Desert Sun Mining (DSM-T) has poured its first gold bar from development ore at the reactivated Jacobina mine in Bahia state, Brazil, slightly ahead of schedule.
Since early March, the mine has processed around 50,000 tonnes of ore derived from development activities; the processing of production ore will begin later in the second quarter.
Recently updated proven and probable reserves at Jacobina ‘s Joao Belo zone stand at 11.1 million tonnes grading 2 grams gold per tonne, for 727,000 contained ounces of gold, based on a cutoff grade of 1.33 grams gold. In all, the Joao Belo, Basal Reef, and Serra do Corrego zones contain reserves totaling 14.4 million tonnes running 2.1 grams gold, for about 980,000 contained ounces. The new reserve estimate bumps the mine’s lifespan up by 2 years.
The previous mine plan at Jacobina called for the mining of 10.7 million tonnes of reserves averaging 2.6 grams gold per tonne over a 7-year period. Production was pegged at 106,400 oz. per year at a cash cost of around US$189 per oz. Cumulative cash flow is forecast at US$78 million, based on a gold price of US$350 per oz.
Desert Sun CEO Bruce Humphrey says the mine should ramp up to an annual production rate of 100,000 oz. by the third quarter. The company also plans to focus on development projects that will allow for a production expansion in 2006 and 2007.
Desert Sun recently raised $25 million via the sale of around 10.7 million units at $2.33 apiece. Each unit includes one share plus a quarter of a warrant. Each full warrant is good for one share at $2.50 per share until Nov. 20, 2008. The company currently has just shy of 84 million shares outstanding.
The company will spend $10 million expanding exploration efforts on the Morro de Vento, Jacobina mine, Pindabacu and Canavieras zones. Another US$5 million will fund pre-feasibility and development work at Morro de Vento and Canavieras; the balance of the funds will be used for working capital purposes.
Plans call for updating reserve estimates for the Morro do Vento, Morro do Vento Extension (Basal/Main Reef), Canavieiras and Serra do Corrego zones as part of a ongoing mine planning and feasibility work.
At last count, measured and indicated in all of Jacobina’s zones tallied to 24.8 million tonnes grading 2.5 grams gold. Total inferred resources stand at 22.2 million tonnes of 2.6 grams gold.
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