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GOLD MINING – Jacobina nears commercial rates in Brazil

BRAZIL - Toronto-based DESERT SUN MINING expects to reach commercial production at its reopened Jacobina undergroun...



BRAZIL – Toronto-based DESERT SUN MINING expects to reach commercial production at its reopened Jacobina underground mine and carbon-in-pulp mill in the Bahia gold belt of northeastern Brazil in the third quarter this year. The company expects to process 90,000 tonnes of ore in July, steadily building up processing capabilities to a capacity of 125,000 tonnes/month in the fourth quarter, COO Peter Tagliamonti said during a conference call.

“We were at 3,600 tonnes/day in May,” Tagliamonti said. “But if you run too fast, you run out of ore. So we are letting the mine set the rate for the mill.”

The first stope was completed in May and a second should be ready in June, Tagliamonti said. Desert Sun processed 70,000 tonnes in May with one stope, so reaching 90,000 tonnes before the end of the current quarter should not be a problem, he added. Desert Sun plans to have four stopes operational in 2006. Development was delayed slightly by the late arrival of two drills. However, all equipment is now on site except for two 35-t trucks scheduled to be delivered in June.

In addition, lower development costs and higher equipment efficiencies than what were expected in the feasibility study are helping to offset a stronger Brazilian real, Tagliamonti said. “We are getting a lot of cost efficiencies better than those in the feasibility study,” he added.

Moreover the feasibility study was conducted with a gold price of US$350/oz and not the current US$420/oz that Desert Sun was able to receive for the 3,200 oz it sold in May. If the real stays at the current exchange rate of 2.4 to the US dollar, it would add a maximum of US$30/oz to total cash costs to US$230/oz, CFO Stephen Woodhead said. However, the company has purchased currency protection at three reals to the US dollar for 2006, he added.

Desert Sun also expects to make a decision on production of the Morro do Vento zone in the third quarter of 2005, CEO Bruce Humphrey said. “We would like to be in development by the end of the year,” he added. The underground feasibility study is essentially complete and is expected in late May, while the milling study is expected to be completed in June. The project will be funded with internal cash, Woodhead said; however, Desert Sun also could receive funding from Brazil’s national development bank BNDES and other sources on the global market.

In addition Desert Sun has purchased a diamond drill for exploration drilling on the Joo Belo zone. Underground drilling is ongoing at the site, Tagliamonti said. Results from continued exploration on Desert Sun’s property will yield an updated resource estimate at year-end, Humphrey said.

The company’s website is located at www.DesertSunMining.com.


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