Alacer Gold commits to next stage of expanding South Kalgoorlie operations as reserve increases 96% to 761,000 ounces
TORONTO, Oct. 24, 2011 /CNW/ - Alacer Gold Corp. ('Alacer' or the 'Company')
announces the Company's Board of Directors has approved a $25 million budget for the first stage of expanding the South Kalgoorlie Operations ('SKO'). This approval to proceed will fund ongoing underground mining feasibility work, ordering long-lead time items for a new 2.5 million tonne per annum ('Mtpa') treatment plant and proceeding with cutbacks of the HBJ North and Mt Martin open pits.Highlights
-- Staged development approach minimizes financial and technical
risk while enabling rapid progress towards bringing to account
the substantial resource and exploration option value at SKO.
-- It is envisaged a new 2.5Mtpa SKO processing facility,
replacing the existing 1.2Mtpa Jubilee plant, will be
commissioned in early 2013 and become a treatment hub for ore
from various open-pit and underground mines from within the
100%-owned SKO tenements as well as the Frog's Leg Mine (49%
owned by Alacer).
-- New SKO Mineral Reserve of 13.1 million tonnes at 1.8g/t gold
containing 761,000 ounces includes the increased HBJ north
open-pit reserve (391,000 ounces) plus the Mt Martin, Pernatty
and Triumph open-pit reserves (together 124,000 ounces) and
Alacer's 49% interest in Frog's Leg (246,000 ounces). This
reserve does not include HBJ or Mt Marion resources which are
potentially mineable via underground methods and are the
subject of ongoing mining feasibility studies with conversion
of Stage 1 underground reserves expected to be announced in Q2
2012.
-- The new SKO Mineral Reserve of 761,000 ounces represents a 96%
increase over the previously published reserve of 389,000
ounces and takes into account mining depletion of 164,000
ounces subsequent to the release of the previous reserves.
-- The preferred approach to mining the large HBJ Lode is to mine
the northern portion via an expanded open pit and the southern
portion via underground bulk-mining methods.
-- SKO exploration and mining tenements contain gold resources
totaling 5 million ounces of gold.
-- Following the completion of ongoing underground feasibility
studies by the end of Q1 2012, the Board of Directors will
consider proceeding with SKO Expansion Project including the
construction of a new 2.5Mtpa processing plant.
Edward Dowling, President and CEO of Alacer stated 'We are systematically and prudently progressing SKO towards reaching its targeted gold production of 200,000 ounces per annum - an important part of our goal of becoming an 800,000 ounce gold producer by 2015. SKO is located in a prolific and extremely well endowed, but under explored, gold district that we believe will yield further significant gold discoveries. We are working towards building a larger treatment facility that will provide a cost-effective basis for processing known resources and new discoveries in a manner that creates substantial shareholder value over time.'
SKO Vision
The >25 year-old Jubilee Plant at SKO currently treats ore from the Company's HBJ Mine and its 49% interest in the Frog's Leg Mine. With Jubilee's processing capacity of approximately 1.2Mtpa, SKO currently produces approximately 100,000 ounces of gold per annum.
The SKO Expansion Project targets doubling gold production by developing a multi-mine treatment hub that processes 2.5 million tonnes per annum of ore grading about 2.5g/t gold, producing approximately 200,000 ounces per annum and targeting a cash cost of about $600/ounce. The mix of ore would vary as exploration of Alacer's large SKO tenements progresses over time and mining studies are completed on various resources. Alacer is evaluating various scenarios to increase and optimize SKO gold production. The initial ore mix for plant commissioning in early 2013 is currently estimated to be 1.5Mtpa from the HBJ Lode, 0.4Mtpa from Frog's Legs Mine and 0.6Mtpa from other mines.
The approved A$25 million budget is for work over the next six months on the SKO Expansion Project and includes the following work programs:
-- Re-commencement of open-pit mining at the Mt Martin mine,
recently acquired by Alacer.
-- Re-commencement of open-pit mining at the Triumph mine.
-- Re-commencement of open-pit mining at the Pernatty mine.
-- Commencement of a significant cutback in the north end of the
HBJ open pit.
-- A Definitive Feasibility Study ('DFS') for Stage 1 of the HBJ
underground mine (southern portion of HBJ deposit).
-- A DFS for Stage 1 of the Mt Marion West underground mine.
-- A DFS for Shirl underground and open-pit mines.
-- Commitment to proceed with power upgrades and purchase of
long-lead time items required for a new 2.5Mtpa plant.
Preferred Approach to Mining the HBJ Deposit
Several different scenarios for mining the large 3 million ounce (Measured and Indicated) resource at HBJ have been assessed. Given that the Company's preferred approach is to maximize value and reduce risk, it has been decided to mine the resource via:
-- an open pit for the northern portion of the HBJ Lode; and
-- a large underground bulk-mining operation for the central and
southern portions of the HBJ Lode.
This approach allows earlier mining of the higher grade mineralization in the south, thereby providing a better economic return as well as eliminating the potential geotechnical risk associated with a large open-pit cutback of the southern end. Another benefit of underground mining the central and southern areas is that waste from the northern open pit can be dumped in the southern end of the existing open pit, rather than being hauled to the surface waste dump. This in-pit dumping will reduce haulage costs associated with waste removal.
Figure 1 below shows the location of potential underground mining, currently the subject of ongoing feasibility studies, and the planned open-pit cutback of the north-end shown as light blue in colour. Note the current underground feasibility studies scheduled for completion at the end of Q1 2012 are focused on the most southern mineralization shown in Figure 1. Further underground feasibility studies on other potential underground blocks shown in Figure 1 will continue after Q1 2012.
New SKO Reserve
Following the completion of feasibility studies for several open pits the new SKO Reserve (inclusive of Alacer's 49% interest in Frog's Leg) is 13.1 million tonnes at 1.8g/t gold, containing 761,000 ounces, all in the Probable category.
________________________________________________________________
|Table 1: Mineral Reserves for the South Kalgoorlie Operations as|
| at August 31, 2011 |
|________________________________________________________________|
|Asset / Project |Lower Cut-Off|Tonnes|Au Grade| Au Ounces |
| | Grade (g/t) | (kt) | (g/t) | (koz) |
|________________|_____________|______|________|_________________|
|HBJ | 0.45 |9,600 | 1.3 | 391 |
|________________|_____________|______|________|_________________|
|Mt Martin | 0.60 |1,250 | 1.9 | 77 |
|________________|_____________|______|________|_________________|
|Pernatty | 0.60 | 304 | 2.2 | 22 |
|________________|_____________|______|________|_________________|
|Triumph | 0.60 | 424 | 1.8 | 25 |
|________________|_____________|______|________|_________________|
|Total Open Pits | |11,578| 1.4 | 515 |
|________________|_____________|______|________|_________________|
|Frog's Leg (49%)| 3.10 |1,500 | 5.1 | 246 |
|________________|_____________|______|________|_________________|
|Total | |13,078| 1.8 | 761 |
|________________|_____________|______|________|_________________|
Note: Reserve methodologies are summarised in the Technical Procedural Section below. Note the Frog's Leg (49%) Mineral Reserve is the Dec 31 2010 Mineral Reserve adjusted for production ounces up to the end of August 2011. Rounding differences will occur.
Production ounces mined from the SKO open pits and Frog's Leg subsequent to the previously published Mineral Reserve of 389,000 ounces total 164,000 ounces, comprising 77,000 ounces from the SKO open pits and 87,000 ounces from Frog's Leg (at 49%).
The increase in Mineral Reserves from the previous 389,000 ounces to the current 761,000 ounces represents a 96% increase in published reserves at SKO. If mined ounces are added to this calculation, the increase from 389,000 ounces to 925,000 ounces (761,000 ounces 164,000 ounces) represents a 138% increase in reserve ounces since the previously published reserve.
It is anticipated that when the Board considers proceeding with the full SKO Expansion Project during Q2 2012, the SKO reserve will have increased further to include the Stage 1 HBJ underground mining reserve at HBJ and the Stage 1 underground mining reserve at Mt Marion West.
Extensive SKO Resources
The previously published resource inventory at SKO (inclusive of Alacer's 49% interest in Frog's Leg) is 71.4 million tonnes at 2.2g/t gold, containing 5 million ounces. None of the 25 deposits within the field has been closed off by drilling, and ongoing optimization studies continue to assess the individual resources for mining scenarios at different throughput rates and mining sequences.
The HBJ Deposit is the largest SKO resource and makes up approximately 60% of the SKO resource base. It represents one of the highest endowed gold lodes in the Western Australian goldfields. HBJ has produced more than 1.6 million ounces of gold over the past 20 years and is known to be consistently mineralized over a strike length of more than 2.3km and is locally up to 50m wide. The lode has up to 10,000 ounces per vertical meter where it is well drilled, however large portions remain poorly drilled due to historically fragmented ownership, and very limited drilling exists below 500m depth.
The Mt Marion Deposit is the second largest SKO resource. The resource to be assessed for Stage 2 Mt Marion underground totals 5.4 million tonnes at 3.5g/t gold containing 608,000 ounces, and lies below the previously mined part of the Mt Marion deposit. Alacer will commence Stage 2 underground mining feasibility studies beginning Q2 2012. A DFS for Stage 1 of the Mt Marion underground is being carried out on the Mt Marion West Deposit over the coming six months.
South Kalgoorlie Operations Exploration
Alacer controls approximately 60% of very highly endowed 'Golden Triangle' located between Kalgoorlie, Coolgardie and Kambalda, as shown below in Figure 2. Estimated resources (prior to mining) within the Kalgoorlie-Coolgardie-Kambalda Golden Triangle amount to approximately 100 million ounces of gold. Accordingly, Alacer's management is confident the SKO holding provides excellent optionality for additional exploration success.
The focus of Alacer Gold's $11 million 2011 exploration program on the SKO tenements has been testing for underground mining potential at HBJ and Mount Marion West; as well as testing for open-pit mining potential at Shirl, part of the SBS28 Complex near Coolgardie. The drilling programs have successfully defined underground mineralization at Mt Marion, the results of which are now the subject of the Stage 1 underground mining feasibility studies at Mt Marion, as described above. Drilling at HBJ has returned encouraging results, although it must be noted drilling at HBJ is being undertaken on widespread drilling centers. Previously released high-grade results from the Shirl deposit have been successfully followed up with recently received additional high-grade results, all of which will be the subject of open-pit cutback studies for 2012 production. Drilling results from the various SKO prospects will be released in an exploration update in Q1 2012.
SKO Expansion Project
The staged development approach announced today enables further work to be carried out while minimizing financial risk and enabling the new treatment facility to potentially be commissioned in early 2013. Alacer will now proceed with procuring critical path items required for a new 2.5Mtpa plant such as committing to power upgrades and equipment with long-lead times.
Alacer has completed a DFS on this new treatment facility and determined that 2.5Mtpa throughput is the optimal size for SKO given current reserves and resources. The facility is envisaged to be a standard carbon-in-leach ('CIL') plant, many of which have been built in Australia. The estimated cost of this new facility and associated infrastructure is approximately $100 million.
About Alacer
Alacer is a leading intermediate gold company with operations in both Australia and Turkey.
Australia
Alacer has three operating gold mines in Australia, namely the Higginsville and South Kalgoorlie Operations; and a 49% interest in the Frog's Leg underground mine. The South Kalgoorlie Operations and the Frog's Leg interest were acquired following the successful takeover of Dioro Exploration NL, which was completed in March 2010.
Turkey
Alacer is recognized as a leader in exploration and development in Turkey and, with the start-up of Çöpler, will soon be among Turkey's leading gold producers. Çöpler is 95% owned by Alacer and 5% by Lidya Mining. Initial plans at Çöpler are to produce approximately 1.42 million leachable ounces of gold at costs consistent with the lower end of industry standards. Average annual production is expected to be about 175,000 gold ounces. Additional production expansion from the sulfide gold reserve is expected to add 2.25 million ounces. A detailed feasibility study is underway. In addition, Alacer holds a significant pipeline of prospective gold and base metal projects.
Alacer currently has 278.9 million common shares issued and outstanding, 296.9 million fully diluted.
Cautionary Statements
Certain statements contained in this report constitute forward-looking information, future oriented financial information, or financial outlooks (collectively 'forward-looking information') within the meaning of Canadian securities laws. Forward-looking information may relate to this report and other matters identified in Alacer's public filings, Alacer's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as 'may', 'will', 'could', 'should', 'expect', 'plan', 'anticipate', 'believe', 'intend', 'estimate', 'projects', 'predict', 'potential', 'continue' or other similar expressions concerning matters that are not historical facts and include, but are not limited in any manner to, those with respect to proposed exploration, communications with local stakeholders and community relations, status of negotiations of joint ventures, commodity prices, mineral resources, mineral reserves, realization of mineral reserves, existence or realization of mineral resource estimates, the development approach, the timing and amount of future production, timing of studies and analysis, the timing of construction of the proposed mines and process facilities, capital and operating expenditures, economic conditions, availability of sufficient financing, exploration plans and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, regulatory and political factors that may influence future events or conditions. Such forward-looking statements are based on a number of material factors and assumptions, including, but not limited in any manner, those disclosed in any other Alacer filings, and include exploration results and the ability to explore, the ultimate determination of mineral reserves, availability and final receipt of required approvals, titles, licenses and permits, sufficient working capital to develop and operate the mines, access to adequate services and supplies, commodity prices, ability to meet production targets, foreign currency exchange rates, interest rates, access to capital markets and associated cost of funds, availability of a qualified work force, ability to negotiate, finalize and execute relevant agreements, lack of social opposition to the mines, lack of legal challenges with respect to the property or the Company and the ultimate ability to mine, process and sell mineral products on economically favorable terms. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in other Alacer filings at www.sedar.com and other unforeseen events or circumstances. Other than as required by law, Alacer does not intend, and undertakes no obligation to update any forward-looking information to reflect, among other things, new information or future events.
Technical Procedural Information
The information in this report which relates to Mineral Reserves is based on information compiled by Tony James, a full-time employee of Alacer, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr James has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which is being undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and a qualified person pursuant to National Instrument 43-101 of the Canadian Securities Administrators. Mr James consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
The estimation methodology for the Frog's Legs Mineral Reserve is summarized in the La Mancha Resources announcement dated March 29, 2011.
Reserve Estimation Summary for SKO Open Pits
-- Geological parameters - Drill hole data used for the SKO
Expansion Project comprised predominantly surface RC with some
surface and underground diamond drilling. Drill hole spacing
for the majority of the resource ranged from 10m x 5m to 30m x
30m. All drill returns have been logged in detail and the data
stored in a validated electronic database. Gold analysis of the
samples was undertaken using predominantly 50g fire assays with
some pulverize and leach ('PAL') 500g assays. Assays were
composited to 1m lengths and assessed for appropriate top cuts.
The resource estimation has been classified based on data
density, data quality, confidence in the geological
interpretation and confidence in the estimation.
-- Geotechnical parameters - Geotechincal analysis and review has
been completed for each mining area to determine the
appropriate wall angles based on rock type and rock mass
conditions. The geotechnical data was comprised of back
analysis of existing open pits, geotechnical mapping and
geotechnical drilling.
-- Metallurgical parameters - All the open pits in the current
reserve have been mined and processed in recent history.
Assumed processing recoveries were 91% for HBJ, 88% for Mt
Martin, 92% for Pernatty and Triumph; and 93% for Frog's Leg.
-- Therefore data exists to support the processing recoveries that
have been applied. In addition to this further metallurgical
test work has been carried out to determine the effects of the
new 2.5Mtpa gold plant which is planned to grind to 106um,
compared to the current Jubilee plant that has a grind size of
180um.
-- Economic Parameters - In order to define the profitability of
the open pits appropriate commodity parameters were applied. A
gold price of $1,250/oz was used to optimize these projects.
-- Mining Costs - The mining costs were derived from current
mining operations and indicative rates gathered from a number
of external mining contractors.
-- Processing Costs - Processing costs for reserves to be mined
and processed during 2012 had the existing Jubilee gold plant
processing costs applied. Ore that is to be processed in 2013
and beyond had the 2.5Mtpa gold plant costs applied. The
2.5Mtpa processing costs have been derived from a completed
internal feasibility study.
-- Capital Costs - Feasibility work has been completed on the
2.5Mtpa gold plant, additional tailings storage facility,
infrastructure services (power etc.) and infrastructure to
accommodate the SKO Expansion Project.
-- Current Mineral Reserve figures are stated as at August 30,
2011 with depletion by production where relevant. A comparison
with the previous reserve is tabulated below (all in probable
Category).
____________________________________________________________________
| Table 2: South Kalgoorlie Operations - Mineral Reserves Comparison |
|____________________________________________________________________|
| | Previous* | As at August 31, | Change |
| | | 2011 | |
|________|___________________|___________________|___________________|
|Asset / |Tonnes| Au | Au |Tonnes| Au | Au |Tonnes| Au | Au |
|Project | (kt) |Grade|Ounces| (kt) |Grade|Ounces| (kt) |Grade|Ounces|
| | |(g/t)|(koz) | |(g/t)|(koz) | |(g/t)|(koz) |
|________|______|_____|______|______|_____|______|______|_____|______|
|HBJ |2,020 | 1.6 | 106 |9,600 | 1.3 | 391 |7,580 |(0.3)| 285 |
|________|______|_____|______|______|_____|______|______|_____|______|
|Mt | - | - | - |1,250 | 1.9 | 77 |1,250 | 1.9 | 77 |
|Martin | | | | | | | | | |
|________|______|_____|______|______|_____|______|______|_____|______|
|Pernatty| - | - | - | 304 | 2.2 | 22 | 304 | 2.2 | 22 |
|________|______|_____|______|______|_____|______|______|_____|______|
|Triumph | - | - | - | 424 | 1.8 | 25 | 424 | 1.8 | 25 |
|________|______|_____|______|______|_____|______|______|_____|______|
|Total |2,020 | 1.6 | 106 |11,578| 1.4 | 515 |9,558 |(0.2)| 409 |
|Open | | | | | | | | | |
|Pits | | | | | | | | | |
|________|______|_____|______|______|_____|______|______|_____|______|
|Frog's |1,714 | 5.1 | 283 |1,500 | 5.1 | 246 |(214) | - | (37) |
|Leg UG | | | | | | | | | |
|(49%) | | | | | | | | | |
|________|______|_____|______|______|_____|______|______|_____|______|
|Total |3,734 | 3.2 | 389 |13,078| 1.8 | 761 |9,344 |(1.4)| 372 |
|SKO | | | | | | | | | |
|________|______|_____|______|______|_____|______|______|_____|______|
* HBJ previous Mineral Reserve is at June 30, 2010 and is detailed in Avoca Resources' announcement dated July 15, 2010. Frog's Leg previous Mineral Reserve is as at 31 December 2010 and is detailed in La Mancha Resources' announcement dated March 29, 2011 Rounding differences will occur.
-- Production ounces mined from the SKO open pits and Frog's Leg
subsequent to the previously published Mineral Reserve of
389,000 ounces total 164,000 ounces, comprising 77,000 ounces
from the SKO open pits and 87,000 ounces from Frog's Leg (at
49%).
-- There are no known environmental, permitting, legal, taxation,
political or other relevant issues that would materially affect
the estimates of the Ore Reserves.
-- Due to rounding of figures small discrepancies may exist.
-- SKO Mineral Resources referred to in this release are detailed
in Avoca Resources' announcement dated July 15, 2010 and La
Mancha Resources' announcement dated March 29, 2011.
-- All resource numbers quoted in this release are reported
inclusive of reserves.
SOURCE ALACER GOLD CORP.
PDF with caption: 'Document: alacerfig1.pdf'. PDF available at: http://stream1.newswire.ca/media/2011/10/24/20111024_C6959_DOC_EN_5331.pdf
PDF with caption: 'Document: alacerfig2.pdf '. PDF available at: http://stream1.newswire.ca/media/2011/10/24/20111024_C6959_DOC_EN_5332.pdf
ALACER GOLD CORP.
CONTACT: Edward Dowling or Lisa Maestas - North America at 1-303-292-1299
Rohan Williams - Australia at 61-8-9226-0625
Roger Howe - Australia at 61-405-419-139
