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The Berezitovy Gold Mine
PROPERTY LOCATION AND DESCRIPTION
The Berezitovy property is located in the Tindinski District, Amur Oblast, 900 kilometres northwest of the Oblast capital city of Blagoveshchensk. The regional centre of Tynda, with a population of 40,000, is approximately 340 kilometres northeast of the property while the closest large town is Skovorodino, approximately 123 kilometres southeast by road. The city of Tynda is located on the Baikal-Amur Railway while Skovorodino is located at the junction of the Trans Siberia and Baikal-Amur Railways. Skovorodino is approximately 2,000 kilometres west of the major port city of Vladivostok.
The nearest population centre is Urusha (4,700 people) located 50 kilometres to the south of the property, on the Trans Siberian railway and a major road.
The Berezitovy property comprises one Mineral Licence covering a total area of 1,810 hectares. The Mineral Licence (in accordance with Russian Mining Law) is in good standing, allowing exploration and mining to be carried out until 2017.
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TOPOGRAPHY
The property is located in a mountainous region with elevations ranging from 500 to 1,300 metres above sea level. Total relief from the valley bottom to the highest point on the property is 500 metres. The area has a mid mountain Taiga landscape with no permafrost. The area is covered with fulvous podzol soils and marshes. Outcrops are rare and overburden thicknesses range from 2 to 10 metres. Vegetation characteristic of the northern part of the Taiga zone comprises northern pine, birch and spruce trees.
CLIMATE
The average mean temperature for the region is -3.6 degrees Celsius. Summer temperatures can reach 36 degrees Celsius with average summer temperatures of 25 degrees Celsius. The warmest month of the year is July. Winter temperatures can be as low as -50 degrees Celsius with January being the coldest month. The average winter temperature is -30 degrees Celsius, while the January average temperature is -35 degrees Celsius.
Annual average precipitation is 600 mm with approximately 80 percent of precipitation falling in July and August and minimum values accumulating in January to February. The average snow cover is 30 to 50 centimetres in forested areas and up to 100 centimetres on windward slopes. Snow cover lasts for 165 to 180 days per year.
Average annual wind direction is from the north and north-eastern directions, with wind speeds averaging 7 metres per second (25 kilometres per hour).
HISTORY
From 1960 to 1962 and from 1974 to 1980 Amurskaya Geological Expedition (AGE) undertook geological mapping, surface and underground exploration and evaluation of the Berezitovy deposit. Between 1975 and 1980 AGE carried out approximately 18,700 metres of drilling in 59 inclined holes oriented on grid due east. Also some 2,750 metres of trenching spaced 15 to 40 metres apart were completed on the deposit. In 1980 geophysical surveys using airborne magnetic, radiometric and ground induced polarization (IP) were performed over the entire property, with a strong IP anomaly evident over the Berezitovy deposit. Regional geochemical soil sampling of the property was also undertaken with anomalous concentrations of up to 30 parts per billion (ppb) gold (Au) detected in several areas.
High River Gold Mines Ltd., on advice from Roscoe Postle Associates (RPA) (retained to perform the deposit resources estimate), carried out a programme of infill diamond drilling and underground sampling. Project operator OJSC Buryatzoloto (Buryatzoloto) completed underground sampling in cross-cuts off Adit No. 5 for metallurgical tests and a 25-hole infill surface diamond drilling programme. In 2002-2003, Buryatzoloto carried out the surface angled infill diamond drilling programme on a 20 metre by 20 metre grid in the southern and central parts of the deposit (Zone 1), and on a 40 metre by 20 metre grid in the northern part of the deposit (Zone 2). Buryatzoloto also continued to collect channel samples from trenches and underground workings along with core samples from the infill drilling programme. Collected samples were fire assayed for gold and silver and tested by chemical analysis for zinc and lead content. In addition, Buryatzoloto continued to perform density determinations and investigate tonnage factors, moisture content, friability factors and hardness of ore.
To date, some 23,345 metres of diamond drilling have been completed including 59 surface holes. The surface diamond drilling completed by AGE totals 18,700 metres and 4,644 metres (25 holes) were completed by Buryatzoloto. Underground drilling totals 8,655 metres of diamond drilling in 115 holes. Also more than 7,194 metres of underground development has been completed in 61 cross-cuts and four raises, from adits 80 metres apart. Some 40 trenches, 15 to 40 metres apart (totalling some 2,750 metres), have been dug across the deposit.
GEOLOGY
Regional Geology
The Berezitovy property is located in the Prishulkino Structural-Metallogenic Zone which forms part of the eastern flank of the eastern Transbaikal Upper Amur Region. Structurally the deposit is situated within the Magochina thrusted block of Archean age rocks and is near the intersection of the Sergachinski and Khaiktinski regional faults.
Structural events occurred in three stages: Precambrian, Mesozoic and Quaternary. The Precambian and Mesozoic rocks have been intruded by several Jurassic age plutons, ranging from alaskites to lamprophyre. The folded volcanic and sedimentary rocks have also been affected by block faulting.
Local Geology
The property is bounded on the north by the east-northeast trending Severa (North) Sergachinsky Fault, on the south by the Yuzhna (South) Sergachinsky Fault, on the west by the north trending Khaiktinsky Fault and on the east by the similarly north trending Bolshe Ilichinsky Fault. The former east-northeast trending Sergachinsky structures define a graben, whereas the latter set define an upthrust block.
The area of the Berezitovy property is underlain predominantly by Early Proterozic age biotite-feldspar gneissose granites and grandiorites. In the southern part a feldspar-pyroxene gabbro is also present. Due to the lack of outcrops, however, the general orientation the foliation is uncertain, but interpreted to be east-northeast from the regional trend of the lithologic units. To the east and west of the property Jurassic age granodiorite and diorites are present. To the south of the property, the Yuzhna-Sergachinsky Fault separates the above rocks from the Archean age Shurigiskaya and Amazarskaya Suites containing interlayered biotite gneiss and biotite-feltspar gneiss. The relative ages of the rocks were determined by potassium-Argon age dating.
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DEPOSIT TYPE
The Berezitovy Deposit is gold-polymetallic, low-sulphide type mineralization with sulphide mineral content in the range of 5 to 10%. Less than 7% of total mineable reserves are oxidized.
Gold mineralization in and around the Berezitovy property is related to explosive breccia within granitic gneisses. At the Berezitovy Deposit, this is present within a north-northwest trending and steeply southwest dipping zone of brecciated and hydrothermally altered granodiorite. This zone, and several other zones of similar orientation in the general area, may represent regional scale tension gashes developed between the east-northeast trending Severa and Yuzhna Sergachinsky faults. The uplifted block, which contains the gold mineralized zones, is in contact with younger sedimentary rocks on either side. Several granitic dikes are parallel to the regional trend and are mineralized close to the main zone.
Exploration work completed to date, by the AGE and by Khaikta, the previous owner of the property, indicates that the Berezitovy property is situated in a geologic environment amenable to mesothermal gold deposits. The geologic model is gold mineralization associated with metasomatic alteration and quartz flooding in granitic and granodioritic rocks. Observations of underground surface exposures and drill core, and mineralogical studies, suggest that the near surface oxidation zone is very shallow (5-7 metres deep) and mineralization is predominantly sulphide.
A set of east trending andesite porphyry and lamprophyre dikes cut the deposit and are generally not mineralized. Higher gold values, however, commonly occur along the dike contacts and some gold mineralization occurs in the dikes. A post mineral diorite dike separates the deposit into two parts; a northern area containing the North Zone and a southern one containing the Central and South Zones. All mineralization south of this dike is referred to as the South Zone (or Zone 1) and all of the mineralization north of this dike is referred to as the North Zone (or Zone 2). The main diorite dike is 5 to 10 metres wide, trends east-northeast and dips steeply to the northwest.
MINERALIZATION
At Berezitovy, gold is associated with polymetallic sulphides and quartz-sericite (berezite) metasomatic alteration. Locally, tourmaline, garnet and epidote are also common. The overall outline of the mineralized zone is due to the juxtaposition of the two inverted cone shaped structures (breccia pipes), which have provided channel ways to the hydrothermal alteration and the associated gold-polymetallic mineralization. Presence of shard fragments in the breccia may also indicate volcanic activity predating the mineralization. The breccia contains fragments of dioritic material within a groundmass of very fine-grained granitic and gneissic material.
TYPES OF MINERALIZATION
Gold mineralization, commonly in the range of 0.5 grams Au per tonne to 15 grams Au per tonne, is present in various facies of the brecciated zones with disseminated sulphides and in silicified rocks. Sulphide mineralization consists predominantly of pyrite, sphalerite and galena. Gold is commonly present in solid solution with silver as electrum.
MINING
The design mining rate is 1.5 million ore tonnes per year. The average mine life waste to ore ratio is 5.61:1 which necessitates an overall average daily production rate of 27,878 tonnes of material moved. The production schedule has a maximum daily production rate of 45,000 tonnes.
The Berezitovy deposit is mined by open pit mining using excavators/shovels and diesel haul trucks. All ore and waste rock requires drilling and blasting. Mining equipment consists of: Sandvik Pantera 1500 production drills, five cubic metre EKG5 electric shovels, loaders (ten cubic metre Komatsu, six cubic metre Toyo, five cubic metre Komatsu), D9 equivalent bulldozers (Komatsu and Caterpillar), fourty-five tonne Belaz trucks (with Cummins engines). The ore is mined from one open pit operation at a rate of 1.5 million tonnes of ore per year. The open pit mine is located approximately one kilometre from the processing plant site. Waste rock is placed in two main stockpile areas, one to the northwest (69 million tonnes) of the open pit and one to the southeast (20 million tonnes).
A low grade stockpile of over 1 million tonnes lies adjacent to the processing plant site for potential future processing (if economic).
Geotechnical studies have shown that the bench walls (comprised mostly of granodiorites) can support slopes of up to 75 degrees and the overall pit slope can be designed at 55 degrees, with berm widths of 6.0 metres. Benches are 20 metres high with berm widths of 6.0 metres and a batter (bench face) angle of 68 degrees above the 600 metre elevation. Below the 600 metre elevation, berms are 5.0 metres and the batter angle 72 degrees. This configuration results in an overall slope of approximately 55 degrees. Open pit main access ramps have a plus or minus 8 percent gradient to accommodate rear wheel drive haulage trucks.
The 10 percent diluted mineral reserve estimate is 13.9 million tonnes with a grade of 2.3 grams gold per tonne and 11.4 grams silver per tonne.
PROCESSING
The processing plant flowsheet consists of a standard crushing, grinding CIP processing circuit as follows:
- Crushing: Jaw crusher (48 in. x 60 in.) with grizzly
- Grinding: SAG Mill (22 ft. x 8 ft., 2,500 HP)
Ball Mill (14.5 ft. x 28 ft., 3,000 HP)
- Cyanidation and carbon adsorption
- Desorption and electrolysis
- Carbon stripping and carbon reactivation
- Refinery
- Tailings treatment (thickener, slurry pipeline, disk filtration, radial stacker, double lined zero discharge semi-dry tailings storage facility)
Overall recoveries for gold and silver are expected to be 90% and 34% respectively.
Process Flowsheet
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Plan View of Mine-site
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Zinc and Lead at Berezitovy
High River Gold is currently studying the feasibility of adding 2 flotation circuits to process the mine tailings and recover zinc and lead, and to increase the recovery of silver.
The Berezitovy deposit is a polymetallic orebody which, in addition to gold and silver, contains an historical estimated resource (B and C1 categories) of 14.1 million tonnes averaging 0.93% zinc and 0.57% lead, calculated according to the Russian Classification System (These historical zinc and lead resource estimates have been calculated according to standard Russian industry practice and do not conform to the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards and definitions for resource estimates, as set out in Canadian National Instrument 43-101 (NI 43-101). These estimates should not be relied upon until fully confirmed by a NI 43-101 compliant independently estimated resource calculation). In November 2003, Roscoe Postle and Associates were engaged to perform an audit of the historical Russian classified resource and to calculate a NI-43-101 resource for gold and silver prior to a bankable feasibility study. The Russian resource database was the result of extensive exploration in the late 1970's which included almost 40,000 metres of drilling and the development of three adits, totalling 7,914 metres, which were used to channel sample the mineralization and provide bulk samples. The zinc and lead content was not included in the audit of the database due to low base metal prices at the time. As part of their audit, Roscoe Postle and Associates requested that a 25 core-hole drilling programme be conducted to provide additional data to confirm the historical Russian database. The 25 additional core holes were also assayed for zinc and lead, and the results were included in a High River Gold May 30, 2007 press release.
Based on the initial test work performed by SGS Lakefield, the Flotation Circuit Project could be expected to recover approximately 70% of the zinc and 67% of the lead in a zinc concentrate and a lead concentrate. As well, it is expected to increase the overall recovery of gold from the currently planned 90% to approximately 92% and of silver from 34% to approximately 77% of silver.
Based on internal study and work by Starkey Associates, the Flotation Circuit Project economics appear very strong, with an estimated internal rate of return as follows:
| Metal Price Range | Zinc | Lead | IRR |
| Upper | US $1.50/lb | US $0.80/lb | Approx. 90% |
| Lower | US $0.75/lb | US $0.40/lb | Approx. 30% |
Project economics benefit from close proximity to railhead and the burgeoning Asian markets. The capital cost of the Flotation Circuit Project is estimated at US $23 million.
The impact of the Flotation Circuit Project on overall Berezitovy Mine economics is significant; by-product credits would reduce cash costs of producing gold (including the 6% royalty) by approximately 85% using the higher base metal scenario, and 25% using the lower base metal price scenario.
INFRASTRUCTURE
Access to the site is provided by a 70 kilometre all weather road.
The Amur Oblast region has a large surplus of hydroelectric power and a highly reliable supply network. Low cost and reliable power is provided to the site from the main substation at Skovorodino through a 101 kilometre, 110 KW powerline constructed by High River Gold. Average power costs during 2007 were 4.7 cents per kilowatt hour. Backup power is provided at site by 2 diesel generators.
Other facilities supporting the mining and processing operations are:
- Mine maintenance shop
- Vehicle garage
- Main warehouse with laydown area
- Fuel and lubricants storage and distribution facility
- Main electrical substation
- Filter plant and tailings storage facility
- Explosives magazines
- Water Reservoir and potable water wells located on the Khaikta River
- Sanitary landfill
- Sewage treatment plant
- Mine water settling ponds
All employees are housed on site in a camp which accommodates approximately 415 people. The camp area includes food storage, catering and recreational facilities.
All freight for site arrives at Skovorodino by rail or truck and is received at a transfer centre for trans-shipping to the mine. This centre also facilitates employees arriving and leaving the mine on shift rotation changes. This facility includes: railway siding and platform; laydown yard; and a small field office.
Mine communication utilizes satellite communication systems providing global telephone and internet services, and on-site cell phone service.
MANPOWER
The total manpower complement will be 800 persons (400 on site full time). The non-staff employees will work a month on month off rotation.
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