Placer Dome to develop Granny Smith

The property has mineable reserves of 23 million tons grading 0.05 oz gold with an average stripping ratio of 2.5:1. Similar to Placer’s Kidston and Misima gold deposits, Granny Smith has extensive oxide reserves which will be used to optimize production during the first three years and ensure a rapid payback of capital.

Existing mine plans call for an 8-year operating life and more than one million ounces of gold production during that period. Higher grades will be mined in the first year when production is expected to be about 235,000 oz gold for the joint venture. Placer Pacific wants to produce as much as possible before the new Australian gold tax comes into effect in 1991.

Construction work is under way and production is scheduled to begin in February 1990. Capital costs are estimated at $91 million(A) including working capital and contingency provisions. Each company will finance its respective participation in the venture.

Speaking from Sydney, Peter Vanderspuy, Delta’s chairman, confirmed the company would be financing its share of the project through a gold loan “which we are negotiating at the moment.” The loan will be secured against the project which he said “would carry a loan of that type.”

Delta is not producing at the moment, but will produce this July with the commissioning of a heap leach operation near Kalgoorlie, W.A., which is expected to produce about 35,000 oz per year. But he said the company’s 50% interest in the project is “not the backstop to the financing of Granny Smith.”

Vanderspuy noted that Granny Smith is the seventh-largest gold orebody in Australia, adding that production over the first five years should be about 150,000 oz per year. The company has a couple of other mines in the feasibility stage including the Hartley platinum project in Zimbabwe, which at full production will produce 100,000 oz platinum, 84,000 oz palladium, 30,000 gold, 8,000 oz rhodium and significant amounts of nickel and copper per year.

“That’s a major one by world standards,” he emphasized.

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