Etruscan pleased with Youga feasibility study
2005-01-11 12:52 ET - News Release
An anonymous director reports
POSITIVE FEASIBILITY STUDY FOR YOUGA GOLD PROJECT
Etruscan Resources Inc. has received a positive feasibility study for the Youga gold project in Burkina Faso, West Africa. The feasibility study concludes that Youga will produce an average of 88,000 ounces of gold per year at a cash operating cost of $255 (U.S.) per ounce over a 5.5-year mine life. MDM Ferroman (Pty.) Ltd. of Randburg, South Africa, was the lead consultant engaged by Etruscan to oversee completion of the study.
The feasibility study is based on minable reserves of 5.5 million tonnes of ore with an average grade of 2.9 grams per tonne calculated at an unhedged gold price of $400 (U.S.) per ounce. The reserve estimation was completed by RSG Global of Perth, Australia, in accordance with National Instrument 43-101. The study proposes open pit mining of three pits via contract mining with the ore to be processed through a conventional gravity-CIL (carbon-in-leach) plant with a design capacity of one million tonnes per year. The average gold recovery and mining strip ratio are respectively 93 per cent and 5.5:1. Initial capital costs for the project are estimated to be $34-million (U.S.) excluding working capital. The project internal rate of return (IRR) is calculated to be 26 per cent assuming the project is 100-per-cent equity financed.
The following table sets out the project IRRs at varying gold price assumptions using the same gold reserves calculated at a $400 (U.S.) gold price with 100-per-cent equity financing.
Au price Project
(U.S. dollars) IRR
$375 17%
$400 26%
$425 33%
$450 41%
Gerald McConnell, president and chief executive officer of Etruscan, stated: "With the feasibility study now complete we are looking forward to getting on with the business of building a gold mine at Youga that we expect will have a mine life extending well beyond the initial projections. The approach we are applying to the development of the Youga gold deposits is similar to what we have successfully applied at the Samira Hill mine in Niger. We are initially financing the development of a centrally located processing facility with starter pits, after which we expect to expand the mine life with the development of additional open pits located within trucking distance of the mill. Furthermore, with the recent addition of five new permits contiguous to our Youga property we have effectively secured over 700 square kilometres of highly prospective Tarkwaian sediments along the border with Ghana to which our technical team will be applying its proven exploration methods.
"The government of Burkina Faso has demonstrated that this country is open for gold mining business with no fewer than four projects presently ready for mine development. We look forward to the Youga project representing the beginning of a long-term relationship between Etruscan and the country of Burkina Faso."
MDM was engaged to provide plant and infrastructure design and costing as well as the overall study management. Mineral resource estimation, open pit optimization, mineral reserves and mining costs were provided by RSG Global. SGS (Ghana) was contracted to complete the environmental impact assessment for the project. Metallurgical testwork was performed by Mintek of South Africa and mill sizing was provided by Orway Minerals Consultants of Perth, Australia. Pit slope design was performed by Golder and Associates of Reno, Nev. Digby Wells and Associates of South Africa performed the geotechnical work as well as the tailings dam design. The qualified person overseeing the feasibility study is Robert Harris, PEng, Etruscan's vice-president, operations. David Duncan, PGeo, Etruscan's chief geologist, is the qualified person managing the resource and reserve components of the study.
An exploitation permit for the project was granted by the government of Burkina Faso in April, 2003, to Burkina Mining Company (BMC) on the basis of an earlier feasibility study commissioned by Ashanti. This permit is valid for 20 years. Etruscan holds a 90-per-cent interest in BMC with the remaining 10 per cent held by the government of Burkina Faso.
Etruscan acquired BMC and the Youga gold deposits from Ashanti Goldfields Company Limited and Echo Bay Mines Limited in December, 2003. During 2004 Etruscan completed an 11,939-metre drilling program directed at increasing the confidence level of the gold resources in conjunction with the completion of a bankable feasibility study. Etruscan's drilling was directed at three of the five known gold deposits previously identified by Ashanti: A2 main deposit, A2 east deposit and A2 west zone 1 deposit. The two other deposits which were included in resource estimations previously prepared by Ashanti (A2 west zone 2 and A2 west zone 3) are currently being drilled by Etruscan with independent updated resource estimations expected in several weeks. The resource estimates at a one-gram-per-tonne cut-off grade for the three deposits which are the focus of the feasibility study were prepared by RSG Global in accordance with National Instrument 43-101 and are summarized as follows.
MEASURED
Grade
Tonnes g/t Ounces
3,193,000 3.5 357,000
INDICATED
Grade
Tonnes g/t Ounces
4,155,000 2.4 316,000
INFERRED
Grade
Tonnes g/t Ounces
1,361,000 1.7 75,000
Etruscan has engaged RMB Resources Ltd., a wholly owned business of Rand Merchant Bank of South Africa, to arrange project debt financing. RMB has completed its initial project due diligence and credit review. Etruscan targets completion of the project financing by the second quarter of 2005. In the interim Etruscan has initiated the procurement of certain equipment and intends to quickly launch the detailed engineering and design phases of the project.
We seek Safe Harbor. |
