Nelson Gold plans expansion at Jilau mine — Project to carry a capital cost of $11.8 million

With a positive feasibility study in hand, Nelson Gold (NLG-T) is proceeding with another phase of its expansion program at the Jilau gold mine in Tajikistan.

Nelson holds a 44% interest in Zeravshan Gold, which owns the Jilau mine and a large package of exploration properties near the mine and in other parts of the former Soviet republic.

Since early 1996, Jilau has produced about 44,448 oz. gold. Production was curtailed by delays in the commissioning of the carbon-in-leach plant, and also by two shutdowns which occurred when negotiations with the Tajikistani government reached on impasse over tax matters and the mechanics of exporting and selling gold. The problems were resolved, however, and operations resumed late in the year.

In 1996, Julau underwent the first stage of its expansion program, which involved reconfiguring the mill and constructing a carbon-in-leach (CIL) plant.

In February of this year, a feasibility study was completed for the second phase, which will see the installation of a second milling circuit, additional leach tanks, a gold recovery plant and extensions to the tailings facility.

This phase is aimed at boosting current production capacity to 1.7 million tonnes per year from 780,000 tonnes. Starting in 1998, annual gold production is expected to increase to more than 100,000 from 72,000 oz. at a cash cost of US$200 per oz. Construction is slated to start shortly, with commissioning planned in the fourth quarter.

The capital cost of the expansion is estimated at US$11.8 million, with funding provided by internal cash flow from operations.

Nelson is looking at yet another expansion at Jilau, aimed at treating lower-grade ore from the Jilau deposit. A large-scale mill and CIL plant is being investigated, as is heap leaching. The results of a feasibility study on this expansion phase are expected late this year.

Last year, a prefeasibility study looked into the prospect of developing the Taror copper-gold deposit. The results suggest open-pit mining is possible in the upper zones of the deposit. Metallurgical recoveries are projected to exceed 80%.

Nelson reported a net loss of US$3.3 million in 1996, compared with a loss of US$4.5 million in the previous year.