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CHESAPEAKE GOLD CORP LIVE @ PDAC - VIDEO LINK
For the video link click below:
http://www.resourceintelligence.net/chesapeake-gold-livepdac/16819
Regards,
Anna Tse, Executive Assistant
Chesapeake Gold Corp.
Suite 201-1512 Yew Street
Vancouver, BC V6K 3E4
Ph: 604-731-1094
Fax: 604-731-0209
Chesapeake Gold Live @ PDAC
By admin .
April 20,
2011 .
1:05 pm .
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Chesapeake Gold Live@PDAC
Chesapeake Gold Live@PDAC
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Resource Intelligence Speaks with Chesapeake Golds Gary Parkison
See the companys profile HERE ,
including resource calculators, charts, news and more.
RI: Your Metates project is getting a lot of investor interest, this is a
huge project and I think much bigger than most investors could possibly
realize.
In production this would be the fifth biggest gold producer and
fifth biggest silver producer in the world.
Youve been on this project
since it was first drilled, before it was Chesapeakes, havent you?
GP: I first came on the project in 1992.
At that time Cambior acquired the
project and I was a project manager advancing the project to prefeasibility
study stage, which was finalized in 1997.
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RI: We look at you there since the get-go, we look at Randy Reifel the CEO
of the company and Randys last project sold for close to $400 million and
he has done that on multiple occasions.
I guess what youre looking to do is
something really huge here that could be vended off and show massive upside
to investors?
GP: Correct.
That is exactly right, Randy has a proven track record in that
sense and this would be his third project that he would basically advance
for sale and this is by far the biggest project that hes ever undertaken.
RI: How big is it?
GP: It is clearly one of the largest gold and silver resources that is still
undeveloped left the world.
Total measured and indicated gold is about 17
million ounces and about 463 million ounces of silver.
We add in the
inferred and convert everything to gold equivalent resource, were talking
somewhere around 28 million ounces of gold equivalent.
RI: Randy mentioned earlier that there is significant potential for upside
here with possibly 20 percent growth in the resource.
GP: Twenty percent might not sound like a whole lot to most groups but you
have to realize that we are starting out at a very high level so were
talking about adding another 6 million ounces of gold.
RI: Weve talked a bit about the size, how does that translate into cash
flows?
GP: The cash flow for the Metates project would be substantial.
Right now we
are looking at upping the actual production rate from 90,000 tonne a day,
which was defined last year in the PEA, up to 120,000 tonnes a day.
At
120,000 tonnes per day we would be putting out in terms of gold equivalent
around 1.15 million ounces per year for 20 years on average.
That net cash
flow comes in at around $600 million per year on average.
RI: It can put out a lot of cash but its going to cost a lot to start it
off on the capital side.
What would a Metates mine cost?
GP: The basis for the PEA which came out last year was a 90,000 tonne a day
rate and with that the capital cost was about $3.2 billion.
What we have
done more recently is evaluate with increasing the production rate to
120,000 tonnes per day and at the same time outsourcing two major capital
costs components.
That would be the dedicated power plant that allows us to
get very low electric power cost and an oxygen plant.
We havent talked much
about the metallurgy yet but an oxygen plant is a big component of a
pressure oxidation plant which is really key for making the Metates ore body
work.
If we outsource those two components were basically back where we
started at about $3.2 billion capital costs.
RI: What I like about what you have been able to do with this project and
what perhaps the previous operators hadnt considered is that you are able
to use the landscape, which in some cases people may have thought of as an
impediment, to your advantage.
Gravity, in terms of piping the slurry down
to more suitable land below and using the valleys in there for your tailings
and so on.
How far does that go to improving the economics of the project?
GP: It was certainly a significant breakthrough for us when we redesigned
the processing flow sheet to take advantage of the natural topography.
The
biggest breakthrough there was probably the identification of a large
limestone resource some distance off to the west and downhill from the mine
site.
How the project is configured now is that we have the Metates mine
site, the tailings and the waste dumps all sited there, as well as natural
topographic drainage there, but as part of the processing we need to have
access to a large limestone resource and we located one of those resources
downstream about 100 kilometers away.
We have a concentrate pipeline that
basically takes the ground material from the mine site downstream and
downhill to this more suitable facility where the limestone is and the rest
of the processing will occur.
RI: The limestone is used to neutralize the acid, is that correct?
GP: Yes.
The acid that comes off the pressure oxidation step which is the
key to unlocking the value of the gold is self.
RI: How important is that? What you end up with are cash costs of about $350
to $360 an ounce including your zinc credits and you have a huge zinc
resource tied in here as well.
GP: Correct.
We dont really talk too much about the zinc but its there and
its basically recoverable at very low cost and it gives us a savings or
credit on our cash costs for gold and silver of about $50 an ounce.
We
actually think we could improve on that with some work were undertaking
now.
RI: So youve got about 20 million ounces of gold and about 525 million
ounces of silver and about 3 billion plus lbs of zinc.
Whats next, what
milestones does Chesapeake have to achieve to show investors that this is
going to become a mine?
GP: We are preparing an updated PEA now and we will probably be releasing
the results of that in the next day or two.
That basically will flush out
this 120,000 tonne a day case, and the impact of outsourcing some of those
capital costs that we talked about.
Going forward, we started a drilling
program there last week with hopes to do a resource expansion but also to
convert inferred tonnes to indicated and that way we can take advantage of
the entire resource base as we move forward to a preliminary feasibility
study, which is slated for completion later on this year around November or
December.
Well be de-risking the project along the way, which is a critical area for
us.
Well be doing more extensive pressure oxidation test work, more
flotation test work and generally more metallurgical testing as well as
drilling and re-engineering a few aspects in an attempt to continue to lower
our operating costs as well as the capital costs.