This was posted by Robert Patterson on the RB thread, I am sure he would not mind me posting this here. Cheers.
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Dear Robert:...
Sorry that it has taken me a while to get back to you. We have been preparing to go to Bolivia on Monday, October 8, [2001] and getting a number of issues out of the way before then has had me in a whirlwind.
Let me try to answer your questions with information that is already in the public domain so that neither you nor I get into trouble.
First, if we are moving 11,000 tons of material per day over a 320-day year (that allows for 45 days, or 12% down time), to recover in the neighborhood of 100,000 ounces, the numbers indicate that we are talking about an average per ton tenor of 0.9 grams (0.029 ozt per ton). Of course the trade off on lower grade could be more process days, or more tons moved per day on average. That grade would be high, but
the Behre Dolbear & Company, Inc. report that became public in February 2000, and the press release bearing on that report in August 1999, both noted that of 73 samples taken, 68 (93%) contained visible, alluvial gold, and 17 (23%) contained grades in excess of 0.8 grams. One sample was above five grams, one was above four grams, a couple were in the three to four gram ranges, and most were above one gram. Since six of those samples were taken in the Paleozoic bedrock and not in the conglomerate, the conglomerate numbers become more like 98% of the samples contained visible, alluvial gold, and 25% of the samples were in excess of 0.8 grams.
The Paravicini Report that became public in February 2000 estimated an average grade of five grams per cubic meter, or 2.5 grams per ton, in the Chaco area. The Trites Report, also written regarding the Chaco area, estimated 2+ grams per cubic yard, or in the gram range per ton.
The 30,000 ounce per year low side scenario, using the same 11,000 ton per day, 320 days per year, comes in at a per ton grade of between 0.25 and 0.27 grams per ton.
What none of these reports could take into account is the concept of high volume earthmoving. No operation in the Tipuani Gold Mining District has ever exceeded about 600 tons per day (with the exception of the South American Placers, Inc. 11 cubic foot bucket ladder dredge that worked in the Kaka, Mapiri and Tipuani Rivers for 30 years doing between 4,000 and 8,000 ton per day). However, the SAPI dredge, as it was known, only worked the Quaternary gravels of the modern riverbeds, and never touched the conglomerate, so the comparison would be apples and oranges. Dr. Atwood has run spreadsheet after spreadsheet on the benefits of the high volume mining. Not just as to costs per ton, but also in bringing the average grade per ton up in this non-homogeneous material by capturing more of the rich pay horizon material in with the lower grade inter-pay streak conglomerate.
On the subject of cost per ton, this can also be calculated from the numbers publicly discussed to date. Due to the inexpensive gravity mining through block caving, the use of conveyors to move both ore and waste, the inexpensive power, the inexpensive labor, the inexpensive gravity concentration techniques in the plant, water available at the site, etc., etc., the costs per ton plummet. Dr. Atwood, working with Dr. Viscarra, our Bolivian mine superintendent and geologist, have calculated a cut-off grade of 0.044 grams per ton (44 milligrams), or per ton costs of $0.41 per ton. If, for example, we really were only averaging 0.044 grams per ton, we could still pay the bills and continue to figure out what the problems are. However, even Behre Dolbear’s 98% of the samples in the conglomerate having visible, alluvial gold gives us some degree of assurance that we can hit the amazingly low 0.044. Now, our base line scenario has been built around our conservative, minimal expectation of 0.25 grams per ton. This base line number would require us to move 124 tons of material to recover an ounce of gold. 124 tons, even at $0.50 per ton, results in $62 per ounce. If our costs ranged up to $0.60 per ton, our price per ounce goes up to $74. On the other hand, if the grade goes up, the tons come down, and the price per ounce drops considerably. At 0.35 grams per ton, we only need 89 tons to make an ounce. At 0.5 grams per ton, we only need to move 62 tons for the same ounce.
If Paravicini or Trites are right with numbers in the 1 to 2.5 gram per ton range, then the price per ounce falls off the chart.
Atwood’s work in the Chaco area that we announced in 1999 showed 95%+ recoveries down to 4 microns, so actual recoveries are not at issue as long as we employ the necessary separation technologies and remove the clays.
Regarding the environmental permitting, as you know I went down to President Quiroga’s inauguration on August 6th. He appointed new cabinet ministers at every position, including environmental and mining. We have just been caught in the changeover of bureaucracy, but every indication is that our permits will be out any day.
Please write with any questions that I can answer in the future. I am leaving for Bolivia on Monday, October 8, so I may be out of pocket for two weeks, so be patient if I don’t get right back to you.
Regards,
Terry
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