Desert Sun resurrects (gold mine) Jacobina
By: Dorothy Kosich
Posted: '29-NOV-04 06:00' GMT © Mineweb 1997-2004
SAN FRANCISCO--(Mineweb.com) If all goes according to schedule, Desert Sun Mining (DSM) will bring Brazil's Jacobina mine back to life early next year.
In an interview with Mineweb Monday, Desert Sun President and CEO Bruce Murphy said the former Anglo American operation will achieve full production of by the second quarter of 2005.
For a $5 million purchase price and an additional $30 million investment, Desert Sun got a former 700,000 ounces gold producer with $100 million in infrastructure. It is expected to produce 100,000 ounces annually at a cash cost of $200 per ounce.
Located near the city of Jacobina in the Bahia State, Murphy said the project has employed local geologists and engineers. Jacobina is 100% owned by Desert Sun, and is located on along the 155 kilometer Bahia Gold Belt in northeastern Brazil.
Murphy said the operation has a particular advantage by the 3-to-1 exchange rate for the Brazilian real. Because operations are tied to the real, he added, actual production costs will be a third of what they would be if they were U.S. dollar-based. The company will also pay a 1% royalty to the government. As of June 30, 2004, Desert Sun Mining had cash and cash equivalents of $23,791,077.
Murphy said the property has no historic environmental liability and will process free gold that will generate few environmental impacts. He added that both the community of Jacobina and the Brazilian government have been "very supportive" of the project.
Resource estimates include 1.4 million measured and indicated ounces of gold, according to Murphy. The 2004 $4 million exploration program includes 28,000 meters of drilling including 80 new drill holes. Programs are underway at the Joao Belo Zone and Morro Do Vento. As of November 17, resources at Joao Belo increased to 970,000 ounces in the measured and indicated category. A final updated mineral reserve and resource statement by SRK Consulting is anticipated at the end of this year. It is hoped the statement will extend mine life from seven to 10 years at Jacobina. Another potential resource is the Canavierias Mine, located three kilometers from the Jacobina processing facilities.
Analyst Rodney Stevens of Salman Partners said Desert Sun Mining was valued at US$27 per ounce of resource. Salman rated Desert Sun a "BUY" and set a target price of Cdn$3/oz as of November 18th. Toronto-based Desert Sun is listed on AMEX and TSX. |
