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Although we had produced gold from our Cangalli properties through June 2004, we were forced to curtail our operations because of a farmer’s strike and then because of legal issues not associated with our operations (as described in more detail in our Form 10-K). We had expected that we would be permitted to recommence production. Inasmuch as we have been unable to recommence production for more than a year, we have determined that (as of June 30, 2005), it is no longer appropriate to describe the mineralization contained on the Cangalli prospect as “mineral reserves.”
Prior to June 2004, extensive testing and sampling, gold mineralization has been found to be present throughout the entire vertical and horizontal sections of the paleoplacer conglomerate gold deposit in Cangalli, but also to be erratic and non-predictive. This phenomenon within alluvial gold deposits (deposited by the effects of water) is referred to as the "nugget effect". Golden Eagle determined that the nugget effect could be compensated for statistically through the mining and processing of a relatively large volume of ore.
Initially, only an open pit trucking operation was designed into our production plans but was replaced as the cost of diesel in Bolivia had risen significantly. The concept of conal subsidence block caving using conveyors for earthmoving in place of trucking was implemented.
The Company had returned to its open pit, and begun the build-out in its underground mine using a focused mining technique known as Targeted Planar Subsidence (TPS) up until the mine closing in June 2004.
The Company began mining on September 30, 2002 with a capacity of 1,000 tons per day ("tpd"). That capacity increased to 2,000 tpd on November 25, 2002. We finished the third quarter of 2003 operating with a capacity of 3,500 tpd. The gold grades reported initially averaged 1.06 grams per cubic meter, or .530 grams per ton. These gold grades were double the grades used in Golden Eagle’s entire computer modeling for the project.
Golden Eagle finished the most recent quarter of production with the following summary:
| Summary Production Figures |
Tonnes Processed |
Gold in Grams |
Gold in Troy Ounces |
Grams/Tonne |
Grams/m3 |
| Pre-Production |
--- |
21,000 |
675 |
--- |
--- |
|
| 4th Quarter 2002 |
92,400 |
43,847 |
1,410 |
.475 |
.950 |
| 1st Quarter 2003 |
84,100 |
36,424 |
1,171 |
.433 |
.866 |
| 2nd Quarter 2003 |
89,150 |
37,841 |
1,217 |
.424 |
.848 |
| 3rd Quarter 2003 |
188,300 |
59,728 |
1,920 |
.317 |
.634 |
| 4th Quarter 2003 |
97,217 |
39,246 |
1,262 |
.403 |
.806 |
| 1st Quarter 2004 |
74,076 |
30,493 |
980 |
.412 |
.824 |
| 2nd Quarter 2004 |
35,045 |
33,745 |
1,085 |
.984 |
1.97 |
| Total |
661,434 |
302,324 |
9,720 |
.457 |
.914 |
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