Partners rework Tonkin Springs plan (January 14, 2005)

BacTech Mining (BM-V) plans to submit a new operating plan for its 55%-owned Tonkin Springs gold project in Nevada after successfully tinkering to boost gold recoveries via bioleaching.

BacTech says that a coarse grind of 300 microns from the TSP-1 deposit’s refractory gold-bearing sulphides is amenable to bioleaching, with recoveries running 86% to 95%.

BacTech’s in-house plans call for the TSP-1 deposit to be mined by contractors at a rate of 1,500 tons per day from the TSP-1 open pit. Existing mine and plant infrastructure will be utilized to produce around 30,000 oz. of gold annually, based on 85% gold recovery.

At last count, the TSP-1 deposit was home to 2.6 million tonnes grading 0.07 oz. gold per ton, for 184 contained oz. of gold.

Initial production would also see oxide material from the Rooster deposit mined at a rate of 2,000 tons per day and placed on the heap leach pad to produce about 17,000 oz. of gold per year, assuming 65% gold recovery. Thereafter, the deposit’s refractory sulphides would be mined at 1,500 tons per day.

The oxide portion of the Rooster portion is pegged at 3.2 million tonnes 0.04 oz. per ton; the sulphides amount to 1.7 million tonnes running 0.05 oz., or a combined 205,000 contained oz. of gold.

The new plans, which envisages eight years of production, carries a price tag of US$9.7 million, which includes the remaining acquisition costs of US$375,000, working capital of US$1 million and a contingency of USD$1.3 million. The price also reflects costs to upgrade the mill, bioleaching, cyanidation and gold refinery circuits initially built by U.S. Gold in the late 1980’s. The project’s existing tailings facility, heap leach pad, and mine infrastructure all require upgrading as well.

The estimated capital costs represents a 69.2% reduction from the US$31.4 million in pre-production capital costs figured under a previous feasibility study by Micon International. The internal study suggests a net present value exceeding US$20 million, and an internal rate of return of more than 30%. Under Micon’s study those figures rang in at US$18 million and of 28%. BacTech’s internal study is subject to independent verification.

Some 2.3 million tonnes of mineable reserves grading 0.09 oz. gold per ton in the previously defined O-15 pit have been excluded from the latest study, owing to a lack of mine planning detail and metallurgical information. Initial leaching tests have shown 84%-88% gold recovery at a coarse grind of 300 microns, and 87%-90% at a finer grind of 100 microns.

BacTech figures the limestone cap overlying O-15 could be used to neutralize the acidic leach liquors produced via the bioleaching of TSP-1 ore. Inclusion of O-15 would require additional drilling, metallurgical testing and engineering, and an increase the grinding circuit capacity.

Micon previously estimated the project’s total reserves at 10.7 million tons averaging 0.06 oz. per ton, for 646,000 oz. of contained gold.

BacTech acquired its stake in the formerly producing Tonkin Springs project from U.S. Gold (USGL-O) for US$1.7 million in July 2003. The project covers 36 sq. miles immediately south of the Cortez joint venture between Placer Dome (PDG-T) and Rio Tinto (RTP-N). Placer is the operator and 60% owner of that joint venture.

Shares in BacTech were 2 higher at 27 in mid-afternoon trading in Vancouver following the news on Jan. 14; U.S. Gold was 3 higher at 40 in over-the-counter trading.