Wednesday, December 07, 2005 WORK at Avoca Resources' Trident gold deposit has pointed to the viability of a toll treatment option, but with more resources expected to be thrown into the mix shortly, a stand-alone operation at Higginsville may still get the green light.
A recently completed pre-feasibility study indicated that at a gold price of $A620 per ounce the indicated portion of the Western and Eastern Zones of the Trident deposit would generate an IRR of 33% - for a five year mine toll treatment operation producing 80,000-100,000 ounces per annum.
The indicated resources from the Western and Eastern Zones comprise 449,000oz of the total 485,000oz resource at Trident, with the third portion of Trident – the Athena Lodes – only contributing 5000oz of inferred resources (not included in the study).
However a bankable feasibility study (BFS) due to commence shortly will incorporate an upgraded resource estimate which will included the Athena Lodes and also evaluate the viability of restarting previous owner Resolute Mining's Challenger and Fairplay open pit operations.
Recent drilling at the Athena Lodes has returned a hit of 74 metres at 9 grams per tonne gold from 390m, leading the company to believe the incorporation of the Athena Lodes will have a positive impact on Trident.
An upgraded resource estimate for Trident incorporating both the Athena Lodes and extensions of the Western Zone to the north and south will be handed down around February for inclusion in the BFS.
Avoca's managing director Rohan Williams told MiningNews.net he expected the upgraded resource estimate to have a significant impact on the project's economics and that the pre-feasibility indicated a resource of about 500,000oz would support a stand alone operation – a figure the company is rapidly closing in on.
He also said Resolute had done extensive drilling of the resources in the Challenger and Fairplay pits and that somewhere in the vicinity of 50,000-100,000oz of measured and indicated resources remained, although Avoca would need to confirm the estimates before including them in the BFS.
The BFS is expected to be completed in mid-2006 when a final decision between a stand alone operation and toll treating will be made.
Avoca said it has already commenced discussions with possible toll treatment partners including Gold Fields, the company's major shareholder.
Avoca has two diamond rigs operating on site drilling extensions to the known resources.
Williams said the company is also hopeful of adding further resources in the Higginsville area after embarking on a regional RC and diamond drilling program.
The area has seen extensive shallow drilling however only 5% of the drill holes have gone deeper than 100m, giving Avoca encouragement that further mineralisation can be uncovered at depth.
Metallurgical work has indicated recoveries of 95-97% are possible with gravity separation and cyanide treatment however a recovery of 94% was used for the pre-feasibility work to reflect the toll treatment option.
Higginsville is situated between Norseman and Kambalda in the Eastern Goldfields of Western Australia.
Shares in Avoca were up 3c to 65c in midday trade.
AVO Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
