U.S. REPORT BMR expects reserve expansion

As a US$5-million, 2-year exploration program gets under way at the American Mine gold project in San Bernardino Cty., Calif., BMR Gold (ASE) is confident that its new partner, Nerco (NYSE), will be able to add considerably to current reserves. Before December of next year, Nerco plans to spend approximately US$2.6 million to define the extent of several parallel, gold-bearing shear zones striking east-west through the property.

So far, BMR has tested the zones along a 4,000-ft. strike length. Results from a recent geophysical survey suggest that they extend much further, perhaps to 12,500 ft.

Based on 180-plus holes drilled to date, reserves stand at about four million tons grading 0.087 oz. gold per ton. BMR predicts this figure could more than triple to 14 million tons at 0.07 oz. gold, as the shear zones are drilled off to a depth of about 600 ft.

“Our intention was to develop the project ourselves,” said BMR President Frank Varseveld. “But, quite frankly, it got too big for us.”

In addition to the US$5-million Nerco has agreed to spend to earn a 60% interest in the project, the American company must also pay BMR US$1.03 million in staged payments by July 31, 1991. Partly because of the relatively high-grade of the American Mine deposit (heap leach operations typically grade 0.02-0.04 oz. per ton gold), BMR believes cash costs will be exceptionally low, ranging between US$150 and US$175 per oz.

Previous small-scale mining on the property suggests average recoveries of about 80%. In fact, contrary to the norm, recoveries are higher for the sulphide ore than the oxide ore, because the gold occurs on the surface, not within the sulphides, said Milton Zink, chief operating officer for BMR.

Permitting for a 5,000-ton-per- day heap leach operation is under way. Following a feasibility study, the joint venture expects to enter production by the third quarter of 1991.