Sutton doubles estimate for Tanzanian project

While drilling continues to test the Reef deposit at depth, Sutton Resources (VSE) has boosted its resource estimate for its 85%-held Bulyanhulu gold project in Tanzania.

A measured, indicated and inferred resource now stands at 7.2 million tons grading 0.45 oz. gold per ton — more than double the previous estimate of 3.5 million tons grading 0.31 oz.

The calculation is based on 179 drill holes, a cutoff grade of 0.15 oz. and a minimum true width of 4.9 ft.

The bulk of the outlined resource is contained within the Reef, a sedimentary, exhalative-type deposit that has been tested over a strike length of 4,500 ft. and to a depth of 2,300 ft. The average thickness of the steeply dipping deposit averages 14.7 ft. The zone, with a potential strike length of more than 6 miles, remains open along strike and at depth.

Sutton acquired the Bulyanhulu project through negotiations with the Tanzanian government in 1994, and subsequently budgeted US$2.3 million for exploration in 1995. Previous operators Outokumpu and, more recently, Placer Dome drilled a total of 210 holes to a maximum depth of 1,000 ft. Sutton concentrated on expanding the resource by drill-testing the Reef system to between 1,000 and 2,000 ft.

The Tanzanian government retains a 15% carried equity interest in Bulyanhulu, as well as a 3% royalty on production. As part of its agreement, Sutton is required to spend US$1.5 million this year, US$1.5 million in 1996 and US$12 million in 1997.

Sutton has carried out little work elsewhere on the property. At least six reef or quartz vein systems occur on the 21-sq.-mile concession. Previous work on the Reef 2 vein, a parallel system north of Reef 1, outlined an additional resource, estimated at 786,519 tons averaging 0.34 oz.

A preliminary engineering study is expected before the new year. In the meantime, Sutton suggests a 1,650-ton-per-day operation could initially produce up to 200,000 oz. per year at a cash cost of US$115 per oz. The capital cost of such an operation is estimated at US$135 million, with a projected payback of 3.5 years.

Anthonie Luteijn, vice-president of project development and operations, says Sutton will drive a decline on the Reef system in order to carry out underground bulk sampling and drilling.

The company also plans to assess the open-pit potential of a 50-to-80-metre-thick, oxidized surface zone.

In a related matter, Frank Vogl, a director of Sutton, is anticipating significant developments relating to the company’s joint-ventured nickel projects, also in Tanzania. Towards this end, Sutton is meeting with partner BHP Minerals, operator of the Kabanga project.

A combined resource in the Main and North zones at Kabanga is estimated at 34.1 million tons grading 1.5% nickel, 0.22% copper and 0.13% cobalt. A program consisting of more than 52,000 ft. of drilling is planned for fiscal 1996.

BHP is earning a 52.2% interest by funding the project through to a production decision. At that time, Sutton will hold a 37.8% interest, with the Tanzanian government retaining 10%.

The Kabanga lies at the southern tip of the 124-mile-long Kagera nickel belt. Under a separate agreement, BHP can earn a 60% interest in the Kagera concession by funding all exploration through to production. Sutton would retain a 30% interest; the Tanzanian government, 10%. Sutton has 10.5 million shares outstanding.