Vancouver — Needing to raise substantial amounts of money,National Gold (NGT-V) is eagerly awaiting a scoping study on the high-grade Estrella zone in the Salamandra gold project in Mexico.
The study is slated to be completed in June. The junior expects that it, and the subsequent production test, will show that Estrella can be profitably mined at prices of around US$265 per oz. gold.
“The company’s focus has shifted from acquisitions to partnering with a quality operator to joint-venture production from the low-cost, high-grade Estrella gold zone,” says Albert Matter, National Gold’s CEO.
The final report will include optimum pit configurations for both the test production and the full production from Estrella. The junior plans on mining the much larger Mulatos resource when gold prices improve.
National Gold took over the advanced project late last year from Placer Dome (PDG-T) and Kennecott Minerals. The $10.5-million deal was originally slated to close at the end of February. However, regulatory hurdles forced National Gold to bump the date ahead to mid-March. Financial problems then forced Placer and Kennecott to defer $2.75 million of the closing payments to July and to agree to pay the $1.6-million refundable IVA tax. This enabled National Gold to close the deal.
The Canadian Ventures Exchange has requested that the company complete a $1.6-million financing before July 15 and another $2-million financing by Aug. 30. If these obligations are not met, National Gold may run afoul of the exchange’s maintenance requirements and be downgraded to the status of inactive trading. National Gold is confident it can raise the funds.
The 151-sq.-km property is located 400 km south of Tucson, Ariz., in the Mexican state of Sonora. It hosts the 3.4-million-oz. Mulatos gold deposit. Within this deposit is Estrella, a high-grade core that holds a measured and indicated resource of 11.5 million tonnes grading 3.16 grams gold per tonne, using a 2-gram-per-tonne cutoff.
National Gold has hired Nevada Mining Consultants and Mintec to prepare a scoping study for production from the high-grade zone. According to National Gold, the preliminary report indicates that the Mulatos deposit contains more than 4.7 million oz. gold, in all categories, at a 0.5-gram-per-tonne cutoff. This is an increase from the original 3.4 million oz. at a 0.8-gram-per-tonne cutoff.
Since 1993, Placer and Kennecott have spent more than $50 million exploring the property. Based on a cutoff grade of 0.8 gram gold per tonne, a 1997 feasibility study pegged the measured and indicated resource at 68.3 million tonnes grading 1.57 grams gold.
A 1999 feasibility study envisioned a 17,500-tonne-per-day open-pit operation. Capital costs are pegged at US$120 million. Operating costs are estimated to be $5 per processed tonne at a gold recovery rate of 66%.
Mineralization is hosted in a large, high-sulphidation gold system, which is found preferentially stratabound in felsic volcaniclastics and porphyritic flows. Alteration is well-zoned, extending from a gold-bearing core of silicic and pyrophyillite clays to kaolinite-illite-dickite clays and finally to a propylitic zone.
Under the deal, $3 million is payable in the first year. The remaining $7.5 million is secured by a debenture and payable at the end of the fourth year. The debenture carries a 7% interest, payable semi-annually. The vendors retain a 2% net smelter royalty on the first 2 million oz. gold produced.
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