Appalaches Buys a Gold Producer in Nova Scotiaadmin
Ressources Appalaches has just signed an agreement to acquire the gold producer Dufferin Resources, located in Nova Scotia. The transaction comprises the acquisition of the ramp-access Dufferin Mine, together with its processing plant (mill), mining lease, environmental permits, and all the other infrastructure required for production.
The cost of the transaction was established at $4,000,000, payable in four instalments spread over three years: a first instalment of $500,000 payable following a due-diligence check lasting no more than five months; a second instalment of $500,000 11 months after the signature; a third instalment of $1,500,000 23 months after signature; and the final instalment of $1,500,000 35 months after signature of the agreement. Once the final payment has been made, the acquisition will be free of all royalties. In the meantime, Appalaches must pay a royalty of 2% to Dufferin Resources. Appalaches intends to make the payments out of its net income from production.
The ore deposit at the Dufferin Mine consists of gold-bearing quartz veins of stratiform “Saddle Vein” type, folded en echelon and enclosed in sedimentary rocks. Thirteen veins have been identified by earlier drilling over a distance of 900 metres, down to a depth of 400 metres. The resources in the first two veins were estimated at 152,100 tonnes at a grade of 12.8 g/t Au (figures not compliant with NI 43-101).
From 1994 to 2001, the first three veins were mined sporadically over a length of 450 metres and down to a depth of 75 metres. “The production data from this period are incomplete and open to question, but it is clear that the previous operators experienced problems regarding both the mining and the processing of the ore in the mill, and faced an unfavourable gold price. In fact, in 2005 and 2006 the addition of a flotation cell enabled a recovery of 3 g/t Au from the mine tailings” notes Andre Proulx, the Company’s President.
The Company’s objective is to put into production a 1,500,000-tonne ore deposit, grading 8 g/t. This objective is based on an extrapolation of the historical resources in the first two veins to all 13 veins, over the length of 900 metres indicated by the earlier work, which includes about fifty holes. The decision to purchase the mine was then based on a gold price of $600/ounce, a grade of 8 g/t Au, and a mine life of 14 years. The due diligence will enable the accuracy of these assumptions to be checked, and will confirm the reliability of the infrastructure and of all the other legal aspects.
“After more than 18 months of negotiations, we are pleased to be finally taking over the Dufferin Gold Mine and to direct our efforts towards putting the existing mill back into production as quickly as possible. This is a very important event for Appalaches, which will now be able to move from being an explorer to a producer of gold in the near to medium term” observes Andre Proulx, the Company’s President.
Pictures of the Dufferin Mine and its mining facilities are available on the Company’s website at www.ressourcesappalaches.com.