Fire Kills 25 at Highland Gold’s Darasun Gold Mine

A mine fire that began on Sept. 7, 2006, at Highland Gold’s Darasun gold mine in the Chita region of eastern Russia, near its border with China, killed 25 miners. Another 39 miners were evacuated or made their own way to surface. Initial reports indicated that welding work at a shaft sparked the fire and that the welders spent an hour or more attempting to extinguish the fire before reporting it. The accident was described as the worst at a Russian gold mine in more than 10 years.

Darasun is a combined underground open-pit operation that produced 11,761 oz of gold during the first half of 2006. Highland also owns and operates the Mnogovershinnoye mine in the Khabarovsk region of far east Russia, which produced 79,500 oz during the first half of 2006. Highland is listed in London and is 20%-owned by Barrick Gold.

On Sept. 15, Highland reported that work had resumed at the open pit and mill and that it was assessing the damage done by the fire and possible options for restoring production underground.

Ivanhoe-BHP Billiton JV Identifies Mongolian Prospects

The Ivanhoe-BHP Billiton Falcon Gobi exploration joint venture has discovered two large induced polarization (IP) chargeability anomalies north and northwest of Ivanhoe’s Oyu Tolgoi copper-gold mine development project in southern Mongolia. BHP Billiton is funding and managing the project, which covers an area of about 28,000 km^sup 2^ of Ivanhoe’s non-core exploration ground in southern Mongolia. IP geophysical surveys have been successfully employed at Oyu Tolgoi and elsewhere in Mongolia’s Southern Gobi region to help delineate zones of sulphide mineralization that are covered by unconsolidated sediments or volcanics.

The northwest anomaly, Toirog Anomaly, is a circular feature 12 km in diameter that has a number of distinct zones of high chargeability and low resistivity. High chargeability could represent a broad area of non-economic pyrite mineralization within which could occur localized but significant concentrations of copper and gold. Initial site visits by BHP Billiton field crews to the western edge of the anomaly indicate the presence of pyrite in volcanic-sedimentary formations. On the eastern margin of the anomaly, a 5-km-long, linear chargeability anomaly encompasses an area of epithermal-style quartz veining that returned up to 1.03 g/mt gold from rock-chip samples taken previously by Ivanhoe field teams. A zone of weak secondary copper staining-chalcopyrite-magnetite also has been noted within a 3-km by 2-km area immediately northwest of this anomaly.

The northern anomaly comprises an area of about 15 km^sup 2^. Ivanhoe crews had not worked in this area prior to discovery of the anomaly. A cursory field examination by BHP Billiton has revealed a broad area of sediments, volcaniclastic units, and basalt that appears to be similar to the hanging wall rocks that overlie the Hugo Dummett deposit at Oyu Tolgoi.

BHP Billiton is initiating a program of detailed geophysics, geology, and soil geochemistry to define drill targets on the two anomalies. Under the terms of the joint-venture agreement, BHP Billiton has the right to earn up to 50% of all minerals found on the project, other than coal, by spending $8 million in exploration costs. Following BHP Billiton’s vesting in the project, a 50:50 joint venture will be established between BHP Billiton and Ivanhoe, and the parties will contribute all further exploration and development costs on a pro-rata basis.

Higher Capital Cost, Output, and Revenue Seen for Nui Phao

Tiberon Minerals reported in early September 2006 that the estimated capital cost to develop its Nui Phao tungsten-fluorspar project in northern Vietnam had risen to $302 million from the 2005 feasibility study estimate of $229.8 million. Reasons for the increase include increased equipment and fuel costs and the general cost inflation being experienced by mining projects throughout the world.

Offsetting the bad news, Tiberon said optimization of the Nui Phao mining plan will result in modestly higher annual production, which is now expected to average 4,800 mt of tungsten trioxide, up from 4,700 mt/y, and 222,500 mt of acid-grade fluorspar, up from 214,000 mt/y. Estimated by-product production of 2,000 mt/y of bismuth, 5,600 mt/y of copper, 2,300 oz/y of gold, and 27,400 oz/y of silver remains essentially unchanged over the mine’s 16.3-year life.

Tiberon reported more good news when it noted that based on September 2006 commodity prices, by-product revenues from bismuth, copper, gold, and silver would more than cover total mine operating costs at Nui Phao. Production costs for tungsten and fluorspar under that scenario would be booked as nil.

The Nui Phao deposit hosts 55 million mt of proven and probable reserves, grading 0.207% WO^sub 3^, 8.13% CaF^sub 2^, 0.093% bismuth, 0.185% copper, and 0.206 g/mt gold. Tiberon now expects production from the mine to begin in early 2009, reaching full production in the second half of that year. Construction of initial infrastructure for Nui Phao’s first resettlement site began in July 2006, and advance compensation has now been paid to about 195 households.

Tiberon has off-take agreements for its initial production of tungsten, fluorspar, and bismuth. Osram Sylvania will take 100% of Nui Phao tungsten for a five-year minimum, with extension options for up to 15 years. CMC Cometals will take 100% of its fluorspar for a three-year minimum, with extension options; and Sidech S.A. will take 100% of its bismuth for a five-year minimum, with extension options.

CSH 217 Granted Mining Permit

China’s Ministry of Land and Resources has issued the mining permit for Jinshan Gold’s CSH 217 open-pit, heap-leach gold project in Inner Mongolia. Jinshan received the final feasibility study for the project in April 2006 (E&MJ, June 2006, p. 44). The company is now targeting a start of gold production in the spring of 2007. Production is planned at 117,000 oz/y of gold over an initial mine life of about nine years at average cash costs of $253/oz.

Current planning calls for a heap leach processing rate of 20,000 mt/d. Near-surface material has been weathered along gold-bearing fractures and is classified as oxide. At depth, the gold is associated with sulphide mineralization. During the initial two years of mining, ore will be delivered directly to a multiple-lift, single-use heap leach pad. Construction of a three-stage crushing plant is planned for year two of operations to process mostly sulphide ore from approximately year three to the end of the mine’s life.

Copyright Mining Media Oct 2006

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