ukon-Nevada Hopes to Fix Jerritt Canyon
By Jon A. Nones
24 Sep 2007 at 08:11 PM GMT-04:00
DENVER (ResourceInvestor.com) -- Shareholders of the newly formed combination of YGC Resources and Queenstake Resources received a nice up-tick today on drill results from the Mahala target in Nevada. Investors pushed shares up 7% in hopes that resources can be replenished at the ailing Jerritt Canyon property in Nevada.
Graham C. Dickson, President and CEO of Yukon-Nevada Gold Corp. [TSX:YNG], told listeners at the Denver Gold Forum that “everything at Jerritt Canyon can be fixed.”
In July 2003, Meridian Gold [NYSE:MDG; TSX:MNG] and AngloGold [NYSE:AU] sold their combined 100% interest in the Jerritt Canyon Joint Venture to Queenstake Resources Ltd. because the mine's high production costs no longer fit with Meridian's low-cost strategy.
Annual production from Jerritt Canyon has historically averaged between 300,000 and 350,000 ounces of gold, at historical cash costs of around $190 to $250 per ounce. Queenstake produced only 153,581 ounces last year at a cost of $533/oz. This year, Yukon-Nevada forecasts production of just 120,000 ounces from its Smith Mine and SSX Mine.
However, with a cash position of US$67 million and no debt, the company plans to turn Jerritt Canyon into a winner by increasing tonnage through the processing plant, reducing manpower, improving gold sales techniques and investing in mine development and exploration.
Dickson said the company has large untested targets: one such being Mahala, where exploration drills were mobilized in late July 2007. Today’s results highlight intersections of 12.72 g/t Au for 10.7 metres from 259.1 to 269.8 metres and 11.52 g/t Au for 18.3 metres from 237.8 to 256.1 metres.
On 18 January 2007, Queenstake first reported the new mineralized zone at Mahala with intercepts of 12.2 metres of 28 g/t Au in the Mahala Dike Trend in Zone 4 and 7.6 metres of 25 g/t Au in the Mahala extension in Zone 8.
Yukon-Nevada said follow up drilling will continue to explore this trend as drilling to date west of the Mahala resource is very widely spaced. The company also plans to advance the Starvation Mine in the south zone of Jerritt Canyon, scheduled for 2010 production.
The exploration budget for remainder of 2007 at Jerritt will be C$4 million, with C$12 million slated for 2008, according to Dickson. He noted that historic costs of finding gold in the region are $18/oz, which shows an impressive return with 8.5 million ounces of production since 1981.
Jerritt Canyon currently hosts 485,700 ounces of proven and probable gold reserves, along with 1.98 million ounces of measured and indicated resources plus 545,200 ounces inferred.
Queenstake and YGC Resources merged in May 2007, bringing YGC’s Yukon properties to the table. The Ketza River Mine is the most developed with past production of 103,000 ounces of gold from 1987 to 1990.
The short term goals are to have a pre-feasibility study completed; to make a positive mill decision; and to have a mine and mill in operation producing up to 140,000 ounces of gold per year by 2009.
The company invested C$7 million dollars in 2006 in an ongoing diamond drilling program and will focus on the highly potential Shamrock Zone and Silver Valley moving forward. Drill highlights at Ketza River include 20.5 metres of 42.4 g/t gold.
Yukon-Nevada announced on Tuesday results from its drilling program at the Hoodoo, Penguin, Lab and Nose Zones, which are all parts of the Ketza River Mine. The Hoodoo zone represents a new discovery, showing 16.30 metres of 5.97 g/t Au, which included 1.70 metres of 23.30 g/t.
Shares of Yukon-Nevada jumped 11 cents today to trade at C$1.65 on the Toronto Stock Exchange. The company has a market cap of about C$280 with 169.6 million shares outstanding. Management owns about 10%.
