Positive feasibility study for Atlanta Gold

Atlanta will also be evaluating various development proposals with the assistance of its financial advisor Bear, Stearns & Co. Inc., a U.S. investment banking firm retained to study all proposals including the possible sale of the company.

Atlanta is attempting to fend off a takeover attempt by its largest single shareholder, U.S Gold Corp. (NASDAQ) of Denver, Colo., (N.M., May 29/89). With a 13.5% stake in Atlanta, U.S. Gold has teamed up with Denver-based VenturesTrident Limited Partnership (Atlanta’s second largest shareholder with 12.67%) to propose a new slate of directors at the company’s annual meeting in June.

The battle for corporate control aside, Atlanta said the recent study concludes that a mine can be built and profitably operated, even at today’s depressed gold prices. The deposit is reported to contain 1,024,000 proven mineable ounces of gold in two pits, known as the East and West.

The study by Behre Dolbear- Riverside Inc. and Bateman Engineers considered several scenarios before concluding that the most profitable option at today’s prices would be to mine the East pit only in a first phase operation.

The East pit contains 8.27 million tons grading 0.087 oz per ton, with an average recovery rate of 83.9%, sufficient for a mine life of six years. Capital costs are estimated at $41.64 million(US) plus $5.83 million sustaining capital, with the payback period estimated at 2.4 years using $375(US) gold.

Atlanta is projecting that annual production will average 101,180 oz of gold and 258,100 oz of silver, with cash operating costs (including royalties and administrative expenses) of $248.46 per oz of gold produced.

After mining by open pit methods, the bulk of the ore would be processed by flotation, bio-oxidation of the flotation concentrate and cyanidation, with the remainder heap leached with cyanide. The gold would then be recovered from solution using carbon-in-leach technology, reactivation of the carbon, stripping and electrowinning of gold and silver onto steel wool, and subsequent smelting to produce dore.

The West Pit contains an estimated 6.21 million tons grading 0.049 oz gold with a recovery rate of 80.4%, to add 2.5-4 years to mine life.

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