EMED Mining (AIM: EMED) has further advanced its Biely Vrch gold project in Slovakia towards production. It has commissioned a refinement of the scoping study to adjust the siting of infrastructure, and improve the project economics by adjusting the slopes of the planned open pit. The study is also to evaluate the potential for additional revenues from selling waste rock mined from the open pit for use in building roads.
The initial scoping study envisaged a mining operation of 3 Mt (million tonnes) of ore per annum and a recovered grade of 0.6 to 0.7 g/t (grammes per tonne) of gold to produce some 60,000 oz (ounces) per annum.
Annual expenditure in the region is expected to total US$36 million, while operating costs are estimated at US$500 to US$600 per oz compared to the current gold price of US$1,100/oz.
Biely Vrch has additional drill-confirmed potential below the current mineral resource of 41.7 Mt at 0.79g/t gold, containing 1.1 Moz (million ounces). This potential will be further evaluated after the open-cut mine progresses towards development.
The company is currently looking for a contractor to conduct the preliminary environmental impact assessment, which it expects to submit to authorities this year, along with securing formal confirmation of support for its plans from the authorities.
“Our goal for 2010 is to advance the project design and permitting process for Biely Vrch and justify triggering a Final Feasibility Study, which will hopefully lead to development and production. In parallel, we will explore our large licence area in Central Slovakia for porphyry and other mineralisation styles in an area that historically yielded over 120 million ounces of silver and 3 million ounces of gold,” said Managing Director of EMED mining Harry Anagostaras-Adams.
The company has already examined 16 mineralized systems in the Central Slovakia Volcanic Field, drill testing six of them and discovering a 1.1 Moz deposit. This work has taken four years at a cost of US$7.3 million, making for a discovery cost of US$7 per resource oz. EMED added that it has already been contacted by companies with similar projects in the area, which could potentially lead to alliances following technical evaluation of their gold projects.
EMED already has an informal alliance with the Rozalia Mine on a small mining licence which is located within the company's Hodrusa licence area. Assays from three recent holes drilled from underground in the Rozalia Mine returned one hole with an intersection of 21.9 metres at 2.8 g/t gold, including 1.9 metres at 17.7 g/t gold. A second hole returned 26.2 metres at 1.4 g/t gold, including 8.0m at 4.5g/t gold.
The potential of Hodrusa licenses surrounding the Rozalia Mine will be assessed this year for underground and surface potential. Other work planned for 2010 includes geotechnical drilling for the revised Biely Vrch scoping study and exploring for gold in Central Slovakia, including Rozalia-style targets.
The drilling programme will start in April.
Broker Fox-Davies Capital said in a note today that it is retaining its 'Buy' recommendation for EMED with an unchanged target price of £0.62 per share.
None of the issues included in the scoping study refinement remit have been considered in the Fox-Davies model, it said. "Steepening the pit walls would reduce the stripping ratio which would save costs or alternatively make a deeper pit and more gold a possibility. It is noted that the higher grade core of the open pit increases in grade at depth and remains open at depth. Selling material from the pit for building roads would increase revenues and in all probability reduce waste disposal costs," the broker added.
EMED is also currently progressing with its flagship project, the restart of the Rio Tinto Copper Mine in Spain.
EMED plans to commence production from the Rio Tinto mine in 2011, having timetabled the regulatory and permitting process over the course of the next twelve months. Public consultations, further regulatory reviews and administrative approvals are expected to be completed from the second quarter of the 2010 calendar year onwards, while the company plans to seek shareholder approval and commence start-up activities at the mine through the third and fourth quarter of 2010.
Disclosure: The author holds no positions in the company