THE BOURSE WHISPERER: Barra Resources has formalised a tribute mining agreement with FMR Investments that it says will enable it to resume gold production at its Burbanks gold project in Coolgardie, Western Australia.
Barra said the new alliance gives the company a revenue stream in times of record gold prices at the lowest possible risk with FMR Investments providing expertise, financial strength and milling capabilities.
“This agreement does not require any contribution of capital by Barra,” the company said in its release to the ASX.
“The company views this agreement as a low risk opportunity to gain access to the depth potential of Burbanks, which was previously restricted by cost constraints.
“Importantly, this agreement will also provide the guaranteed milling of ore at FMR’s nearby Greenfields Mill.”
Under the deal FMR will fund the extension of the existing underground decline at Burbanks as well as manage the underground operations for a 50/50 split of the profit.
This will enable the immediate resumption of underground mining at depth with the target being to mine what the company describes as, “the pristine already discovered high grade zones beneath the areas of all previous production”.
Barra’s timetable for the resumption of mining at Burbanks will be as follows:
September / October 2011:
Complete first phase mine planning and scheduling, and lodgement of all documentation to meet statutory requirements.
Commence development of existing decline a further 100 metres vertical depth, enabling access to the 7 Level where past face sampling indicated 76 metres at 17.4 grams per tonne gold over a 1.1 metre width and 30 metres at 18.3 grams per tonne gold over a 1.5 metre width.
Development will see drill stations established along the decline that will enable follow-up drilling to target lode positions between the 4 and 7 Levels and known high grade shoots below the 7 Level, in particular the 4.7 metres at 462 grams per tonne gold intersection completed in 2007.
Follow up drilling of this intersection was severely restricted as no surface positions were available and underground positions did not allow effective testing.
Underground diamond drilling to assist with positioning of strike drives.
January / February 2012:
Commence strike driving on two levels and the production of first ore.
Commencement of first stoping operations.
April / May 2012:
Full scale production at 15,000 tonnes per month.
Delivery of first 40,000 tonne parcel for treatment at Greenfields Mill.
Mining at Burbanks underground was halted in 2008 when the gold price was hovering around the US$820 mark and was less than operating costs.
During 2007/08 Barra milled 251,000 tonnes at 3.5 grams per tonne for 28,300 ounces gold.
The company said the subsequent operating loss of approximately $3 million was the result of a high volume mining technique which led to grade dilution.
At current gold prices Barra claims the 2007/08 mining operations would have produced a profit of approximately $10 million.