100,000 tonnes of ore processed at the Jacobina Mine to date
TORONTO--(BUSINESS WIRE)--April 19, 2005-- DESERT SUN MINING CORP. (TSX:DSM - News; AMEX:DEZ - News) continues to make steady progress with mine commissioning following the first gold pour announced in late March and with the exploration and development programs that have been planned for 2005. Desert Sun has focused on achieving full production in the last half of 2005, increasing resources and reserves in 2005, advancing feasibility studies on new development projects and exploring the northern part of the Bahia Gold Belt.
"We are extremely pleased with the progress we have made at Jacobina," commented Bruce Humphrey, President and CEO of Desert Sun. "We are tracking to the plan developed at the outset of this project and are confident that we can continue to increase resources and reserves through our planned exploration and development programs in the area around the mine."
Desert Sun will hold an investor conference call update at 10:00 AM EDT on Wednesday April 20, 2005. Dial-in numbers can be found on the Desert Sun website (www.desertsunmining.com) in the investor section under press releases. As well, the company will hold its Annual General and Special Meeting at 4:30 PM EDT on Wednesday April 20, 2005 at the National Club, 330 Bay Street, Toronto, Ontario.
MINE UPDATE
- Commissioning of the processing plant has been completed and the plant is now operating on a continuous manner
- 100,000 tonnes of ore have been processed
- 2,000 meters of development have been completed
- 5,600 meters of ITH (In-the-Hole) production holes have been drilled
- 50,000 tonnes of development ore have been stockpiled on the surface ready for processing
- The first gold was poured in March, 2005
- Approximately 1,500 ounces of gold have been poured to date and another 3,800 ounces are contained in the system
- All the required heavy mining equipment is currently on site (The late delivery of the production drills have delayed the planned start of stope production ore. Efforts to minimize the impact have been successful and the year end impact on production will be minimal.)
- Grades have met expectations with an accumulated average grade for the month of April of 1.98 g/t.
DEVELOPMENT PROJECTS UPDATE
Mine Area
An internal review and evaluation of the development projects was completed in January. From this evaluation, the sequence of up coming development was established with Morro do Vento identified as the first development project.
Morro do Vento
- A project development engineering team started work on Morro do Vento in January 2005
- An independent 43-101 ore resource has been completed
- An internal study was completed in April indicating that underground mining is the best option for this project and an independent feasibility study has been started and is expected to be completed by the end of May, 2005
- An engineering study on optimizing the processing plant for expansion has been started with Vancouver-based AMEC Americas Limited
- An exploration and development budget of CAD$6 million (US$5 million) was approved in March 2005
- A decision on advancing the project is expected in June
EXPLORATION UPDATE
As previously announced, Desert Sun has initiated a CAD$6 million ($US5 million) exploration program for 2005 which will include at least 25,000 meters of diamond drilling. This program is focused on further exploring and developing major targets in the Jacobina mine area as well as significantly expanding the exploration work in the northern area of the Bahia Gold Belt, especially at Pindobacu and Canavieiras. Separate press releases will be issued shortly with greater detail on the exploration programs.
Canavieiras
- Two underground drills and one surface drill are currently working and focusing on the MU/LU (Middle Unit/Lower Unit) target. The mine is being re-surveyed and an underground development heading is being extended to allow enhanced drill access to test the potential extension of reefs previously mined and the MU/LU reefs.
Morro do Vento Extension
- One surface drill is testing the strike and downdip extension of the Basal and Main reefs. Underground drifts are being prepared to allow access for underground drilling which is expected to start soon.
Pindobacu
- In the Pindobacu area, one surface drill is following up on excellent intersections previously reported and to characterize the nature of the faulted contact between the Archean Mundo Nova volcanic rocks and the silicified Proterozoic Jacobina Group quartzites.
- A geophysical survey involving induced polarization work has been completed on 50 line kilometers. Priority anomalies identified will be drill-tested later in the program.
- A basin study by Dr. Paul Karpeta, an expert on Precambrian quartz pebble conglomerate-hosted gold deposits, has been completed and results of this study will be reported separately.
- Detailed geological mapping and soil geochemical sampling continue to be carried out to better characterize the extensive mineralized system in the Pindobacu area.
- Diamond drilling is now proceeding at a rate of approximately 3,000m per month and will continue at this rate through the rest of the program.
FINANCIAL UPDATE
Desert Sun has a cash position of approximately CAD$27 (US$22.5 million). The Jacobina Mine redevelopment project costs to March 31, 2005 are CAD$38 million (US$30 million). In early March 2005, Desert Sun raised CAD$25 million (US$20.8 million) through a bought deal financing with approximately CAD$12 million (US$10 million) of the proceeds from this offering to be used to expand the exploration program in Morro do Vento, Jacobina mine, Pindobacu and Canavieiras. An additional CAD$6 million (US$5 million) to be used to finance pre-feasibility and other development work at Morro do Vento and Canavieiras and the balance for working capital purposes.
To mitigate currency risk over the long term, Desert Sun entered into a currency protection agreement in March 2005 with BankBoston to purchase Brazilian Real (R$) for monthly delivery of the equivalent of US$1 million per month beginning January 1, 2006 at an exchange rate averaging 3.00 for the year. This represents approximately 60% of the Jacobina Mine capital and operating budgets and the rate is in line with the exchange rate assumed in the 2003 feasibility study. Contract discussions are being finalized for gold purchase agreements with several international companies. Gold sales are expected to begin at the end of April 2005.
Desert Sun Mining is a Canadian gold mining company listed on the Toronto Stock Exchange and the American Stock Exchange with 100% ownership of the Jacobina Mine and the 155 km long Bahia Gold Belt in the state of Bahia, in northeastern Brazil. Proven and Probable mineral reserves are 14,378,000 tonnes at 2.12 g Au/t containing 980,000 ounces of gold. As a result of the Desert Sun's exploration programs to date, Measured and Indicated resources total 24,800,000 tonnes at 2.53 g Au/t containing 2,050,000 ounces of gold, and Inferred Resources total 22,200,000 tonnes at 2.61 g Au/t containing 1,900,000 ounces of gold. The mineral reserves are included within the Measured and Indicated mineral resources. For additional information, please see Desert Sun's website at www.desertsunmining.com.
Beaten Down Golden Star Tries to Reclaim Its Footing
By Ben Abelson 25 Apr 2005 at 08:15 AM EDT
NEW YORK (ResourceInvestor.com) -- Sixteen months ago, Colorado-based Golden Star Resources [AMEX:GSS/TSX:GSC] was the posterchild of upstart success for the junior gold industry.
In December 2003, the company’s U.S. shares hit a multi-year high of $8.64, up more than 300% in just six months. Amidst what from all appearances was the start of a fantastic bull-run in precious metals, Golden Star had emerged from West African to become a beacon of intermediate gold producer potential – with an experienced management team and a solid plan to grow production to the 400,000 ounce range by 2007.
A year-and-a half later, after an operationally disastrous 2004, a failed hostile acquisition, and declining stock prices industry wide, Golden Star’s shares are languishing just above a recent multi-year low of $2.52. Analysts are negative to neutral on the company, technicians decry the stock’s apparently bottomless chart, and even normally upbeat company executives are cautiously focused on a coming “operational turnaround.”
But with all of the bearishness factored into Golden Star’s shares, the question for typically contrarian-minded precious metals investors then becomes – is a 2005 comeback in the works for the company and its shares?
Thanks to the startup of the company’s Ghanian Wassa mine, group production for the coming year is set to rise to the 250,000 ounce range, while costs should remain under control in the $250 range. Yet while the company’s long-awaited growth has begun to be realized, serious questions remain on when – and if - the true potential of Golden Star will be achieved.
Foremost on Golden Star’s agenda is a successful year of operations at the recently opened Wassa. Thanks to a series of exasperating construction delays from the mine’s contractor, production was delayed from the fourth quarter of last year until this March. While the mine is set to churn out some 100,000-plus ounces for 2005, cash costs will remain fairly high – in the $280 to $300 per ounce range. The company is optimistic that costs will drop by $80 per ounce in 2006 to average following the mine’s full ramp-up and a connection to the national electric grid.
Golden Star must also ensure an increase in cost-effective production at its Bogoso/Prestea mine. Thanks to a heavy rainy season, “scheduling issues,” and a lower gold recovery rate, production slumped by nearly 30,000 ounces to 147,000 ounces, and operating cash costs climbed by over $70 an ounce to $250. While production is expected to be more or less flat in 2005, the company has placed high hopes on its plan implement a relatively new oxidation process to double production by 2007 – and in the process become cash-flow positive. But for a company with more than its share of operational missteps mining an economically cyclical product, a lot can happen in two years.
Other intangibles in Golden Star’s future are its continued exploration in historically gold-rich West Africa and select regions of South America, and the company’s acquisition of a 9.5% stake in Australia’s Moto Goldmines, currently exploring for gold in the volatile Democratic Republic of Congo.
Golden Star’s management has gone to great lengths to reassure existing shareholders while attempting to rekindle investor interest. CEO Peter Bradford spent the bulk of the introductory letter to the company’s recent annual report apologizing to shareholders and addressing specific operational issues. And, the company has placated investors by swearing off frivolous takeover attempts such as 2004’s long-shot bid for West African rival IAMGold – which wound up costing Golden Star $4.1 million in related expenses and considerably more in evaporated market capitalisation.
In addition, Bradford has won fans by swearing off shareholder dilution in the near term. Golden Star is expected to be able to finance the bulk of its 2005 capital costs through operational cash flow and a recent $50 million convertible bond issuance. Most of this money is expected to finance Bogoso’s expansion.
But for all of the company’s hopes of an operational turnaround – Golden Star’s success, like those of every unhedged gold miner, will rest on the shoulders of gold bullion itself. For better or worse, Golden Star is among the miners most leveraged to the price of the gold, with recent company estimates showing a $10 change in the price of gold affecting pre-tax earnings by some $2 million. It’s a sizeable amount when one considers that Golden Star only managed $2.6 million in net income last year.
Resource Investor attempted to contact both Bradford and CFO Allan Marter for this story. As of press time, neither was able to respond.
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