Ongoing work on the South Kemess gold-copper property in north-central British Columbia is expected to advance the project to prefeasibility status by April.
El Condor Resources (VSE), operator and 60% owner of the joint venture, initiated the tendering of a detailed prefeasibility study on the project. On completion of the study, the joint venture plans to apply to the British Columbia government for a Mine Development Certificate.
St. Philips Resources (VSE) holds the remaining 40% interest in the South Kemess project and recently completed a loan agreement with El Condor and Rio Algom (TSE).
El Condor agreed to loan St. Philips $500,000 by way of a debenture convertible at the option of St. Philips at $1 per share for a 6-month period. Rio Algom, which already owns about 30% of St. Philips outstanding shares, will lend the company $200,000 on the same terms.
If the debentures are not converted to stock within six months, the loans will be due and payable in full. The loans carry an interest rate of prime plus 3% and the lenders will also receive a bonus of 10% of the loan value in St. Philips stock at $1 per share.
The joint venture is now completing a $1-million program of detailed project engineering studies including open pit mine planning, metallurgy, power, access, tailings impoundment, site layout and environmental studies. Open-pit minable reserves at South Kemess are estimated at about 204 million tons grading 0.23% copper and 0.019 oz. gold per ton at an overall strip ratio of 0.9-to-1. The minable reserve includes a starter pit with an estimated 41 million tons grading 0.27% copper and 0.022 oz. gold at a strip ratio of about 0.2-to-1.
The blanket-shaped deposit is made up of an upper zone of supergene mineralization and a lower zone of hypogene mineralization.
Metallurgical studies on the supergene zone, which accounts for about 22% of the minable reserve, put recoveries at about 70.7% for copper and 71.3% for gold to a copper concentrate containing 22.7% copper and 2.66 oz. gold. Tests on the hypogene mineralization yielded recoveries of about 90.9% for copper and 77.6% for gold to a copper concentrate grading 23.5% copper and 1.52 oz. gold.
Mine modelling is based on a 44,000-ton-per-day operation, giving the project a 14-year mine life and a yearly output of about 221,000 oz. gold and 58 million lb. copper.
The joint venture recently collected a 30-ton bulk sample using large-diameter core and reverse circulation drilling.
Lakefield Research is now completing large-sample process tests on the bulk sample in order to provide final estimates on recoveries.
In addition to the metallurgical studies, a portion of the bulk sample will be used by Hazen Research for grinding characteristic studies on the various Kemess rock types.
El Condor currently has about 14.3 million shares outstanding and is well funded, with $5 million in working capital. It also has 900,000 warrants exercisable to the end of the year at $4.25. St. Philips has about 8.1 million shares outstanding.
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