Open pit operation to begin in 1989 at Sikaman’s Bogosu

A large open pit operation is expected to get under way late next year at the Bogosu concession in Ghana, West Africa, where a consortium led by Toronto-based Sikaman Gold Resources (TSE), is in the early stages of a feasibility study.

Preliminary information from the study indicates that reserves will support a 825,000-ton-per-year operation with a start-up production rate of 100,000 oz gold annually.

However, the consortium expects to accelerate the Bogosu production rate to 1.5 million tons annually as additional reserves are proven up over the next 12 months, Sikaman says.

With a 40.5% interest, Sikaman Gold is one of the major participants in Canadian Bogosu Resources, a consortium set up to develop the West African concessions. The other partners include a Dutch metals company called Billiton B.V. (40.5%), the government of Ghana 10% and International Finance Corp. of Washington, D.C., 9%.

A 40,300-ft diamond drill program (155 drill holes), an extensive adit and trench sampling on six open pit deposits has increased reserves to 6.8 million tons grading 0.14 oz gold per ton, Sikaman says.

Proven reserves on the same deposits stand at 750,000 oz with an additional 195,000 oz in the probable category. Capital costs

Depending on which open pit deposit is developed first, operating costs will vary from $170 to $210(US) per oz with capital costs in the $45-million range, said President Tom Griffis.

At current market prices, the project would generate cash flow of about $28 million(C) to the joint venture partners.

While the Bogosu concession contains 13 known targets, the joint- venturers have concentrated their efforts on six. Bogosu also hosts seven remaining targets where the potential exists for 3-5 million tons of open pit reserves grading 0.12 oz and over 10 million tons of underground reserves grading from 0.12 oz to 0.30 oz per ton, Sikaman says.

A 6.6-million-ton tailings deposit with about 174,000 oz of proven reserves, will also be evaluated for its production potential, and the chances of finding more open pit and underground deposits along the 18-km strike length appear to be good, Griffis said.

Upon consultation with project engineers Minproc Engineering of Perth, Australia, the final parameters, of the feasibility study are expected to be outlined later this month and a bankable document will be tabled in September.

A start-up date at Bogosu has been delayed by six months to late 1989 because of an increase in the plant size, drilling program and metallurgical tests. Requisite financing

Debt financing for the project has been undertaken by the IFC and no difficulties in acquiring the requisite financing are anticipated, Griffis says.

Preliminary results are expected in September from a 517-sq-km gold concession in Mali, West Africa, where Sikaman and Billiton are joint venture partners.

Sikaman is also finalizing negotiations to acquire a 50% interest in a 200-sq-km gold property in Kenya, East Africa.