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Latest updates Bring Sona One Step Closer to Production at Blackdome Mill

Given the latest resource updates for Sona Resources’ (TSX: SYS, FWB: QS7) flagship Blackdome Gold Mine and Blackdome Mine’s tailings, the Canadian based junior exploration and development company is one step closer to achieving its stated goal of commencing full-scale production at its Blackdome Mill by 2013. Just this week, Sona gave details of the Preliminary Economic Assessment (PEA) for its Blackdome and Elizabeth properties, which reinforced the prospects for the property. In addition to this, the company recently listed its shares on the Frankfurt Stock Exchange, in hopes of raising its global profile and attracting investment from Europe.

In doing so, the company has signaled to the market that it is not content to rest on its laurels, but rather wishes to build on its current successes and bring its key mines into active production. This latest set of resource updates seem to show that the company will be able to build on the small scale production coming from the Blackdome Gold Mine, and in addition affirms the need, and indeed benefits, of their planned five thousand meter diamond drilling program this summer to target extensions of the known veins with the expectation of being able to add additional resources.

The Blackdome Gold Mine is 100 percent owned by Sona Resources with no underlying royalties , consisting of 45 mineral claims, 10 crown granted mineral claims and two mining leases. It is a permitted mine and milling facility located in southwest British Columbia, approximately 230 kilometers north of Vancouver and is an 18,383 hectare property near the summit of Blackdome Mountain. The property contains a modern, well maintained floatation and gravity mill with a current design capacity of 200 tonnes per day, but has so far only undergone small scale mining operations. These have, between 1986 and 1991, treated over 340 thousand tonnes of ore at a mill head grade of 20 grams of gold per tonne (g/tn), producing 225 thousand ounces of gold over a five year period.

The floatation reject tailings are fine silica sand with some clay like fractions containing less that 0.02 percent sulfur, and preliminary testing at the SGS Lakefield site indicates a recovery of 90% of gold form the tailings pond. Innovat Ltd, who interpreted the results, also suggest that tailings form renewed production at Blackdome can be placed as paste residue or dry stacked away from the tailings pond, allowing for possible mining and recovery of the gold contained within the old floatation reject tailings.

These latest studies bring resource estimates for Blackdome to NI 43-101 standards, as required by Canadian authorities, and shows an increase of around 50 percent from the 1999 historical mine resource estimate. The latest resource estimate for Blackdome Gold Mine showed 144,500 tonnes of indicated resource, at a grade of 11.3 grams per tonne of gold and 50 grams per tonne of silver, for an indicated 52,600 ounces of gold and 232,300 ounces of silver. In addition to this, the report showed inferred resources of 90,600 tonnes at grade 8.8 grams per tonne of gold and 18.8 grams per tonne of silver, for an inferred 25,900 ounces of gold and 54,400 ounces of silver. It should be noted that the resource update was based on a cut off grade of 5 grams per tonne of gold, assumed an underground mining scenario, a gold price of one thousand dollar per ounce and 100 percent mineral recovery.

The report’s assessment of the Blackdome Gold Mine tailings impoundment at SGS Lakefield was equally as buoyant for the company. The resource estimate inferred a project’s tailings impoundment of 298,389 tonnes of tailings, grading 1.5 grams per tonne of gold for an inferred resource estimate of 14,145 ounces of gold. Again it should be noted that the estimate sued a cut off grade of 5 grams per tonne, and used an average specific gravity of 2.6 for the old tailings. With these latest resource estimates, the company has affirmed its intention to bring the Blackdome mill into active production in the next three years, with the opportunity to upgrade the mill if and when required. As well as the obvious benefits from having a mill in close proximity to the Blackdome project, the company also looks to benefit from its close proximity to the company’s Elizabeth Gold property, which is located just 30 kilometers south of the Blackdome property.

The Elizabeth Gold Property is a high grade gold project, covering 10,888 hectares in southwest British Columbia and is situated along a tributary of the Yalakom River. Again, the Elizabeth Property is 100 percent owned by Sona Resources, and consists of four crown granted claims and 19 other claims. To date, the Sona Resources team have conducted four diamond drilling programmes totaling almost nine thousand meters, and in June 2009 reported an initial inferred resource estimate of 522,900 tonnes, grading an average of 12.3 grams per tonne of gold (with a cut off grade of 5 grams per tonne of gold), inferring a total of 206,100 ounces of gold for the project.

The property already has the advantage of a good infrastructure, with access from the town of Lillooet approximately 75 kilometers up the Yalakom River Forest Road, with several smaller roads accessing old mine workings and the areas proposed for exploration. This leaves the ability of Sona to transport resources for processing at Blackdome from the Elizabeth property, relatively simple, with the company already stating its intention to transport any eventual production at Elizabeth by road to the Blackdome Gold Mine gravity and flotation mill. This in effect consolidates a lot of the costs of production for the two properties, and makes the quick and effective production at the Blackdome Gold Mine itself a priority. Any production from the Blackdome site will help give a good financial platform, for any upgrades needed to the gravity and floatation mill to accommodate extra resources being processed eventually from the Elizabeth Gold Property (if and when the current 200 tonnes per day needs to be improved on), and in addition should give Sona the ability to ramp up production at both sites relatively quickly, and in a cost effective manner.

This improvement of resource estimates at the Blackdome Gold Mine and Blackdome Gold Mine’s tailings opens up the potential not just for the Blackdome project, but eventually for the nearby Elizabeth Gold property as well. The Preliminary Economic Assessment contemplated underground mining at the Blackdome and Elizabeth properties, with 200 tonnes per day mill throughput over an eight year mine life, to recover 183,600 ounces of gold and 62,500 ounces of silver.

The assessment also assumed a $950/oz gold price, and projected operating cash costs to average $686 per ounce over the life time of the project. Pre-production capital costs were estimated to be $11.4 million at Blackdome and $9.4 million at Elizabeth, with a combined sustaining capital of $9.45 million. With these assumptions in place, the PEA estimate pre-tax cash flow to be a positive $27 million, seen as $20 million after tax. These strong financial projections reinforce the prospects for both the Blackdome and Elizabeth projects, but highlight the benefits of having Blackdome facilities in place quickly, allowing milling for both properties and generating a strong revenue stream.

The company’s decision to concentrate efforts on the Blackdome project, while not overlooking its other properties, aims to bring the mine into production quickly and efficiently within the next three years. These latest updates improve the outlook for achieving this goal, and add to the future gold production and projected cash flow coming from the project. In addition, the knock on effects for the Elizabeth Gold Mine of the quick and successful production from the Blackdome property will have a wider and longer lasting impact on Sona’s production in North America, improving overall outlook for the company and hopefully, bringing improved profitability going forward over the next decade.