Suppliers News (July 30, 2007)

Caterpillars to invade Venezuela

Management at Spokane, Wash.-based Gold Reserve (GRZ-T, GRZ-X) likes Caterpillars so much that the company is spending US$80 million on them over the next three years.

Caterpillar (CAT-N) and local Venezuelan dealer, Venequip, will supply Gold Reserve with haul trucks, front-end loaders and other machinery to build Gold Reserve’s Brisas open-pit gold-copper mine in southeastern Venezuela.

Gold Reserve has ordered 21 pieces of construction equipment worth about US$10 million, all of which should be in Venezuela by the end of the year.

The equipment will be used to start digging the Brisas pit and build the tailings dam.

More equipment will arrive over the next few years, including more than thirty 236-tonne haul trucks, two 18-cubic-metre front-end loaders, and seven D10T bulldozers.

In total, the contract with Venequip and Caterpillar is worth $80 million over three years, with another $500 million ex- pected in maintenance and spare parts purchases over the life of the mine.

Jim Geyer, senior vice-president of Gold Reserve says: “Caterpillar views our Brisas mine as strategically important within Venezuela and has agreed to support our mining plans with a steady supply of high-quality equipment, spare parts, and technical expertise.”

Reserves at Brisas are a National Instrument 43-101-compliant 485 million tonnes grading 0.67 gram gold per tonne and 0.13% copper containing 10.4 million oz. gold and 1.3 billion lbs. copper, using gold and copper prices of US$400 per oz. and US$1.15 per lb., respectively.

The mine plan calls for conventional truck-and-shovel methods to process 70,000 tonnes of ore per day, for an average 456,000 oz. gold and 60 million lbs. copper annually over 18.5 years.

Using copper as a byproduct, operating costs are expected to be US$126 per oz., using prices of US$470 per oz. gold and US$1.80 per lb. copper.

Meanwhile, Gold Reserve placed a US$64-million order for a gyratory crusher, pebble crushers, as well as semi-autogenous grinding (SAG) and ball mills from Finnish firm Metso Minerals. Payments will be made in stages over the next 2.5 years.

The company expects to fund construction with an upcoming combination of debt and equity financings.

SRC can now handle more carats

The Saskatchewan Research Council (SRC) couldn’t meet the demand for diamond analysis so it expanded its geoanalytical diamond operations, effectively doubling capacity to make it one of the largest diamond analysis labs in the world.

The expansion will allow mining companies to access a range of geoanalytical services near their operations, making it more convenient and less expensive.

“This will offer the diamond industry some much needed additional capacity and options for accelerated delivery of trustworthy quantitative results, so crucial to our prospecting and evaluation efforts,” says De Beers Canada’s manager of advanced exploration, Peter Williamson.

The expanded lab features a dense media separation (DMS) plant. The first client scheduled to use the DMS plant is Saskatchewan-based Great Western Diamonds (GWD-V, GWSDF-O).

Birch Mountain signs aggregate deal with Suncor

Birch Mountain Resources (BMD-T, BMD-X) has signed a 3-year contract with Suncor Energy (SU-T, SU-N) to supply the oil giant with construction aggregates that will be used to build further infrastructure projects in the oilsands.

Birch Mountain says this is the first long-term aggregate contract of its kind in the oilsands.

“Shifting to longer-term contracts as opposed to the historical spot market is a strategic opportunity for Birch Mountain,” says Joel Jarding, Birch Mountain president and chief operating officer.

The deal gives Birch Mountain and Suncor more cost certainty.

The terms of the contract were not disclosed.

During the previous 40 years in Alberta’s oilsands, Suncor has expanded its production capacity of synthetic crude oil to an average of 260,000 barrels per day, with plans to reach 550,000 bpd within five years.

Birch Mountain’s Muskeg Valley Quarry processes aggregates on two 12-hour shifts each day to supply the growing needs of construction projects in the oilsands, near Fort McMurray, Alta.