THE GLOBAL SEARCH FOR GOLD SPECIAL — Scotland’s first gold mine to start up next year

Although it is not likely to rival the world’s top gold producers in South Africa and the U.S., a small, high-grade mine is about to put Scotland on the producers’ map.

Situated near the town of Tyndrum, 60 miles north of Glasgow, the Cononish gold project of Caledonia Mining (CA-T) marks the beginning of what President Richard Fiorini hopes will be a greater presence in the region.

“We would like to get established [there] as a small producer,” he says. “The idea is that we can get an operation running, get cash flow started and explore the area further. We hope the mine will be a stepping stone to bigger and better things.”

Slated to begin production in the third quarter of 1997, the 30-acre operation contains a minable reserve of 448,642 tonnes grading 10.2 grams gold and 52.8 grams silver per tonne. The mine, which is expected to last seven years, carries a capital cost of about $11 million and operating costs of US$160-225 per oz. The potential for outlining further mineralization is considered good — so good that Caledonia expects the mine’s life to increase.

Annual production is anticipated at 25,000 oz. gold-equivalent, and Fiorini is optimistic the region, which is better known as a lead producer, has more of the yellow metal to offer.

“We’ve found gold in a number of places in rock outcrops, as well as areas of great mineralization near the Cononish mine,” he says. “It’s an area play, and it’s not an area known for gold. But with additional drilling, we think we can add to reserves.”

The deposit was acquired when Caledonia acquired Scotish-based Fynegold Exploration for US$4.5-million. Fynegold has also discovered gold showings at 36 of its exploration and development licences.

Fynegold has licences for 60,000 acres in the country’s Central Highlands, while Caledonia’s land holdings, which surround those of Fynegold, top 170,000 acres. Caledonia also holds an additional 31,000 acres of exploration rights along the Strath of Kildonan, in northern Scotland, where placer gold has been reported. Airborne and ground geophysical surveys there have identified several features coincident with previously identified anomalous stream-sediment and till samples.

Permits in hand

Fiorini says his company has experienced little difficulty in bringing the Cononish project to the development stage, and adds that the permitting process is similar to that of Canada.

“The process has been straightforward,” he says. “We acquired Crown permits, since the British government owned the mineral rights. We then went to the surface landowners, and then on to a regional planning committee. We have all the permits to proceed.”

The Cononish deposit is contained within a northeast-striking, auriferous, quartz-sulphide vein in quartzites and pelites. The sulphides consist of pyrite, galena, chalcopyrite and sphalerite; the gold occurs with galena in pyrite microfractures.

As the quartz vein is situated in the hills of the Highlands, the operation itself will be developed with level adits. Narrow stopes will be mined through shrinkage stoping, while blast-hole open-stoping will be used in wider areas. A western extension has been defined, and other results from underground drilling are expected soon.

The gold at Cononish tends to be free with high-grade gravity and flotation concentrations, Fiorini explains. “No cyanide will be used on-site, and the tailings will not be acidic, which will make the reclamation process easier.” Based on metallurgical testing, recovery is anticipated at 93%.

The Cononish mine will employ 80 people during construction, which will fall to 50 upon startup. Caledonia intends to seek miners familiar with hardrock operations.

“There are not a lot of hardrock miners in Britain,” Fiorini says. “They have experience mainly in coal. The area of the Cononish mine is a large agricultural area, so the people there are used to working with machinery.”