William to buy Brazilian producer

The impending acquisition of a Brazilian company will help establish William Resources (WIM-T) as an intermediate gold producer by 1998, the junior predicts.

Having entered final negotiations to buy Jacobina Mineracao of Brazil from a subsidiary of Minorco, William is expected to take ownership of two underground mines with a combined minable reserve of 4.7 million tonnes grading 3.44 grams gold per tonne by early July.

The acquisition is also expected to double William’s resource base to 8 million from 4 million oz. gold.

Although ore from Jacobina is processed at a relatively high cash cost of US$322 per oz., William plans to reduce these costs to US$250 per oz. within two years by reducing dilution, investing in new mining equipment and selectively mining high-grade ore.

During the same period, annual production is expected to increase to 72,000 from 50,000 oz. gold, boosting William’s total production to 250,000 oz. for the year ended March 31, 1998.

The Jacobina operations, including two mines and a carbon-in-leach plant, are 17 km from the town of Jacobina in Bahia state. The mines have produced more than 500,000 oz. gold since entering production in 1983.

Surrounding the existing mines is a 6,000-hectare mining concession containing an estimated total resource of 4.4 million oz. gold, including 1.5 million oz. in the proven and probable category.

In addition, Jacobina holds several thousand hectares of exploration concessions and has filed exploration claims totalling 23,000 hectares.

“We have identified 14 targets along a 35-km belt, some of which have been drilled,” says Gilles Filion, manager of geological services for Bharti Engineering Associates, William’s mining services division. “We plan to revisit these targets and outline a resource.”

Filion adds that William plans to spend about $1 million to explore the area during the year ended March 31, 1997.

The Jacobina deposits consist of a series of Proterozoic quartzite and conglomerate reefs that have been compared with the prolific Witswatersrand deposits in South Africa. In addition to the five reefs currently being mined, the property hosts at least 10 other reefs with significant open-pit and underground potential. All the reefs remain open at depth.

Filion says the near-vertical reefs have an average width of 3 metres, extend for 300 metres to 3 km along strike, and reach a known depth of up to 700 metres.

William, encouraged by the government’s decision to allow 100% foreign ownership of mines, made its first foray into Brazil with the acquisition of the Sabara gold property in 1995. Along with equal joint-venture partner Brazilian Resources (BZIN- CDN), William is now defining reserves on Sabara and hopes to enter production in 1997.

Other contributors to William’s gold production include the Rustler’s Roost mine in Northern Australia and the Velardena mine in Mexico.

The company plans to spend $5 million to explore existing properties in fiscal 1997 and produce approximately 132,924 oz. gold at an average cash cost of US$267 per oz.