Based on a recent letter of agreement, Sun River Gold (VSE) and Bre-X Minerals (ASE) plan to form a joint venture to place into production the United Western gold mine project near Oatman, Ariz. In order to earn a 55% interest, Bre-X is required to provide financing of about US$5 million for capital costs and up to a further US$1 million for working capital to reach startup at 400 tons per day. A 12- year mine life is projected and payback is expected to be reached about one year after the start of production.
Sun River Gold’s United Western mine is reported to host proven, probable and possible reserves of 1.38 million tons grading 0.221 oz. gold per ton. According to a report by an independent consulting engineer, this includes minable reserves of 701,758 tons grading 0.202 oz. gold across an average width of 15.7 ft. The calculations are based on 10,000 ft. of underground drilling and 10,000 ft. of underground workings.
Thomas Tough, president of Sun River, noted that the deposit and parallel vein structures are open along strike and to depth “providing excellent potential to develop substantial additional reserves.”
The two companies expect to enter into a further formal working agreement upon completion of a satisfactory due diligence review by an independent consultant.