Nevada plant banished to Siberia

High River Gold Mines (HRG-T) has acquired a semi-autogenous ball mill, jaw crusher and overland conveyor system from Newmont Mining (NEM-V). The units will be shipped from Nevada to the junior’s Berezitovy gold project in the Amur region of southern Siberia.

High River, which didn’t disclose the price tag, says the high-quality equipment is in good repair. The company says the acquisition will allow it to shortly begin development at Berezitovy.

The mill was built in 1988 and ran at an average rate of 6,000 tonnes per day until 1998; plans at Berezitovy call for the processing of 4,800 tonnes daily to produce about 100,000 oz. of gold per year over 9 years. Construction of a power line to connect Berezitovy to the low-cost regional power grid has begun; production is expected to ramp late next year.

Pending state approval, the equipment will be dismantled, refurbished, and then shipped from a west coast port to Vladivostok; it will then travel by rail to within 70 km of the project site, where it will begin the final leg of its journey along an all-weather road.

High River’s CEO Daniel Vanin says the used equipment will help reduce capital costs, and, as it has a proven track record, help reduce some of the risk associated with the isolated project.

High River is currently in talks with banks aimed at arranging the debt portion of the project financing. The company is also in talks aimed at selling a half-interest in the project to Russian gold producer Buryatzoloto. High River recently agreed to a $15.9-million share-swap deal that will see its stake in Buryatzoloto climb to 63.1%.

A bankable feasibility pegs Berezitovy’s internal rate of return at 21.9%, based on a gold price of US$400 per oz. The estimated initial capital cost comes to US$59 million, including US$9 million in recoverable value-added taxes.

Meanwhile, in Burkina Faso, West Africa, High River is building the Taparko gold mine, with production scheduled to begin in late 2005. The operation is expected to churn out more than 90,000 oz. of gold per year, for 7 years. Bank financing has been arranged with South Africa’s Absa Bank, subject to due diligence and credit approval.

High River also takes in attributable gold oz. from its 50% interest in the New Britannia mine (which is nearing its end) in Manitoba, and its (current) 54.1% equity interest in Buryatzoloto, which owns the Zun-Holba and Irokinda underground gold mines in southern Siberia, as well as a small placer operation there.

All told, High River expects its attributable gold production to hit around 300,000 oz. per year beginning in 2006.


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