Having drilled off an indicated resource of more than a million ounces, Centerra Gold (CG-T) will begin a feasibility study of its Gatsuurt gold deposit, 35 km southeast of the company’s Boroo mine in Mongolia, in May.
Between November 2004 and mid-January of 2005, the company sank an additional 52 holes at Gatsuurt to boost resources by 387,000 oz. An in-house estimate pegs the deposit’s indicated resource at 11.3 million tonnes averaging 3.5 grams per tonne, for about 1.28 million contained oz. of gold. Another 2.2 million tonnes running 3 grams gold are classified as inferred resources.
The estimates employ a conservative gold price of US$375 per oz., and a cutoff grade of 1.6 grams gold. High-grade samples were also cut to between 30 grams and 45 grams, depending on the mineralized zone.
A previous estimate of indicated resources at a cutoff grade of 2 grams and a cutting grade of 25 grams totalled 8.1 million tonnes of 3.4 grams gold. Inferred resources amounted to 1.5 million tonnes averaging 3.1 grams.
The feasibility study is due by the end of the year; conceivably, production would begin in late 2007.
Centerra CEO Len Homeniuk figures Gatsuurt will prove capable of supporting a stand-alone operation similar in size to Boroo. Gatsuurt’s proximity to Boroo is also expected to allow for rapid developed, as it would benefit from Boroo’s existing infrastructure and the company’s knowledge of the area.
Meanwhile, metallurgical test work at Gatsuurt continues; further exploration drilling aimed at expanding the resource base is planned for the balance of the year.
Centerra’s first-quarter net earnings came to US$12 million (or 17 per share), compared with year-ago earnings of US$8 million (20 per share). The drop in per-share earnings reflects an increased share count following a restructuring and initial public offering in June 2004. Net earnings improved owing to an increased share of production at the Kumtor mine (now 100% owned), a full quarter of operations at the Boroo mine, and higher spot and realized prices.
Cameco owns 53% of Centerra, while the Kyrgyz government holds 15.7%. The International Finance Corp., and European Bank for Reconstruction and Development each have about 2.1%.