Taparko-Bouroum feasibility positive

With a positive feasibility study for the Taparko and Bouroum gold deposits in eastern Burkina Faso in hand, High River Gold Mines (HRG-T) has concluded a deal with Axmin (AXM-V) to take over Bouroum.

The deal gives High River a 100% interest in an 11.7-sq.-km part of the Bouroum permit area for US$3.3 million cash. The two companies also form a joint venture to explore the rest of the Bouroum permit, plus two adjoining permits, Yeou and Ankouna. Under that deal, High River will spend US$1.5 million on exploration over three years, starting with US$381,000 in the first year, and earn a 100% interest in the properties. A back-in clause lets Axmin buy a half-interest in the properties by reimbursing the expenditures plus a 50% premium.

Axmin acquired Bouroum from Channel Resources (CHU-V) in a series of deals between October 2003 and May of this year. Providing the feasibility study earned a 65% interest, with the rest purchased for just over US$521,000.

The feasibility study on Taparko and Bouroum, partly done by consultants and partly in-house by High River, examined the economics of an open-pit operation exploiting both deposits and a shared mill. Three open pits would be mined on the Taparko property and three smaller and higher-grade pits on Bouroum.

On the present schedule, High River expects to start detailed engineering and procurement in the third quarter of 2004, with construction to start in the last quarter of the year and commissioning to be done in the third quarter of 2005. Commercial production would be under way in the quarter after that.

The three Taparko pits share a combined reserve of 6.8 million tonnes grading 2.8 grams gold per tonne. The Bouroum pits enclose a reserve of 861,000 tonnes grading 3.97 grams gold per tonne. The average stripping ratio at Taparko would be 4.4, and at Bouroum, 7.2. The Taparko pits would be mined over a 7.6-year mine life, and the Bouroum pits mined during a 3-year period within that time.

The mine plan takes just under 65% of the Taparko and Bouroum resources. Taparko’s measured and indicated resource was estimated at 10.5 million tonnes at an average 2.7 grams gold per tonne; Bouroum’s was pegged at 2.2 million tonnes with 3.1 grams per tonne, both at a 1-gram cutoff grade.

The mine will not be a large-fleet operation, having only two excavators, a loader, and ten 54-tonne haul trucks. Still, the planned rate of mining is 1 million tonnes of ore annually, most of which would be drilled and blasted. Ore from Bouroum would be trucked 45 km to the plant on the Taparko property.

The project’s plant, whose design was based on recent metallurgical testing of Taparko mineralization and previous testing of Bouroum material, would have a semi-autogenous grinding mill with a secondary ball mill, feeding a gravity circuit. Gold not recovered in the gravity circuit would be fed to carbon-in-leach tanks and, from there, to a pressure stripping system.

The reserve consists of oxide, sulphide and transitional ore types. Tests indicate recovery of about 97% of the gold in Taparko and Bouroum oxides, 94% recovery from Taparko transitional ore, 90% recovery from Taparko sulphides and Bouroum transitional ore, and 84% recovery of gold in Bouroum sulphides.

A tailings disposal area with a perimeter dam has been designed for the project. Water from the tailings slurry will be recovered and recycled in the plant. A new reservoir, fed by local surface drainage, is to be built, and domestic water wells are also to be drilled. Power will come from diesel generators on site.

The study calculated a capital cost of US$51.9 million for the mine, mill, tailings disposal area, and infrastructure. The plant, which is estimated at US$11.9 million, is the big-ticket item; the mining fleet is expected to cost US$8.8 million, and US$12.5 million has been reserved for construction. Infrastructure, the tailings disposal area, water supply and power account for US$15.8 million of the capital cost.

A further US$4 million in sustaining capital will be needed over the life of the mine.

Operating costs, per tonne, were estimated at US$17.24, including US$6.06 for mining and US$8.21 for processing. Total cash costs come out at US$204 per oz., including a 3% royalty payable to the government.

The project’s net present value, based on US$350-per-oz. gold, is US$38 million if undiscounted. At a 10% discount rate, that falls to US$8.6 million, and the internal rate of return is 15.5%.

At US$400-per-oz. gold, the project’s internal rate of return rises to 24.6% and its net present value is US$65.8 million, falling to US$24.7 million at a 10% discount.

High River holds an 80% interest in Taparko, with the government of Burkina Faso holding the rest. Three-quarters of the government’s interest is carried.