Six widely spaced drill holes identified a mineralized zone 400 metres northwest of the Reef 1 and 0 deposits, and the structure has been traced along strike for about 1 km. The depth of mineralization ranges between 400 and 920 metres below the surface. Drill results are as follows: * hole 468 was drilled into the Reef 1 extension and intersected 1.5 metres grading 9.23 grams gold per tonne starting at a down-hole depth of 540 metres.
* hole 519 cut 1.8 metres of 5.22 grams gold at a down-hole depth of 470 metres;
* hole 521 intersected 3.9 metres grading 5.41 grams gold starting 600 metres down-hole;
* hole 524 intersected 4.2 metres of 5.8 grams gold at a depth of 920 metres down-hole;
* hole 526 was drilled into the Reef 0 extension and intersected 1.5 metres averaging 10.43 grams gold at a down-hole depth of 400 metres; and * hole 528 cut 2.5 metres of mineralization at a down-hole depth of 850 metres. Assays are still pending for this hole.
Drilling has been halted for the holidays and is scheduled to resume later this month.
Diluted proven and probable reserves in the Reef 1 deposit are pegged at 10 million tonnes grading 11.65 grams gold per tonne, equivalent to 3.7 million contained ounces. Gold recoveries are projected at 92.5%. Reef 0 represents a short splay structure off of Reef 1 and contains about 190,000 oz. gold.
Reef 1 contains an additional inferred resource of 5.9 million tonnes grading 13 grams, or 2.5 million oz., which could extend the mine life to 18 years.
Running parallel to Reef 1 and 500 metres to the north is the Reef 2 zone.
Indicated and inferred estimates peg this resource at 1.6 million tonnes grading 11.63 grams.
Sutton envisages Bulyanhulu as a 300,000-oz.-per-year underground mine, with startup expected by the year 2000. Total cash costs have been estimated to average US$163 per oz. for the initial 12 years.
The first phase of underground development work has resulted in 4.2 km of mine workings, including a 20,000-tonne test stope. A third of this stope has been mined and stockpiled on the surface.
A 400-bed construction camp is in place, and surveying for the process water pipeline to Lake Victoria has been completed. Sutton has also built a 75-km all-weather highway from Bulyanhulu south to the highway; the road connects Bulyanhulu to the railhead at Isaka, a total distance of 125 km.
A concrete batch plant has also been built on site. Rock waste from the underground program is crushed and screened for aggregate for the concrete foundations of the mine site buildings.
Earthwork projects, now under way, include a water reservoir, surface runoff ponds and plant-site excavations. Construction of the tailings impoundment is to begin shortly.
As part of the feasibility study, an environmental impact statement was completed using guidelines set up by the World Bank. The statement was accepted by Tanzanian authorities, who issued the appropriate environmental permit.
Sutton holds a 100% interest in the Bulyanhulu project, with the Tanzanian government retaining a 15% carried interest on after-tax profits.
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