Acadian Gold prepares Scotia zinc mine for Q1 production
ACADIAN GOLD PROVIDES CORPORATE UPDATE TO SHAREHOLDERS
Halifax, Nova Scotia CANADA, November 30, 2006 /FSC/ - Acadian Gold Corporation (ADA - TSX Venture), ("Acadian Gold") is pleased to report that the Company's progress with respect to advancing its Atlantic Canadian gold and zinc effort continues on track. At the present time the Scotia Mine (zinc-lead) at Gays River, Nova Scotia, Canada which is being readied for production in Q1-2007, has somewhat overshadowed the Company's Scotia Goldfields Project. This development reflects management's recognition of the importance of capturing the current high prices for zinc and lead by bringing the Scotia Mine into production as quickly as possible. The original target for commencement of operations at Scotia Mine was Q2-2007. At the current rate of progress this operation should start ahead of schedule which should be positively reflected in the Company's 2007 financial statements.
Although a considerable portion of the Company's human resources were dedicated to advancing the Scotia Mine, substantial effort continued on the Scotia Goldfields Project, specifically on the Beaver Dam property, and as well, on the expansion into the Buchans region of Newfoundland with a friendly take-over bid launched for Buchans River Limited ("Buchans River") by Royal Roads Corp. ("Royal Roads"). Royal Roads is approximately 57% owned by Acadian Gold.
The Company's growth, and in particular the effort to bring the Scotia Mine into production, has necessitated the hiring of additional key people. These include Mr. William Rogers, P.Eng., who has assumed the position of Chief Operating Officer, and Mr. John Rawding, CA, who has increased his role in the Company from part time Chief Financial Officer to full time.
Scotia Goldfields Project
The principal focus continues to be the Beaver Dam property which is a bulk tonnage-open pit target and a key property in the Company's central servicing and processing strategy. This strategy envisions a treatment facility at Beaver Dam processing low-grade gold bearing material from Beaver Dam and higher-grade material from potential underground operations at Forest Hill, Goldenville and Tangier.
Diamond drilling was primarily focused on the Beaver Dam "Main Zone" with the objective of ascertaining the overall size and grade of the deposit in this portion of the property. Progress was slower than anticipated with 7 drill holes of the 132 hole program remaining to be drilled at time of writing. This reflects the high level of activity in mineral exploration industry in general coupled with a shortage of skilled drillers. To date 125 drill holes totaling 16,978.5 metres have been completed, with the remaining 7 holes expected to be completed by the end of Q4-2006. This will result in a delay in the new resource estimate from a planned Q4-2006 date to a probable mid-Q1-2007 date.
Drill results have been released for drill holes up to BD2006-72 and these continue to support the bulk tonnage-open pit potential at Beaver Dam. Of 68 drill holes reported on the Main Zone, 56 have intersected wide zones of gold mineralization and the reader is referred to Press Release No. 18-06, August 17, 2006, as well as to the Company's web site for more details. The Main Zone has been traced over a strike length of 725 metres from section line 625 E in the west to 1350 E in the east. The deposit is faulted off in the east and further geological work is necessary to determine the potential for finding an extension beyond this point. In the west, the deposit begins to weaken at approximately 600 E, with further geological work also required here to ascertain the potential for extension in this direction. Gold mineralization intersected in the Mill Shaft Zone located approximately 800 metres west of section line 600 E provides encouragement for discovering the possible western extension of the Main Zone.
Metallurgical work is ongoing at Lakefield Research in Ontario, and it is anticipated that results from this program coupled with a new resource estimate at Beaver Dam in Q1-2007 should provide the basis for commencing a pre-feasibility study.
Exploration activities outside of Beaver Dam included basic field programs designed to bring various properties to the drill stage. Results from previously completed drill programs at Goldenville, Lake Catcha and Killag are expected to be available shortly.
Scotia Zinc Project
Acadian Gold's Scotia Zinc Project is comprised of two key elements: The Scotia Mine at Gays River, Nova Scotia, owned (subject to a 2% n.s.r. to Savage Resources Limited) through ScoZinc Ltd. ("ScoZinc"), and a large holding of exploration claims (approximately 116 hectares). The Scotia Mine has proven to be a timely acquisition for Acadian Gold with zinc and lead prices at US$2.06/lb. and US$0.70/lb. at time of writing, and with potential for further price appreciation in early 2007. Current prices are particularly attractive for the Scotia Mine hence the Company's efforts to fast track production. Based on zinc and lead prices of US$1.50 and US$0.45 respectively and a US$/CDN$ exchange rate of $0.89, and at an annualized rate of production of 30,100 tonnes of zinc concentrate and 16,500 tonnes of lead concentrate, the Scotia Mine should generate CDN$57,400,000 in revenues and CDN$23,500,000 in cash flow net of taxes, royalty and interest (MineTech International Ltd., Feasibility Study (the "Study") - Press Release No. 16-06, July 17, 2006; Doug Roy, M.A.Sc. (Mining Engineering), P.Eng., principal author of the Study and Qualified Person defined by National Instrument 43-101). The Company is on schedule with its Scotia Mine project and zinc and lead concentrate production could start as early as Q1-2007 with shipments to commence in Q2-2007. Two milestones key to staying on target with respect to start-up include raising debt capital in the order of $15 million for capital expenditures, working capital and contingencies, and receipt of an Industrial Approval Permit from the Nova Scotia government.
The Company is in discussions with a number of lending groups regarding the required debt capital, and given the robust project economics and the current prices for zinc and lead, this is expected to be in place prior to the year-end or early 2007.
The Industrial Approval Permit is the final permitting document required by the Company to commence operations. The required information to support the issuance of this permit (consisting primarily of certain updated environmental background data contained in the Environmental Assessment Study approved in 2000) has been filed with the Nova Scotia government. The Company is optimistic that it will have the Industrial Approval Permit in hand early in Q1-2007.
Refurbishment of the mill has been underway for three months and currently involves the services of twenty full time employees of ScoZinc plus outside contractors. Excellent progress has been made to date with a new 35,000 square foot roof installed, mill heating system commissioned and main pump-house completed. Mill electrics are expected to be completed in Q4-2006 and mill mechanical (crushing, grinding and flotation circuits) in Q1-2007.
Upon receipt of the Industrial Approval Permit, mill commissioning is scheduled to commence which will initially entail treatment of low-grade material from the open pit. Initial sales of zinc and lead concentrates are expected to take place in late Q1-2007 or early Q2-2007.
Advertisements for mine and mill personnel have been placed in several publications, and it is anticipated that many of the positions will be filled by residents of the local community. It is expected that at full production the Scotia Mine will employ approximately 80 people.
Management is pleased with progress to date and at this time remain confident that the Scotia Mine will be on target with a Q1-2007 start-up date. This event will be a major milestone for Acadian Gold and is expected to be a cornerstone for future growth.
Management wishes to thank the team refurbishing the processing plant at Scotia Mine for their excellent work to date which has enabled the Company to exceed scheduling targets. The high morale of the group is testimony to their teamwork and dedication to bringing the mine on-stream on time, and to the strong leadership being provided by Mr. Wayne Ellis, Mr. Don Hood, Mr. Lester Fitzgerald and Mr. Dave Holder. The entire group is proud that to date the safety record at Scotia Mine is unblemished with no accidents reported and no time lost. This reflects both the group's and management's commitment to a safe working environment for all employees at ScoZinc and Acadian Gold.
Subsequent to the end of the third quarter, the Company announced (Press Release No. 23-06, November 15, 2006) that it was the successful bidder for the exploration rights to 86 mineral claims covering 1398.4 hectares contiguous to the Scotia Mine. This claim group is important to Acadian Gold in that it covers the "Getty Deposit" (zinc-lead) which was discovered by Getty Mining Northeast Limited ("Getty") a subsidiary of Getty Oil.
The Getty Deposit is the westerly extension to the adjacent Scotia Mine deposit which is located 700 metres to the east. Based on a 1.5% zinc-equivalent cut-off grade, resources (uncategorized) at the Getty Deposit were estimated (Hudgins & Lamb, 1992 for Westminer Canada Limited) at 4.5 million tonnes at an average grade of 1.9% zinc and 1.3% lead. This resource estimate is historical in nature and is not compliant with National Instrument 43-101 and as such should not be relied upon. Nevertheless, historical drilling on this deposit points to two zones of particular interest with respect to potential open pit possibilities and two zones with potential underground possibilities.
The Getty Deposit resources described above are in addition to the 5.24 million tonnes of measured and indicated resources grading 4.1% zinc and 2.0% lead and 1.8 million tonnes of inferred resources grading 3.1% zinc and 1.1% lead at the adjacent Scotia Mine. For additional information on the Scotia Mine deposits, see Acadian Gold Press Release No. 16-06, July 17, 2006. The Getty Deposit resources are an important acquisition for Acadian Gold, which along with the 1.8 million tonne inferred resource at Scotia Mine provide potential for an extended mine life.
The Scotia Mine currently has a reserve sufficient for five years of open pit production planned at 700,000 tonnes per year and 2.5 years of underground production planned at 472,500 tonnes per year. Future work programs will be designed to bring the Getty Deposit into National Instrument 43-101 compliance and ascertain its development potential.
In addition to hosting the Getty Deposit, this new group of claims has potential for additional discoveries. The Getty Deposit is hosted by a carbonate reef on an island-like basement high that is connected to the Scotia Mine reef deposit by a basement saddle. A similar style island-like basement high may exist to the north of the Getty Deposit, and is considered a high priority drill target.
This newly acquired claim group is subject to a 1% gross metal royalty to Globex Mining Enterprises Inc. Acadian Gold has an option to purchase one-half percent for $300,000 at its option at any time, and has a first right of refusal on the remaining one-half percent.
The Company has been undertaking a data compilation program on its various other zinc prospective holdings and it is anticipated that targets warranting drill testing will be identified. Testing of these targets may commence late in Q1 or early in Q2-2007.
Buchans, Newfoundland Base and Precious Metals Project
During the third quarter, the Company completed a friendly take-over of Royal Roads resulting in the acquisition of a 78% interest in that company, which was diluted to 57% on the recent private placement by Royal Roads. Royal Roads' principal asset is a 16,075 hectare (approximately 32 km x 5 km) mineral property known as the Tulks North property which is strategically located in the centre of the world-class Buchans base metal camp in central Newfoundland, Canada. The property is located approximately 15 km south of the formerly producing Buchans Mine (ASARCO) which produced 16.2 million tonnes grading 14.51% zinc, 1.33% copper, 7.56% lead, 126 g/t silver and 1.37g/t gold; 25 km west of the Duck Pond deposit currently being developed by Aur Resources Inc. ("Aur") (5.5 million tonnes grading 5.8% zinc, 3.3% copper, 58.0 g/t silver and 0.8 g/t gold) (Aur Annual Report 2002); and ties on to Messina Minerals Inc.'s ("Messina") Tulks South property which is currently the target of a 43,000 meter diamond drilling program (4 drill rigs) (Messina press release June 6, 2006).
Royal Roads' Tulks North property is host to the Daniel's Pond deposit which was discovered by BP Resources Canada Ltd. in 1989. Royal Roads reported (See Press Release issued November 7, 2006) an inferred resource (Zn cutoff = 2%, S.G. 4.0) of 1.69 million tonnes grading 0.57% copper, 4.40% lead, 8.37% zinc, 196.9 g/t silver and 0.68 g/t gold over an average width of 4.2 metres.
The bulk of this resource is within 200 meters of surface and there is potential for expansion down dip and along strike. In addition, the Tulks North property is host to a number of prospective targets which have been identified and evaluated through only limited exploration programs completed to date. These include the Parking Lot Showing, Daniel's Pond Extension, Roebuck Alteration Zone, Tim's Creek Area, Bobby's Pond Alteration Zone, Bobby's Pond South, Jack's Pond Alteration Zone, Black Jack Prospect and Sutherland's Pond Alteration Zone. All of these targets warrant follow-up exploration programs. The Jack's Pond Alteration Zone is potentially the largest known alteration zone in the region outside the Buchans Mines.
The Company's current plan is to keep Royal Roads listed on the TSX-Venture Exchange and maintain it as a key vehicle to primarily explore and develop base and precious metals projects in Newfoundland. Subsequent to the end of the third quarter, Royal Roads announced a friendly take-over bid for Buchans River a TSX-Venture Exchange listed company with an excellent holding of mineral claims in the Buchans Camp, including the former producing Buchans base metal mine last operated by ASARCO in 1984 (see Acadian Gold Press Release No. 21-06, October 2, 2006). This acquisition which is expected to close on or about December 15, 2006, will significantly enhance Acadian Gold's footprint in the Buchans base metal camp and position the Company as a key player in that region.
Subsequent to the takeover of Buchans River by Royal Roads, which is expected to occur on or about December 15, 2006, and assuming Royal Roads acquires a 70% interest in that company, Acadian Gold will have an approximate 50% direct interest in Royal Roads and a 35% indirect interest in Buchans River.
Other
The Company was pleased to announce the appointment of Mr. William Rogers, P.Eng. to the position of Chief Operating Officer of Acadian Gold effective October 1, 2006. Mr. Rogers who comes to Acadian Gold from Xstrata Nickel in Sudbury where he was responsible for the day-to-day management of four mines, brings the necessary expertise and experience to bring the Scotia Mine into production. Mr. Rogers has over thirty-three years experience in the industry including seven years with Hudson Bay Mining and Smelting and eleven years with Noranda.
The Company was also pleased to announce that Mr. John Rawding, C.A., who was until recently filling the position of Chief Financial Officer on a part time basis is now with Acadian Gold full time.
Most recently, November 17, 2006, the Company announced that it had engaged the services of Mr. Stanley Neamonitis, International Marketing Consultant for base metals and concentrates, to assist the Company with respect to the negotiation of sales contracts for the zinc and lead concentrates from the Scotia Mine. Mr. Neamonitis who is based in Manhasset, New York brings considerable expertise to Acadian Gold in the field of concentrate marketing with over 40 years experience in the business. This experience includes 10 years (1975-1985) as a senior trader for lead concentrates with Philipp Brothers in New York and 15 years (1985-2000) as senior trader for zinc and lead concentrates with Glencore Ltd. (formerly Clarendon Ltd.).
These individuals bring considerable strength to the Acadian Gold management team and play an important role in guiding the Company's transition from a developer to a producer.
Other
Terence F. Coughlan, P. Geol., who is a Qualified Person as defined by NI 43-101, reviewed the technical information contained in this news release.
Certain information regarding the Company contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. Discussion of the various factors that may affect future results is contained in the Company's 2005 Annual Report which is available at www.sedar.com. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
For additional information on Acadian Gold's properties and activities, please visit our web site at www.acadiangold.ca. If you wish to be added to Acadian Gold's email or fax distribution list for future news releases and updates, please contact us at phone: 902-444-7779, fax: 902-444-3296. FOR FURTHER INFORMATION, PLEASE CONTACT:
G. Will Felderhof, President & CEO
or Terry F. Coughlan, Vice President
902-444-7779 / 1-877-444-7774
mail@acadiangold.ca
Halifax, Nova Scotia
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Shares Outstanding: 104,838,584
Press Release No. 27-06 |
