Vancouver — Buoyed by a surging gold price, junior
The junior ventured into the region back in 1993, initially optioning a 90% stake in the Kubi concession and a 51% stake in the Tabakoto claims. However, development plans were stalled as a result of declining gold prices in the latter half of the 1990s. The company then acquired additional ground in the prolific greenstone belt, and the renewed interest in gold this year has put the projects back on track.
Among the new acquisitions was the Segala property, in which Nevsun bought a 77% interest from
The latest bout of infill reverse-circulation (RC) drilling defined the Main zone of the Segala deposit at 25-metre spacings, and results confirm the continuity of broad mineralized zones hosting high-grade sections.
The best drill results came from holes 357, 359 and 364, which returned 25.62 grams gold per tonne over 3 metres, 9.81 grams gold over 6 metres and 10.44 grams gold over 30 metres, respectively. (Holes 349 and 354 tested the margins of the deposit and failed to cut any significant mineralization.)
Other highlights include the following:
n Hole 355 — 6 metres grading 1.38 grams gold at a down-hole depth of 76.5 metres.
n Hole 356 — 9 metres grading 4.09 grams gold at 21 metres down-hole.
n Hole 358 — 7.5 metres of 2.06 grams gold at 12 metres down-hole.
n Hole 360 — 4.5 metres of 4.77 grams gold at 40.5 metres down-hole.
n Hole 361 — 6 metres of 8.23 grams gold at 42 metres down-hole.
n Hole 362 — 36 metres of 2.6 grams gold at 42 metres down-hole.
n Hole 367 — 42 metres of 4.66 grams gold at 36 metres down-hole.
A new resource estimate is expected by the first quarter of 2003, with a final feasibility study for the Segala deposit (Main and NW zones) slated for completion in the first half of the same year. Drilling on the NW zone is complete, with results pending.
The ongoing work is part of a $4-million, 23,000-metre drill campaign on the Tabakoto and Segala mining licences. So far, diamond and RC drilling have been completed on the Far NW Segala, Moralia and Dar Salam targets on the Segala property, and diamond drilling is under way on Tabakoto.
“We’re excited about this drill program because of the strong potential to add a second mining operation at Segala and to discover new ounces from the targets we have generated,” says Nevsun President Clarke.
Nevsun began working the Tabakoto project in earnest back in 1994, and the first hole it drilled that year returned 4.6 grams gold over 5.3 metres. By 1996 drilling had covered the system over a 1.8-km strike length to a vertical depth of 275 metres.
‘Turning point’
“The main property has always been Tabakoto,” says Clark. “The turning point for us was raising funds a year and a half ago to finish off the feasibility.”
In October, Nevsun tabled a robust feasibility study for the project, which is situated 4 km south of Segala. The study, by South African-based MDM, envisions a 650,000-tonne-per-year open-pit operation cranking out some 105,400 oz. gold annually over a mine life of five years. The average grade coming out of the proposed pit is 5.45 grams gold, while the recovery rate is estimated at 96%. Average production costs are pegged at US$185 per oz., with preproduction costs coming in at about US$24 million. MDM projects an internal rate of return of 35%.
Other surface resources on the property could extend the mine life by two years. There is also an inferred resource, consisting of about 220,000 tonnes grading 8.56 grams gold (within the waste envelope) plus 978,000 tonnes grading 8.48 grams gold (in the northern pit extension).
The company says it will consider shifting to underground mining once the open pit is depleted. The prefeasibility envisions underground mining to a depth of 600 metres at a rate of 330,000 tonnes per year over a mine life of six years. The initial capital cost for developing the underground mine is estimated at US$7 million, with production averaging 75,000 oz. per year. The average grade would be about 7.5 grams gold, with recoveries hitting 96%.
The junior is trying to raise financing to transform the property into a mine by the second quarter of 2004.
The prefeasibility was based on a total gold resource of 1.9 million oz., comprising an indicated resource of 5.6 million tonnes grading 7.5 grams of primary material and 535,000 tonnes of 1.8 grams of gold oxide. The inferred resource totals 2.1 million tonnes grading 7.64 grams of sulphide material.
Laterite cap
The typical depth to unweathered bedrock is 50-70 metres, through a hard laterite cap and clayey saprolite. At depth, the primary gold mineralization occurs in tensional fractures and fault gouge. The host rock is a feldspar porphyry, intruding into a sequence of greywacke and shale. Despite the ductile nature of the sediments, local silicification makes them competent enough to break, resulting in mineralization.
The mineralizing system is controlled by an almost vertical, northeast-striking fault that is nearly parallel to the bedding of the sediments. Fracturing is most strongly developed at the intrusive contacts. The gold-bearing veins have quartz, pyrite and arsenopyrite as the main minerals.
In April, the junior picked up more ground around Tabakoto. The Dioulafoundou, Koutila and Fougala claims enlarged the size of the project to 60 from 26 sq. km.
The Dioulafoundou and Koutila projects were acquired from Malian entities for 450,000 and 150,000 shares plus US$60,000, respectively. They have been subjected to soil geochemical surveys, limited termite-mound sampling, geophysical surveys, and geological mapping, as well as auger, reverse-circulation and diamond drilling.
“Tabakoto’s 1.9-million-ounce resource lies on a two-kilometre strike, and now we control more than fifteen kilometres of that type of strike,” says Clarke. “Nevsun will continue to increase its resource base through aggressive exploration of Tabakoto and Segala.”
The two projects cover 83 sq. km in Mali’s Kenieba district.
Farther to the south, in Ghana, the company holds a 90% interest in the Kubi project, which it acquired in 1992 from BHP, now
Mineralization lies at the faulted contact between Birimian (early Proterozoic) greenstones and younger Tarkwaian sediments. The fault is nearly vertical but has been interpreted as a tilted thrust surface. Along the contacts in the Birimian rocks, the gold is hosted in quartz veins and pyrite-pyrrhotite stringers.
A total strike length of 6.4 km has been drilled, with the main body of mineralization occurring over a 1-km portion.
The property is currently dormant, while joint-venture partner
“The Kubi pit is half-way through its production life and has quite a large resource underneath it,” says Clarke.
Mining was conducted at the Kubi pit up to the boundary with a designated Forest Reserve area. The current pit depth is 112 metres, which is also the ultimate pit bottom.
Ghana’s Forest Reserves are not parks but areas set aside for the logging industry.
In April 1999, Ashanti made an initial payment of US$1.8 million for the first 60,000 oz. of gold recovered. Some 20% of the initial payment is held in escrow, pending either the receipt of a permit to mine inside the Forest Reserve or the recovery of the first 60,000 oz. from areas outside it. In addition, Ashanti will make royalty payments of US$15 per oz. for every additional ounce recovered beyond 60,000. Should the gold price exceed US$325 per oz., Ashanti will pay Nevsun an additional 20% of the amount by which the gold price exceeds that level, and this stipulation applies to all the ounces over 60,000.
Nevsun has been one of the best-performing stocks on the Toronto Stock Exchange this year, soaring more than 1,000% to $2.15 from 21.
The company is one of only a few small-cap gold companies with advanced-stage projects that were revived by a rising gold price.
“Over the past year, we have made progress at Tabakoto, as well as good acquisitions in a background of rising gold prices,” states Clarke. “People invest in our type of stock because they think gold is going higher.”
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