Junior Alaska Gold Mining Company Prepares for Production

By Alan Fein

(AXcess News) New York - Silverado Gold Mines Ltd. (Otcbb: SLGLF) is preparing to go into production at its Nolan project in Alaska. The company's NI 43-101 amended report from June 2009 recommended a 200 ton per-day mill, though development work to expand gold resources will commence first.

According to Silverado Gold's 2009 Annual Report, the company has spent close to $36 million on the Nolan Project since first acquiring the claims in 1979 that comprise 12 square miles and have completed an impressive amount of pre-development work that includes a complete mining camp capable of housing 23 miners, including a high-capacity well in nearby Wiseman, Alaska which provides fresh drinking water for the community as well as the Nolan Camp. Considering how much development has gone into the preparation of the Nolan mine, outside of a drilling program to expand on its gold resources, only the mill would be needed to commence production.

So far Silverado Gold has been quiet about its development plans outside of information found in its Annual Report and NI 43-101 geologists report, though in picking through those disclosure documents I can understand why.

According to the NI 43-101 report, the preparing geologist said, "the average gold price in 2008 was $865 per ounce." But with gold bullion setting record prices for the third day in a row Monday, gold is now $1280 per ounce and many precious metals analysts are forecasting $1300 gold by the fourth quarter.

In a story published by AXcess News earlier this month we noted that expenditures on gold production in Canada dropped 47% in 2009 while in Nevada, the 6th largest gold producer in the world, expenditures fell 15.5%. Commodity prices and demand were at the root of those cutbacks in the wake of the worst recession seen in decades. But now investments are expected to surge in the second half of this year as prices and demand have returned to the marketplace. That places Silverado Gold in the right position to move forward on its Nolan Project.

SLGLF reports that its probable reserves are 42,400 tons of ore with an average grade of 0.408 ounces per ton, or 17,300 ounces of minable gold. An additional 2,841 ounces of indicated reserves were also reported, though the company's property could well prove to extend those resources further once drilling commences in the second quarter of 2011.

While Silverado Gold Mining Ltd's Nolan Project may seem small at a 200 ton-per-day production rate, the mill capacity can most likely be expanded once additional ore bodies are developed. Yet in preparing for production, the Company is coming into the marketplace at an ideal time when bullion prices are at record levels and production rates have yet to catch up. A formula like that could mean a win-win for both investors and Silverado Gold Mining Ltd.

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