Effective December 31, 2007 the Company owns 100% of the Bjorkdal Gold Mine. In 2006 the Company acquired an option from Minmet plc to purchase the holding company for the mine, Bjorkdalsgruvan AB, and on December 31, 2007 the Company exercised its option and acquired all the shares of Bjorkdalsgruvan AB. Bjorkdalsgruvan is now a wholly owned subsidiary of Gold-Ore. The assets of Bjorkdalsgruvan include the fully-operational gold concentrating plant, all necessary environmental permits, the tailings management facility, the open pit and associated mineral resources.
As a result of gold sales from the operation of the plant at the mine, fed by stockpiled material, some newly mined open-pit material, and material from underground development operations, the Company is now generating cash flow from the mine. However, as the Company continues to carry out underground development at Bjorkdal and is in the process of completing an optimization feasibility study on the underground operation of the mine, the earnings associated with mining activities and operation of the plant are netted against the Bjorkdal mineral property acquisition and exploration costs. When a feasibility study and reserve statement has been completed at the minesite, and production from underground mining has reached a normalized level, the Company will consider the mine to be in commercial production. The Company anticipates that this will occur by late 2008.
Location and Access
The Bjorkdal gold mine is located 30 km along paved highway northwest of the city of Skelleftea and 750 km north of Stockholm, Sweden. Skelleftea is a modern city with daily flights to Stockholm. The area has a long history of mining and strong economic ties to the industry. Developed infrastructure includes railway and paved highways connecting the community to all of Sweden. Low cost hydropower and a skilled labour force further support the industry. The climate in this area of northern Sweden is moderated by the Gulf Stream and is very similar to Timmins, Ontario.
Property History
The Bjorkdal mine was discovered by Terra Mining AB by regional till sampling. The first anomalous gold values in till samples were found in 1983 and bedrock values were discovered in 1985. Definition drilling was started in early 1986; the feasibility study was finished in May 1987 and a production decision was made in July 1987. The first shipment of gold concentrate was made in September 1988.
Late in 1996, Williams Resources Inc of Toronto purchased Terra Mining and took over ownership of the mine. However, gold prices plummeted shortly thereafter and Williams placed the mine into receivership in June 1999. The property was dormant until 2001 when private concerns purchased the assets from the banks and started processing low grade stockpiles. Minmet acquired 50% of the mine in March of 2003 and the remaining 50% in October, 2003. Minmet extracted ore from the open pit during 2 brief periods in 2003 and 2004 and has principally processed low grade stockpile material.
The tables below summarize the production from the Bjorkdal mine. Table 1 provides the data for the period 1988 to 1999 when the open pit was in full scale operation. Table 2 mainly reflects the processing of low grade stockpiles.
Table 1. Björkdal Production 1988 to 1999
Year
Mill Feed (tonnes)
Head (g/t Au)
Gold Produced (Ounces)
Recovery (%)
1988
147,658
2.26
9,559
89.1
1989
475,313
2.86
39,810
90.9
1990
612,892
2.56
45,383
89.9
1991
764,504
2.65
58,466
89.8
1992
872,395
2.95
74,287
89.9
1993
839,793
3.33
81,552
90.7
1994
877,247
2.63
68,162
92.0
1995
1,156,756
2.11
71,288
91.0
1996
1,275,584
2.31
86,191
91.0
1997
1,288,382
2.49
92,498
89.6
1998
1,330,373
1.77
67,299
90.0
1999
635,231
1.5
27,514
N/A
Total
10,276,128
2.41
722,009
Table 2. Björkdal production 2001 to 2007
Year
Mill Feed(tonnes)
Head (g/t Au)
Gold Produced (Ounces)
Recovery (%)
2001
302,740
1.10
8,926
84.2
2002
1,190,206
1.02
33,754
86.2
2003
1,198,341
1.30
43,207
86.4
2004
1,193,719
0.94
30,601
84.8
2005
1,197,330
0.68
22,240
84.8
2006
1,209,599
0.61
20,503
87.2
2007
1,109,483
0.63
19,198
85.5
Total
7,401,418
.88
178,429
85.8
Resources
A new independent NI 43-101 compliant resource estimation for Bjorkdal was completed by Wardell Armstrong International Limited ("WAI") in March 2008. The Company received two alternative resource estimates utilizing different assumptions for potential open pit mining and for underground extraction. WAI reported the open pit scenario resources using a 2.5 metre minimum mining width and 0.3 grams per tonne (g/t) gold cutoff grade. The underground mining scenario resources were reported using a 3.0 metre minimum mining width and a 1.5 g/t gold cutoff grade. Open pit and underground mining scenario resources are shown in Table 1 and Table 2 below. The open pit mining scenario resources are inclusive of the underground mining scenario resources and are proximal to the open pit.
Table 1 - Bjorkdal Open Pit Mining Scenario Mineral Resources
(0.3 g/t cutoff grade, 2.5 metre minimum mining width, WAI March 2008)
Resource Category
Tonnes
Gold Grade (g/t)
Ounces Gold
Measured
Indicated
Measured & Indicated
Inferred
2,040,000
6,870,000
8,910,000
18,060,000
1.74
1.69
1.70
1.53
114,100
373,300
487,400
888,500
Open pit scenario resources were estimated using multiple indicator kriging (MIK), utilizing similar parameters as were used to establish the 2005 resources (NI 43-101 Technical Report previously filed on SEDAR). A modified search ellipsoid which reflects anticipated pay shoot orientation was introduced into the 2008 model.
The underground mining scenario resource was estimated using conventional block modelling techniques, whereby wire-frames for the individual veins are established and evaluated separately. An inverse power of distance cubed estimation method was used to interpolate grades into the model. Resources external to the identified wire-frames were also estimated using an inverse power cubed estimator with 11 metre by 1.5 metre by 7 metre search radii (along-plunge by across-strike by dip).
Table 2 - Underground Mining Scenario Mineral Resources
(1.5 g/t cutoff grade, 3.0 metre minimum mining width, WAI March 2008)
Resource Category
Tonnes
Gold Grade (g/t)
Ounces Gold
Indicated
Inferred
467,000
421,000
4.72
5.65
70,900
76,500
Mineral resources which are not mineral reserves do not have demonstrated economic viability. There are no known issues that materially affect the estimations of the mineral resources.
Note - Subsequent to the completion of the March 2008 resource estimation at Bjorkdal, another 40 holes were drilled underground. An updated resource estimation based on the results of these 40 drill holes is expected in the fall of 2008.
Geology
The Bjorkdal Mine is located in the eastern part of the Paleoproterozoic Skelleftea district. This 1.9 billion year old volcanic arc hosts close to 100 Zn-Cu-Au-Ag volcanic-hosted massive sulphide deposits (VHMS) of which 28 have been mined historically. The best known mine in this area is the famous gold-rich Boliden deposit which is located just 12 km from the Bjorkdal mine. The Skelleftea district consists of a lower volcanic sequence (Skelleftea Group) overlain by a younger sedimentary sequence (Vargfors Group). The 3 km thick Skelleftea Group is composed of mainly felsic volcanic rocks and the upper part of the Group hosts most of the VHMS deposits. The supracrustal rocks of the Skelleftea District were later cut by a variety of intrusions.
The gold at Bjorkdal is associated with cm to m wide subvertical quartz veins within a biotite-altered granodiorite. The gold mineralization is localized near the contact between the intrusive and the overlying Skelleftea Group. The veins mainly trend NE and NNE and terminate at the sediment-intrusive contact. The gold is found both as free milling gold and also associated with pyrite.
The Bjorkdal belongs to the class of gold deposits known as "Intrusion Related Gold Systems" or IRGS. This class of deposits includes some new multi-million deposits such as the Fort Knox mine (6.7 Moz Au), Pogo (5.1 Moz Au), Donlin Creek (23 Moz Au) and Dublin Gulch.
Processing Plant
The processing plant at the mine, which operates at a capacity of 3,400 tonnes per day, was built in 1988 and has been well maintained. The plant consists of a coarse crusher, a rod and ball mill, gold gravity concentration circuit and flotation circuit for gold bearing pyrite. Feed material is sourced from underground, open pit and stockpiles. Gold recoveries average over 85%. During 2007, the mine produced 19,200 ounces of gold from material primarily sourced from stockpiles. The Company successfully increased production during the first half of 2008 by processing more material sourced from underground, thereby increasing the head grade. The Corporate objective is to increase annualized gold production to between 60,000 and 70,000 ounces by the end of 2008.
The tailings from the plant are very benign, containing no deleterious material, and have been classified by Swedish authorities as non-toxic.
Detail of Mining Methodology
The gold-bearing veins at Bjorkdal range from less than one metre to six metres in width and commonly occur as swarms. The veins are vertical and the granodiorite host rock is extremely competent. The underground mining method being tested is longhole stoping or blast hole open stoping with sub-level spacing of 20 metres. This mining method has been used successfully in many different mines throughout the world.
Using this mining method a gold bearing vein is developed with sublevels driven along the vein. The six veins planned for testing in our initial exploration program all showed gold bearing zones, with good lateral continuity that varied in width from 3 meters wide to 6 meters wide, and in length anywhere from 15 meters long to 110 meters long. These zones are being divided into mining blocks, or stopes, with a maximum strike length (distance along the vein) of 30 meters. Wherever the gold bearing zone is longer than 30 meters, it is divided into blocks with a maximum length of 30 meters leaving a small unmined pillar between each block.
A typical 30 metre block 3 metres wide is mined as follows. An upper, (drilling) sublevel is driven 3 metres wide by 4 metres high on vein 20 metres above the lower, (mucking) sublevel, which is the same size and is driven on same vein directly below the drilling sublevel. At the far end of the drilling sublevel a production drill drills a slot raise, or initial hole, that is drilled between the bottom of the drilling sublevel to the top of the mucking sublevel. Because the sublevels are 20m apart the production drill holes are 16 metres long. Behind the slot raise the production drill drills lines of blast holes until the 30 metres long block is completely drilled.
When drilling is completed the slot raise is blasted. The slot raise is blasted retreating upwards in a series of blasts that remove between 2 and 5 vertical meters of the raise with each blast. The broken rock is removed after each blast via the mucking sublevel using a scooptram (a low profile front end loader). Once the muck from the slot raise is removed the production drill lines are blasted into the void produced by the slot raise. These lines are blasted in groups of 3 to five lines with enough muck removed between blasts to allow sufficient void for the following blast. When the entire mining block is blasted the scooptram mucks out the remaining broken ore. The scooptram is fitted with a remote control to allow mucking of material beyond the blasted brow during the final clean up.
By leaving small pillars, and changing the mining sequence, this mining method can be adapted to changing ground conditions, and can be modified to drill production holes either down towards the mucking sublevel as described, or up towards a previously developed sublevel or known mining boundary.
