Mt. Burgess, Arboyune primed for production

Mount Burgess Gold Mining and Arboyne NL, both listed on the Australian Stock Exchange, are typical of the companies that have helped Australia displace Canada as the Western World’s number three gold producer. Both have a gold deposit (about one million tons) and each company is primed for production.

For Mount Burgess, the 800,000 ton Yundamindera gold property 115 miles north of Kalgoorlie in Western Australia (WA) is the company’s principal asset. Not uncommon for deposits in this neck of the outback, combined reserves for the property average about 0.082 oz gold per ton which includes some old mine tailings from previous operations.

During a recent visit to the property, The Northern Miner went down into some old underground workings which in the past had yielded high grade material averaging 1.0 oz or better. Because they lacked the technology to go deeper, mining was fairly shallow in those days and many of these workings bottomed out in what today would be called ore. Indeed, given the tendency of these high grade ore shoots to have a longer vertical component than a lateral one, most Canadian companies would be prompted to test these zones to depth.

Airborne magnetometer, soil geochemistry, geological mapping and, to a lesser extent, enhanced infra-red photography are important exploration tools used in the area. Since there is little outcrop in the area, these techniques are used to define structure.

Although it hasn’t ruled out the possibility, Mount Burgess feels the economics of developing a surface leaching operation are considerably better than conventional milling. Prefeasibility work indicates a cost of $1.5 million for such an operation, versus $3.5 million for a 200,000 tonne per year carbon-in- pulp (CIP) plant.

Reserves occur along a 2.5-mile stretch of a much longer shear zone where three pits would be developed, the first with a 9:1 strip ratio. Crushing and treatment costs for a heap leach operation are estimated to be $10(A) per ton and $19 for CIP, Nigel Forrester, managing director, told The Northern Miner.

Because the ore is highly silicious it will have to be crushed to about 2 mm to ensure good recoveries which are now estimated at 83-86%; agglomeration will be required owing to the clay content which tends to prevent percolation of cyanide solution through ore heaps. Forrester said they are aiming for an initial production rate of 180,000 tonnes per year using contract mining and leased plant equipment. “The limiting factor is our ability to mine,” he emphasized.

The company wants to generate cash flow from a small mining operation, then develop the property on a larger scale. “The longevity of the project is quite substantial,” Forrester said, predicting reserves of at least one million tonnes averaging over 0.076 oz.

Getting an operation like this off the ground in Western Australia is relatively easy. Roads can be built almost anywhere and, with little in the way of pre-production stripping, open cut mining can begin almost immediately.

The company has 27.5 million shares issued almost 43% of which are placed with European investors. Reflecting current market conditions, its market capitalization is approximately $3 million, about one tenth of what it was before the Oct 19 market crash. At least one U.S. company, DRX Inc. (NASDAQ), has made a takeover offer for Mount Burgess but it was a paper swap which the company rejected.

]]>