September 29, 2011 / 11:19 AM / 6 years ago

Sudanese-Canadian gold mine to expand, produce copper

HASSAI GOLD MINE, Sudan (Reuters) - Sudan plans to double gold production at its main mine run together with Canada's La Mancha Resources LMA.TO within around two to three years and launch a copper production by 2015 or later, company officials said.

The African country is expanding its gold and minerals industry to compensate for the loss of 75 percent of 500,000 barrels a day of oil output after South Sudan became independent in July. Oil is so far the dominant state revenue earner.

Sudan's government expects a gold production of 74 million tonnes this year but experts say this is hard to verify as most of the output comes from unlicensed small-scale entrepreneurs.

Sudan's by far biggest mining operation located in the desert some 500 kilometers northeast of Khartoum is investing in new leaching technology to lift gold production to between 4 and 5 tonnes annually from around 2013 at the earliest.

Gold production there has been falling because the top layer in the Hassai mine has been mined for 20 years, making deeper drilling and better technology necessary.

Output will be around 2.3 tonnes in 2011 and probably less next year as more pits are being closed, said Denis Baillargeon, site manager at the Hassai gold mine.

But probably from around 2013 gold production will significantly pick up once a new carbon in leach (CIL) plant -- costing maybe $150 million -- will be in place.

"2013 we will have the new plant. We are going to produce in the range of 4 to 5 tonnes a year for three years," Mutassim Awad Mohd, processing engineer and deputy site manager, said during a visit to the site on Wednesday.

COPPER PRODUCTION

He said gold production could rise to 6 or 7 tonnes annually when the government-controlled Ariab Mining Company, in which La Mancha holds 40 percent, will produce there at least 50,000 tonnes of copper annually by 2015.

More gold is also expected in the same copper deposit in the remote mining complex, an almost five-hour drive from the Red Sea port Port Sudan. A small plane serves the mine twice a week.

"The copper we will produce 50,000 tonnes per year for 6,7 years," said the deputy site manager as massive machines crushed gold ore.

"This is the only proven reserve we have now but we expect to duplicate that because this is only (from) three main locations. We have other 12 locations to look," he said.

Exploration manager Dan Hamer said exact forecasts were difficult but studies pointed to rich copper and gold deposits beneath the currently mined gold layer.

"We have a very promising deposit here which comprises a surface cap of about 80 meters which is rich in gold which has been mined for the last 20 years. Below that is the primary deposit which contains a lot more copper," he said.

"The potential for volcanic massive sulphide deposits is really, really significant," he said.

But executives said the original time frame to have the CIL plant running in 2013 and start producing copper from 2015 could be slightly delayed.

Sudan expects gold to bring in about $3 billion in export revenues in 2011, the mining minister told Reuters in April.

Editing by James Jukwey

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