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Negotiation of Open-pit Mining Contract
The Company's majority-owned subsidiary, Eagle Mining of Bolivia, Ltd., has
negotiated the terms of an open-pit mining contract to increase production
levels at its Cangalli, Bolivia gold mining operation. Golden Eagle will scale
down its shaft mining operations due to less-than-expected production results
and the lower cost of operating open-pit mines. The Company's third quarter
production totaled 5,605 grams of gold with a value of US$56,760, while October
production amounted to 3,255 grams of gold with a value of $31,395. Total fourth
quarter projections indicate a 66% quarterly increase over third quarter
figures.
The mining contract is with Ingenieria de Servicios Profesionales, S.R.L.
(ISP), an engineering and earth moving company located in La Paz, Bolivia. The
contract calls for a 24-hour-per-day operation employing three 25-ton dump
trucks, one 15-ton dump truck, one 950 Caterpillar front-end loader, one 930
Caterpillar-equivalent front-end loader, two 15-ton dump trucks on stand-by, and
various compressors, generators and support equipment. ISP's equipment would be
added to Golden Eagle's current rolling stock, which includes two D85 Komatsu
bulldozers, one leased 950 Caterpillar-equivalent front-end loader, one 930
Caterpillar front-end loader, and two leased 6-ton dump trucks. ISP's
calculations, because of the short haul distance, fixed the daily production of
the entire operation at 8, 000 to 10,000 tons of head material per day.
The ISP contract will be executed once efforts to improve the Company's
fine gold recovery process are completed. The Company's Cueva Playa open-pit
mine site is currently undergoing modifications, including the installation of a
new flow-sheet, to increase the levels of fine gold recove ry.
Guido Paravicini, M.A., Eng., an independent mining engineer and
geophysicist hired by the Company to perform geological evaluations of the
Cangalli property, has projected that, with a conservative calculation of 2
grams per ton (g/t) of recoverable gold, daily gross production from Cuev a
Playa could reach 500 to 650 troy ounces of gold (approximately US$150,000 to
US$200,000 per day at US$300 per ounce). ISP and Eagle Mining of Bolivia, Ltd.
have conservatively estimated that combined operating costs would not exceed 40%
of gross sales, resulting in daily net revenues of approximately US$90,000 to
US$120,000, or monthly net revenues of US$2.25 million to US$3 million. (The
Company cannot guarantee that Mr. Paravicini's projections are accurate, nor
that they will necessarily re sult from the ISP contract.)
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In addition, the Company's subsidiary reports that it is in compliance with
its contract with the United Cangalli Gold Mining Cooperative and continues to
work closely with the Cooperative's leadership.
Negotiation of Consulting Contracts for Services
The Company's Bolivian subsidiary, Eagle Mining of Bolivia, Ltd., has
negotiated a contract with a Bolivian consulting firm, COPROFI. COPROFI's resume
of consultants includes mining engineers, geologists, metallurgists, civil
engineers, architects and economists. Pursuant to the agreeme nt's terms,
COPROFI will evaluate production enhancement, provide an environmental impact
statement required by recent Bolivian legislation, and perform reserve
calculations and quantifications. Additional services to be provided by COPROFI
include analysis, evaluation and recommendations in the following areas: mine
workings, mine safety, production costs, topographical surveying, administrative
systems and provisioning, inventory control and asset evaluation, investment
return, acquisition and gro wth opportunities, and community support services.
The services provided by COPROFI are expected by Golden Eagle management to
improve production levels and increase the flow of critical information needed
to develop future growth strategies.
The Company also announced contracting the expertise of a respected
Bolivian metallurgist, German Zambrana, M.A., Eng. Mr. Zambrana is focusing his
vast experience in the area of fine gold recovery to aid Golden Eagle in
improving its open-pit recovery process. He has been a staff metallurgist with
the United Nations and major mining companies, focusing on fine gold recovery
issues in such diverse locations as Malaysia, Indonesia, and Brazil. Following
two site visits to the Company's Cangalli operation, Mr. Zambrana reported that
in excess of 50% of the fine gold being processed was being lost due to present
recovery methods. Mr. Zambrana is currently developing a new flow sheet designed
to increase recovery levels; Golden Eagle expects the modifications to be
completed by the end of January 1998. Management expects that Mr. Zambrana's
expertise in fine gold recovery will play a vital role in improving the
Company's open-pit capabilities as it prepares to execute the contract with
Ingenieria de Servicios Profesionales. |
