A huge and shallow gold deposit that has been intensely drilled in recent years will now be assessed for a target of producing between 333,000-410,000 ounces per annum for the partnership of AngloGold Ashanti Australia and diverse explorer Independence Group NL (ASX: IGO) which is mining nickel at the Long Shaft in Kambalda. AngloGold Ashanti is 70% owner and manager.

The established deposits at Tropicana are about 330 kilometres east of Kalgoorlie and in the centre of a group of generally north-south running licences over several hundred kilometres that stretch from east of Laverton in the north and east of Norseman in the south.

The partners agreed to proceed with a full feasibility after positive results from a pre-feasibility study (PFS), undoubtedly helped by the strong gold price, particularly in $A terms, the end to tight labour conditions and poor availability of machinery and equipment.

The PFS was based on a measured to inferred resource of 75.3 million tonnes grading 2.07 grams/tonne gold for 5.01 M oz.

AngloGold Ashanti said today that options the PFS looked at included:

  • Open pit mining of the Tropicana and Havana deposits via a conventional drill and blast, truck and excavator operation;

  • Ore processing at a rate of 6 million tonnes per annum, based on a comminution circuit comprising two-stage crushing, high pressure grinding rolls and ball milling, along with a conventional CIL circuit;

  • A flexible approach to pit design to accommodate future price fluctuations based on a planning reserve of 56 Mt @ 2 g/t for 3.6 M oz of gold;

  • Development of considerable supporting infrastructure, including construction of 220 kilometres of new road, power infrastructure and communications capacity.

Indeed the infrastructure required to establish Tropicana in an unpopulated region with a few dirt roads, no power and limited surface water should be a boon for other developing exploration projects in the region for uranium, gold and nickel.

AngloGold Ashanti said the key development issues to be addressed in the feasibility study are owner versus contract mining, and diesel versus gas power, using a third party power purchase agreement.

While the whole of the Tropicana leases and nearby properties held by others have attracted the attention of explorers, the joint venture's known mineralisation for the feasibility study is considered adequate for a 10 years mining life.

There is potential to increase resources, and mine life, through additional drilling at Havana South and other prospects. Commented AngloGold Ashanti Australia's Vice President, Mike Erickson.

Cash costs, which will depend on the mining and treatment options chosen, and gold and oil prices, could be between $A590/oz-$A710/oz ($US480/oz-$US583/oz).

The capital cost of plant and infrastructure, excluding mining fleet capital, could be about $A520 M ($US427 M).

Erickson expected the feasibility study to be completed by mid-2010, at which time -- provided regulatory approvals had been received -- the joint venture partners would consider a decision to begin development. If approved at this time, development would take about two years and commissioning would begin in the first quarter of 2013.

Tropicana is an important growth project for AngloGold Ashanti, and if development goes ahead it will make a significant economic contribution to Eastern Goldfields and Western Australia.