This part of the deposit contains 109 million tonnes grading 1.29 grams gold (for 4.2 million oz. gold plus 115 million lb. copper), based on a cutoff of 0.5 gram gold.

Mineralization here tends to be, on the whole, deeper.