Scoping study says Golden Star needs more ounces

Through a scoping study prepared by independent consultants, Golden Star Resources (GSC-T) has determined that the Andorinhas gold project in Brazil could not support a 1,000 tonne-per-day underground operation at current reserve levels.

Golden Star is earning a 50% interest in the property, which is situated in Par state, from Brazil’s largest mining company, Companhia Vale do Rio Doce (CVRD).

The scoping study, prepared by Kilborn SNC-Lavalin, found that resources defined to date at Andorinhas are not yet sufficient to justify a production decision. The latest resource estimate, which covers only the three mineralized bodies in the Mamo zone, is 500,000 tonnes at an average grade of 13.3 grams gold per tonne, equivalent to 210,000 contained ounces. A cutoff of 4 grams per tonne was used.

Nevertheless, Richard Winters, Golden Star’s vice-president of corporate development, is pleased with the results of the study and optimistic that 1998 exploration will locate additional mineralization.

“It makes you think about the possibilities,” he says. “We’ve delineated resources enough for the first several years of mining. It’s a good beginning,” he adds.

Golden Star is targeting a production rate of 100,000 oz. per year at Andorinhas.

During 1997, Golden Star completed 65 holes, totalling 13,289 metres which delineated the Mamo zone bodies — Melechete, M2 and Arame. The three mineralized areas represent ductile shear zones that dip at about 42 and have an average thickness of 3.6 metres. Multiple mineralizing events deposited gold-bearing sulphides and free gold associated with a complex set of deformed quartz veins and massive silica replacement.

All three bodies remain open at a vertical depth of 300 metres. “It simply got too expensive to drill deeper,” Winters says.

Early in the new year, Golden Star will begin a limited drilling program on the Lagoa Seca target, he says.

Lagoa Seca, situated 6 km northeast of Mamo, is a second regional shear zone on the 250-sq.-km property. During the 1970s and 1980s, CVRD completed 40 holes, totalling 5,500 metres, on two contiguous zones, the Lagoa Seca 1 and Lagoa Seca 2. The drilling tested a strike length of 1.1 km and intercepted gold mineralization of varying grades in 33 holes.

“We could produce a resource estimate based on CVRD’s data,” Winters says, but Golden Star will instead wait on the results of its own drilling, which is designed to confirm the previous work, and determine if more detailed drilling is warranted.

The grades at Lagoa Seca are lower than Mamo, but the former may be more amenable to lower-cost mechanized mining because of its steeper dip and greater widths, Winters says.

In addition to Lagoa Seca, Winters says the Andorinhas property contains at least four undrilled targets which could add ounces to the total resource.

The scoping study concluded that Golden Star and CVRD could construct a 1,000 tonne-per-day operation at Mamo at a capital cost of US$88 million.

Proposed mining methods include open stoping using jackleg drills and mechanized blasthole stoping where the orebody is thicker.

Head grades would be 11.6 grams gold per tonne, including a dilution of close to 15 percent. Initial metallurgical studies indicate gold recovery of 96-98%, though further studies found an optimized recovery of 94%. The ore would be crushed, ground and sent through a flotation circuit, followed by regrinding, before being sent to the carbon-in-pulp circuit.

Estimated cash costs for the operation, according to the study, would be US$156 per oz. gold. Before a production decision can be made, Winters says, the property would likely need as much as 700,000 oz. gold to justify the required capital expenditure.

Another conclusion Winters draws from the study is that the company could consider proceeding with the project through staged development.

“We could start at a rate of 40,000 to 50,000 oz. per year, working our way up to 100,000 oz. per year,” he says.