Canadas Desert Sun Mining Corp discovered a new gold deposit at its Jacobina mine in Brazil that could significantly expand its inferred mineral resources, the company said Monday.
In a statement, the company said the new deposit, called the Foot Wall Reef, is still being measured. However, it could boost Desert Sun's current program to produce 250,000 ounces of gold per year in Brazil from late 2009.
"The discovery of the Foot Wall Reef close to our production area is a very exciting development for Desert Sun," said Peter Tagliamonti, vice president of operations.
He said preliminary signs are that the company could use its current equipment and infrastructure to mine the zone.
Desert Sun's current measured and indicated resources are put at 24.8 million tonnes of ore with a gold content of 2.53 grammes per tonne, equivalent to 2.05 million ounces of gold.
Inferred resources show a further 22.2 million tonnes of ore containing 2.61 grammes of gold per tonne, equivalent to 1.9 million ounces of gold, the company said.
Desert Sun started producing gold at its Jacobina mine in Bahia state in July 2005 and expects to produce 55,000 ounces from this site in 2005.
Next year, output at Jacobina will grow to full capacity of 115,000 ounces per year under the present production program, said company investor relations vice president Naomi Nemeth, adding that investments in Jacobina amounted to $37 million.
"During 2006, Desert Sun will start producing at its Morro do Vento mine, near Jacobina. This should produce 15,000 ounces of gold during 2006," Nemeth told Reuters.
Morro do Vento represents a $31.2 million investment.
Start-up of the Morro do Vento mine will be followed by the start of mining operations at Canavieiras, also in the Bahia gold belt, planned in 2008. It should initially produce 20,000 ounces per year of gold, Nemeth said.
Total Canavieiras investment has not yet been released.
"The plan is to produce 250,000 ounces a year of gold in total at all projects by the end of 2009," Nemeth said.
Ore from the mines will be processed at a nearby processing plant, before proceeding to an independent refinery in Sao Paulo state and then exported, she said.