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Chalice Gold looking for 2-year payback on Eritrean gold mine

Chalice is planning to start construction on its US$122 million Koka gold mine development in Eritrea next year and expects rapid payback
Posted: Thursday , 02 Sep 2010

PERTH -

Chalice Gold Mines says its aspirations to emerge as a new gold player in the world class Arabian Nubian shield - the geological province that underlies much of Eritrea - will take a step forward next year with first start to mine construction on its promising US$122 million Koka mine within its Zara project.

Chalice's Managing Director, Dr Doug Jones, told the Africa Downunder conference in Perth that Koka offered estimated total cash costs of US$338 an ounce "from a very clean deposit metallurgically".

"This will produce a lot of money - close to US$600 million (US$589m) with a payback of just over two years," Dr Jones said.

"The permitting process has now been underway for a few weeks and the just completed feasibility studies show Koka as a robust and highly viable gold mine in Eritrea."

Koka will be an open pit mine with average production over an anticipated seven year life of mine of 104,000 ounces per annum.

"This is an exciting new place to be in Africa's gold exploration scene with a gold endowment within the Arabian Nubian shield of 20 million plus ounces of gold and numerous deposits and mines dating back to ancient times," Dr Jones said.

"Significantly, the area has had virtually no modern exploration but is now starting to reveal world-class projects such as Centamin's now producing 14 moz Sukari mine in nearby Egypt and Nevsun's large Bisha gold and base metal mine which is also under development in Eritrea and due on stream later this year.

"Koka's potential is reflected in the expected gold recoveries of 96.2% based on metallurgical test," Dr Jones said.

Koka has a JORC Indicated resource of 5.0 Mt at 5.3 grams per tonne gold (g/t Au) for 840,000 ounces with the bulk of the resource contained at shallow depth of less than 150 metres, and with excellent near-mine and regional exploration upside.