Citigold Corporation has signed a Memorandum of Understanding (MoU) to partner with an Indian consortium to tender for the assets of Bharat Gold Mines Limited (BGML). The assets principally comprise mining leases, land and plant in the heart of the Kolar Gold Field, India.
Citigold has been conducting field visits and investigations on the project in southern India since 2006. India plans to auction at least three gold mines this year, including Kolar.
The Kolar Gold Project is 80km east of Bangalore in Karnataka State. The gold field is about 60sqkm, although the enclosing schist belt is some 80km long.
The consortium members who have partnered exclusively in the project are Citigold and Pan India Network Infravest Limited, which is part of the giant Essel Group conglomerate.
The consortium is collectively referred to as EGCITICO and the purpose of the alliance is to acquire the BGML assets from the Government of India, which had previously operated the mines as a Public Sector Undertaking.
Citigold says this opportunity is a part of a long-term strategy to eventually have an interest in another world-class gold project in addition to its main priority, the Charters Towers Gold Project in northwest Queensland.
Citigold has partnered with a very strong local partner in India, a strategy it believes is essential for success in foreign markets. “Involvement in this large gold consuming market should build our business and gradually attract additional investment interest into Citigold,” the company says.
The Kolar field produced 25 million ounces of gold over 150 years down to depths of 3200 metres. A combination of rock stress problems, inefficient work practices and a low world spot price for gold (under US$300 per ounce) resulted in the Indian Government mines operator generally stopping production in 2001.
The project is of a similar age, geology and mineralisation style to the Kalgoorlie gold field in Western Australia (60 million ounces).
From 1951-60 the field produced 54,125kg (1.7 million ounces) of gold from 5.29 million tonnes of ore at an average grade of 10.23 grams/tonne and from 1961-70 produced 32,450kg (1 million ounces) from 4.54 million tonnes at a grade of 7.15 grams/tonne.
Citigold believes there is the potential opportunity to obtain early gold production from re-treating some 32 million tonnes of tailings, open pit mining (potentially a continuous ‘superpit’) and production from shallow underground workings down to 600 metres.