May 11, 2012

Gold mine needs 165 km water pipeline

To improve production of gold, a $44 million water pipeline needs to be constructed from the Nile River to the mine located about halfway between Atbara and Port Sudan. The Hassai gold mines in in the Red Sea Hills west of Port Sudan are running out of traditional ore.

Gold has been retrieved from the ore using the traditional heap leaching method. This involves pouring cyanide through many tons of crushed rock. Gold will dissolve in cyanide and a chemical process can then remove the gold from the cyanide. Gold bars are poured on site.

Diggings at the 16 open pit mines are almost complete. In 2011, 71,730 ounces of gold were retrieved. Using this standard cyanide method, the mines will be mostly depleted by the summer of 2014. For 2012, the company expects to extract 55,250 - 60,000 ounces of gold.

Canadian based La Mancha company owns 40% of the mine, and directs the mine operations. They have a plan to use a different technology to extract more gold from the tailings. This involves the application of electricity and water in a new plant to wash the dirt, thus retrieving the final grains of gold that were not captured by the cyanide method.

Using this VMS technique, the mine expects to produce 160,000 ounces of gold in the first year, once the machinery is in place. It will take about four years to go through all 12 million tons of dirt. This method allows them to extract more from the bottom of the existing pits as well. The three tested mines show promise, so the company thinks operations could run for 20 more years.

Water permits have already been approved, and the company expects to begin 18 months of construction "as soon as ownership discussions are completed with State of Sudan." The Sudanese Minister of Mines is on the leadership team or the Board of Directors of the company operations. Funding for expansion will be be completely supplied by the company. They need a plant for machinery and operations [$83 million.] They need a 165 kilometer water pipeline to bring water from the Nile River to the mining site in the Nubian Desert [$44 million.] Electricity is required, and so it will be taken from the existing line that runs to Port Sudan. A new electrical supply line will need to be built to get to the mine site [$18 million.]

Details of the current company operations are available in the corporate presentation [April 2012.]

We previously offered some details of this project in a post about six months ago.

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