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Etruscan has acquired strategic land positions in three important greenstone belts in Burkina Faso: the Youga Gold Belt, the Banfora Gold Belt, and the Boromo Gold Belt. This strategic land package covers over 3,200 km2. Etruscan also has landholdings in Ghana located on the Bole-Bolgatanga Gold Belt which represents the southwest extension of the 80 kilometer Youga Gold Belt located in Burkina Faso. These landholdings consolidate Etruscan's land position over the Youga/Bole-Bolgatanga Gold Belts where Etruscan now controls in excess of 1,000 km2.
Youga Gold MineThe Mine
The mine commenced production in February, 2008 and commercial production and substantial completion of construction was effective on July 1, 2008. The initial open pit mining operation is comprised of five pits with the ore being processed over an initial 6.6 year mine life through a conventional gravity-CIL (carbon-in-leach) plant with a design capacity of one million tonnes per annum. Location The Youga Gold Mine is located approximately four kilometers north of the Ghanaian border and 180 kilometers southeast of Ouagadougou, the capital city of Burkina Faso on the 80 kilometer Youga Gold Belt. Ownership Etruscan, through its wholly owned subsidiary Cayman Burkina Mines Ltd, holds a 90% interest in Burkina Mining Company (BMC) which has been granted the rights to exploit the Youga Gold Deposit. The remaining 10% of BMC is held by the Government of Burkina Faso. Youga Resource and Reserve The Youga Gold Deposit feasibility study completed January, 2005 by RSG Global (Pty) Ltd. and MDM Ferroman (Pty) Ltd. as updated October, 2006, concludes that Youga will produce an average of 88,000 ounces of gold per year over a 6.6 year mine life from five deposits. The resource estimates (which include mineable reserves) at a 1.0 gram per tonne cutoff grade for the five zones ( A2 Main, A2 East, A2 West Zone- One, A2 West Zone-Two and A2 West Zone-Three) were prepared by RSG Global in accordance with National Instrument 43-101 and are summarized as follows:
The updated life-of-mine reserves at Youga as at June 30, 2009 calculated by the Company using a US$700 per ounce gold price are estimated at 6.2 million tonnes with an average grade of 2.7 grams per tonne containing 534,000 ounces of gold. In addition, 1.7 million tonnes have been classified as marginal ore with an average grade of 0.69 grams per tonne. This material will be stockpiled separately and considered for processing at the end of the mine life. This material had been classified as waste in the 2006 feasibility study reserve estimation.
Mine Development and Operations Milling of ore at the Youga Gold Project commenced in February 2008 and commercial production and substantial completion of construction was effective July 1, 2008. The initial mining operation is comprised of five pits with the ore being processed through a conventional gravity-CIL (carbon-in-leach) plant with a design capacity of one million tonnes per annum. The initial ore reserve is estimated at 6.6 million tonnes, allowing for a mine life of 6.6 years at the proposed processing rate. All of the ore and waste will be mined from the open pits using conventional mining equipment. The treatment plant includes direct-dump ore receiving followed by three stages of crushing and one stage of milling. The ground ore is fed to a bank of cyclones where the over size is fed to the gravity circuit, consisting of a centrifugal concentrator and a shaking table. The under size is fed to the leaching circuit. A total of six tanks are being used to leach and recover the non-gravity recoverable gold on activated carbon. The gold is then extracted from the activated carbon and deposited using an electrowinning step. The recovered gold is heated in a smelting furnace and then poured into gold dore bars. Based on the Youga Feasibility Study test work, the overall gold recovery is anticipated to be in the range of 93 to 94%. Drilling and blasting is required prior to mining. All of the pits contain hard-rock (ore and waste) material, and there are mineral free digging areas. Following blasting, the ore is excavated and transported by conventional mining gear. The primary fleet consists of a 120 tonne excavator and 100 tonne haul trucks. The drilling and blasting is being undertaken under contract with Nitrochimie SNC and the mining (load/haul) under contract with PW Mining International Limited. The primary water supply for the plant is pumped from the nearby Nakambe River via an 11 kilometer pipeline to a raw water storage pond. The tailings area is designed to maximize water recovery in an effort to minimize the primary water demand. Permanent power supply will be by way of grid power from the nearby Ghanaian national power grid operated by the Volta River Authority. A 21 kilometer powerline is being built from the town of Zebila in Ghana directly to site. The capacity of the line is designed for a minimum transmission of 10 MW. Full on site back up power generation capacity (8 mega watts) is provided via diesel generators. The diesel generators are presently being utilized until grid power is available and thereafter will ensure that milling operations continue uninterrupted should there be any periodic load shedding during the summer months. The power plant was supplied and commissioned by SDMO of France. Employment on the Youga Gold Project during production is approximately 350 full time employees including both expatriate and local positions. There is a program of extensive training of the local work force for the management and skilled positions. In the longer term, it is anticipated that Burkina Faso nationals will fill the majority of the operating and management positions within BMC. Economics and Financing The total capital expenditure for the development of the Youga Gold Mine including preproduction and financing costs was $83.5 million. These costs were funded in part by a US$35 million senior debt facility and a US$7.5 million subordinated debt facility provided by RMB Australia Holdings Ltd. ("RMB") and Macquarie Bank Limited ("Macquarie"). The debt facilities were arranged by RMB Resources Limited of Australia. The senior debt facility is structured as a full recourse loan to the Company until economic and technical completion conditions have been satisfied, upon which the debt facility converts and becomes non-recourse to the Company and is secured by all of Etruscan's interests in the Youga Gold Project. Standard project finance security provisions apply. The loan is repayable on a quarterly basis over a 4-year term and bears interest at LIBOR plus 3% pre-completion and LIBOR plus 2.5% post completion. The facility was fully drawn down during 2007. Subsequent to November 30, 2007 the Company completed and drew down the US$7.5 million subordinated debt facility. The subordinated loan is repayable in two equal quarterly instalments following the repayment of the senior debt facility and bears interest at LIBOR plus 3.5%. Initial draw down under the senior debt facility was subject to the Company satisfying a number of conditions precedent including the implementation of a gold price protection program. In January 2007, the Company implemented a gold price protection program for the Youga Gold Mine comprised of a combination of bought put options and sold call options whereby 100% of gold production for the first 60 months (456,102 ounces) is price protected at a minimum price of US$629 per ounce. The put options were funded by writing call options covering 246,296 ounces over the same 60 month duration having a strike price of US$700 per ounce. The fixed monthly ratio of call options to put options is 0.54 to 1 (246,296 ounces / 456,102 ounces) with the put option volumes matched to the production schedule in the October 2006 Youga Feasibility Study Update. The program requires no cash or other margin. As a result of the extended construction schedule, primarily due to the exceptionally heavy rains during the July to September period, the Company elected to settle for cash certain delivery obligations under the $700 call options for the first six months of the program (September 2007 to February 2008). In 2007 the Company settled for cash, delivery obligations aggregating 10,554 ounces at a net cost of $630,000. In 2008, the Company settled for cash, additional delivery obligations aggregating 19,702 ounces at a net cost of $3.7 million. In the eight months ended November 30, 2008, the Company also delivered into the hedge obligation a total of 25,628 ounces from production. Gold Production and Sales Gold production for fiscal 2008 which comprised the five months of commercial production ended November 30th aggregated 29,305 ounces at an estimated cash operating cost of US$598 per ounce. A total of 371,000 tonnes of ore were milled during the period at an average mill feed grade of 2.93 grams per tonne. The mill throughput represented 89% of forecast as certain aspects of the operation continued to be optimized during the period. Gold sales for the five month period aggregated 26,988 ounces which generated cash revenues of $22.3 million. A total of 19,022 ounces were delivered into the $700 per ounce hedge commitment and 7,966 ounces were sold at spot prices for an average realized gold price for the five month period of $746 per ounce. Commencing in December 2008 the operation experienced a decrease in the availability of the diesel generators that provide power to all aspects of the milling operation. This problem continued to impact the operation through the first six months of 2009. These generators were never intended to provide power on a continuous 24-7 basis and during the first half of 2009 a number of the generators required major maintenance which resulted in reduced plant availability. This situation has been mitigated by the recent sourcing of three 1.0 MW Caterpillar generators to the Youga mine site all of which are operational. The addition of these three new generators has reduced the draw required from the existing backup generators and will ensure security of power supply until the grid power is connected later in July. The 22 km grid power line from the town of Zebila in Ghana to the Youga Mine site is in its final stages of completion and power supply is expected to be available at Youga by the end of July. A second factor contributing to reduced gold production during the first half of 2009 was lower than forecast drill rig availability for the blasting of ore and waste. The drill rig availability of the drill and blast contractor improved during the second quarter but total material blasted was still 32% below forecast. The contractor continues to make improvements to the rigs to increase availability so that the backlog of waste mining in the Main Pit can be addressed. The mined ore grade for the first half of 2009 was below forecast for two main reasons. The reduced blast volumes prevented access to the higher grade ore blocks scheduled in the mine plan for the period and the quality of the blasting was poor, causing excess ore dilution. Both of these issues are being addressed and additional drill capacity is being acquired. With these issues resolved, the actual mined ore grade is expected to be in line with the projected grades set out in the Youga mine plan. These operational issues negatively impacted gold production for the first half of 2009 with 15,181 ounces in the first quarter and 13,024 ounces in the second quarter. The lower than forecast gold production resulted in the unit cash operating costs being significantly above the forecast costs. Cash operating costs for the first quarter were US$791 per ounce and US$886 per ounce for the second quarter. Cash operating costs are forecast to be significantly lower for the second half of 2009 basis increased gold production. Operations at the Youga Mine are under the direct supervision of Etruscan's newly appointed Chief Operating Officer, Stephen Stine, who has been based at site since early May. Mr. Stine's mandate is to optimize operations at Youga to achieve steady state production (plant throughput of 80,000 tonnes per month and minimum monthly gold production of 7,000 ounces), and in this regard he is also overseeing the strengthening of the mine management team. During the first six months of 2009, gold sales aggregated 30,680 ounces which generated cash revenues of US$21.9 million. A total of 28,266 ounces were delivered into the US$700 per ounce hedge commitment and 2,414 ounces were sold at spot prices for an average realized gold price for the first half of 2009 of US$713 per ounce. Additional Exploration on the Youga Mining Permit The Company has completed regional and detailed mapping as well as airborne and ground geophysics identifying a number of exploration targets within the Youga mining permit. The Company continues to evaluate near-surface mineralized zones that can provide additional mine reserves. Six potential satellite deposits are known to exist within a three kilometer radius of the Youga mill site: the Nanga Zone, the Leduc Zone, the A2 Village Zone, the Village Tail Zone, A2 West Zones 4 & 5, and the Zegoré Zone. In 2008, the Company completed sufficient work to release resource estimates on two of these zones in the mining permit as follows:
Insufficient drilling has been carried out to categorize any of these resources as "measured". Additional drilling is planned on all zones to increase the confidence level of the resource categories.  Satellite Deposits and Strategic Land Package click to enlarge Youga Gold Belt - Burkina Faso EastOutside of the Youga mining permit, Etruscan holds exploration permits covering over 1,000 square kilometers, which cover the 80-kilometer strike length of the Youga Gold Belt. Regional exploration on these permits has already identified significant target areas at Zerbogo (25 kilometers southwest of Youga), Bougre (13 kilometers southwest of Youga) and Bitou (25 kilometers northeast of Youga). The most promising targets are situated on the Bitou permit at Ouaré, some 35 kilometers northeast of the Youga mill site. In 2008, the Company completed sufficient work to release resource estimates on Ouaré as follows:
Banfora Gold Belt - Burkina Faso WestThe Banfora Gold Belt located in Western Burkina Faso extends for over 150 kilometers and continues into Côte d'Ivoire, where significant gold occurrences have been reported. Etruscan holds exploration permits along the Banfora and Houndé Gold Belt covering over 1,600 square kilometers. The Banfora Gold Belt is one of the most under-explored volcano-sedimentary belts in Burkina Faso. Limited regional mapping and geochemical surveys were carried out in the belt by junior explorers in the mid-late 90's. In recent years, gold digging activity (orpailleur fields) has been undertaken in the northern parts of the belt. Etruscan has conducted regional exploration over the Banfora Gold Belt. Follow-up pitting and auger drilling has delineated four primary and eight secondary drill targets. Drill-ready targets on the Komoe Permit include Phaco Hill (350 meter long target with 0.5 -- 4.1 g/t in rock samples coincident with regional arsenic anomaly), and Siniko West (two targets comprising a 700 meter strike length up to 1.3 g/t from pits and auger drilling). Drilling on the Kangounadeni Permit will focus on the Diarabakoko target where recent gold digging has taken place with assays up to 16 g/t along a strike length of 200 meters within a soil anomaly extending for 600 meters. Additional regional soil targets remain to be tested with auger drilling.  Click to enlarge Boromo Gold Belt - Burkina Faso NorthAn initiative has been undertaken to develop a land position in the Boromo gold belt, which hosts the Bissa Gold Deposit of High River Gold Mines Ltd. with 662,000 ounces of indicated and 669,000 ounces of inferred resource. Preliminary investigations by Etruscan in the areas of active gold digging suggests that the potential exists for significant gold discoveries and a drill program is presently being undertaken by Etruscan. Maps and PhotosFirst Gold Pour Youga Gold Mine | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Crushed ore on Stockpile | Gold Table | Ore on conveyor belt |
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| First gold pour | |||
| View Video of Ball Mill |
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