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Gold/Mining/Energy : SOUTHERNERA (t.SUF)

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To: Tomato who wrote (136)	6/17/1997 12:57:00 PM
From: VAUGHN	of 7235

Hello Tomato I have no specific knowledge of the incidence of core VD frequency vs mine development other than to say that it is reported to be rare. As I tried to communicate on the WSP thread, the issue of core VD's is certainly exciting but quite irrelevant to the issue of mine development. The real issue is grade, stone quality, stone size, ore quantity and recovery expense (open pit/pipe vs underground/dyke). Dykes are mined in Africa but it is a warm climate, labour is cheap and infrastructure in most cases, readily available. Most North Slave gold deposits are underground operations and essentially nothing more than gold enriched dykes. Four of those are currently economic (two marginally) and their ore is breaking even at about $74/tonne +/-. It is generally conceded that you establish approximatly 1,000,000 ozs of reserves before developing an underground gold mine here. At .25 ozs/tonne you would need a deposit of approximately 4 to 6 million tonnes before you would see a mine developed. If the setting is remote such as the Lupin mine, the breakeven point moves up to as much as $125/tonne. WSP would presumably want numbers modestly better than this before they would develope an underground mine. Regards

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