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General
The Fenelon Gold Project is located about 600 kilometres northwest of Montreal, Quebec in the highly productive Casa Berardi greenstone gold district. The project is 100-percent owned by American Bonanza Gold Corp. Various elements of a feasibility study have been completed, including the construction of underground workings, a mining test, commercial-scale metallurgical tests and environmental studies. Drilling is underway that will include the definition of additional gold resources sufficient for the completion of the feasibility study and for the long-term development of the project.
Cyprus Canada Inc discovered the Fenelon gold deposit in 1993. Through 1998, Cyprus and Fairstar Explorations Inc expended in excess of $8 million on the Fenelon Project. The work included extensive drilling and the preparation of an open-pit mine prefeasibility study. Cyprus withdrew from Canada and the gold business in 1998 and International Taurus Resources Inc purchased Cyprus' remaining Canadian properties, which included Fenelon and other Casa Berardi properties. Taurus re-evaluated previous work at Fenelon and determined that underground exploitation appears to offer the best potential to develop a profitable sustainable mining venture. Since 1999, Taurus and Fairstar spent more than $13 million on additional drilling, bulk sampling, underground development and resource assessment. In March 2005, Taurus merged with American Bonanza Golding Mining Corp to form American Bonanza Gold Corp. In a concurrent transaction, American Bonanza purchased the remaining Fenelon interest from Fairstar, which transferred the entire 100-percent interest in the Fenelon Project to American Bonanza Gold Corp.
To date, more than 300 diamond-drill holes have been completed at Fenelon. Every drill hole has intersected gold mineralization or related alteration. More than half of the holes intersect and define the high-grade gold deposit in the Discovery Area, which is at least 250 metres in depth, 300 metres in length and 75 metres in width. The deposit is open along strike and down dip.
An open-pit bulk-sample program has provided the direct mining experience necessary to develop an underground mining-test and feasibility program. Production from the bulk sample totaled approximately 14,000 tonnes milled, producing 4,339 ounces of gold. The metallurgical response of the bulk-sample mineralization to a conventional cyanidation mill flow-sheet was as predicted in previous tests, with an excellent gold recovery of over 97 percent. Underground development was started in October 2003. Site facilities and a full camp have been built. More than 250 metres of ramp, 550 metres of access workings and several stopes have been developed since that time. The ramp has advanced to the 5195 elevation (55 metres below surface). An 8,300-tonne bulk sample was mined from the stopes, which produced 2596 ounces of gold.
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