A formal joint venture agreement between Rea Gold (TSE) and BMR Gold (TSE) was recently completed for the development of the Comstock gold project near Carson City, Nev.
To earn a 50% interest in the joint venture, BMR will provide up to US$2.5 million toward capital and operating costs in two phases of US$1.25 million each.
Rea, the operator of the project, completed an initial feasibility study estimating proven and probable reserves at about 3 million tons grading 0.05 oz. gold per ton and 0.7 oz. silver.
The company is developing a detailed operating plan and hopes to have the project up and running within two months. The initial capital cost to bring the former producer back into production is estimated at US$500,000 including US$250,000 to install a new liner in an existing leach pad.
Current plans call for a 2,500-ton-per-day operation using a mining contractor in the initial phase. Recoveries are estimated at 70% for gold and 50% for silver to produce about 40,000 oz. gold per year at an average cash cost of about US$200 per oz.
Rea is entitled to 100% of the cash flow from the project until payout of its initial US$1.25-million investment.
The second-phase development includes a further US$1.25-million investment from Rea for the construction of additional leaching facilities at the North Comstock area. Additional capital and operating costs above the second US$1.25-million expenditure will be shared equally between Rea and BMR.
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