Tanzanian Gold begins production at Buckreef

Tanzanian Gold (TSX: TNX; NYSE: TRX) has produced commercial-grade gold for the first time from the oxide processing plant at its Buckreef gold project, south of Lake Victoria and 110 km southwest of the city of Mwanza in north-central Tanzania.

“The ore comes in two forms — the primary ore that is at depth and then becomes oxidized as you get close to the surface,” Ulrich Rath, the company’s director said in a telephone interview. “The oxidized ore has different characteristics to the underlying sulphides.”

Some companies, he added, elect to build plants that process both of them at the same time; however, they decided to treat the oxide ores first, as they are close to the surface and then to build a second plant to process the sulphide ores.

The company, he noted, now plans to expand the oxide plant in the fourth quarter of this year, with a further expansion slated for early next year.

“The money generated from production at the oxide plant will be used to complete a feasibility study for the development of a sulphide processing plant,” Rath said.

The combined plants, he added, should produce between 150,000 to 175,000 oz. gold per year at full production capacity.

Recent drilling has also identified ore below the bottom of the pit, Rath noted, which could lead to an underground mining operation once the open pit comes to the end of its life.

The company has also reassessed the mineral resources for the project, which now stand at 35.88 million measured and indicated tonnes grading 1.77 grams gold per tonne for 2.04 million contained oz. of gold. Inferred resources add 17.82 million tonnes grading 1.11 grams gold for 635,540 oz. of gold. The estimates used a cutoff grade of 0.4 gram gold.

The oxide processing plant including the crushing and grinding circuit at Tanzanian Gold’s Buckreef gold project. Photo Credit: Tanzanian Gold.

“These final resource estimates are an update to preliminary results released in mid-March,” Rath said. “They include a reclassification in resource categories, with an overall reduction of 21% in the measured and indicated categories, which reflects a reduction in the measured category and an increase in the indicated category.”

However, the overall contained ounces in the measured and indicated category, he added, declined by only 13%, with a reduction of 307,360 oz. of gold from the preliminary estimates.

Although the quantities have reduced, Rath noted, the grade of ore in the measured category increased to 1.99 grams gold, a rise of 14% from the previous estimate, and a 43% increase in the inferred category grade to 1.48 grams gold.

Furthermore, the contained resources in the inferred category increased from 39,190 oz. to 635,540 oz. of gold.

The previous resource estimate, Rath said, used kriging parameters for the Main zone, which were then applied to the South and Northeast zones and the narrow parallel zones in these areas. The improved classification comes from treating the different zones separately and determining kriging efficiencies for each zone.

“The project presents a very robust and quite high-grade resource base with our measured and indicated resources grading at nearly two grams per tonne,” Rath said. “There aren’t currently many deposits of that quality in the junior sector.”

Mineralization at Buckreef occurs along 1.2 km of the east-west trending Archaean Rwamagaza Greenstone Belt and is open along strike and at depth. The project consists of three deposits: the Main, South and Northeast zones.

At press time in Toronto, Tanzanian Gold was trading at $1.10 per share within a 52-week trading range of 55¢ and $1.56. The company has 151 million shares outstanding for a $176.39-million market capitalization.