The Saskatchewan government has given final approval to the Jolu gold project paving the way for the property to start producing gold before the end of 1988.
The project, a joint of Mahogany Minerals Resources (VSE) with a 70% interest and Royex Gold Mining (TSE) with 30%, is expected to produce 50,000 oz a year starting in 1989.
Site clearing and construction of a 400-ton-per-day mill are expected to start soon with mining to begin in May. Mining will be contracted out to Tonto Mine Development (Saskatchewan).
The project, about 80 miles northeast of La Ronge, has been a boon to the economy of northern Saskatchewan, as have mining exploration projects in general. Local businesses have participated in a broad range of construction and service contracts. When in operation, the mine is expected to employ about 100 people and another 60 during construction. The provincial and federal governments have combined to create a special program for northern Saskatchewan residents in order to train 10 mill operators.
Royex, the operator, is negotiating with Barclays Bank of Canada a $20-million gold loan for 35,000 oz of gold. That would cover the entire capital cost of putting the property into production. The partners have already spent $20 million on exploration and development.
Proven and probable reserves of 606,000 tons averaging 0.40 oz gold per ton habe been established since the discovery in 1984, good for three years of production. Operating costs are estimated at $170(US) per oz.
A 6,000-ft exploration ramp, put down to a depth of 800 ft for exploraation, will be used for mining.
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