Dragon Mining (ASX:DRA) has ticked off an important milestone with a decision to commence the decline for the underground development of the Kujankallio deposit at the Jokisivu Gold Mine in Finland.
With the resource base already established at Jokisivu, the commitment to develop an underground mine provides a platform to expand the mine life to greater than five years.
Finnish mining contractor, SK-Kaivin OY, has been awarded the contract and the decline is expected to commence later this month, with ore available for processing in 2011.
An internal study is underway aimed at the prospectively of the project. An infill drilling campaign is also underway at Kujankallio to improve the category of Resources and to allow for more detailed mine planning and scheduling to take place.
The decline which will provide mine access is located at the eastern end of the Kujankallio open pit which was completed in August, yielding 10,176 ounces at an approximate cash cost of US$620/oz.
The Arpola deposit, which is located 200 metres to the east, could improve the viability of a development and studies are underway to encompass its inclusion in the studies.
Intriguingly, both deposits remain open with depth and partially along strike and may converge.
Executive chairman Peter Cordin said “The commitment to develop the underground is an important step in achieving an extension of the mine life at Jokisivu and the Company securing a long term presence in Finland."
"There are considerable Resources defined at Jokisivu and further exploration success will help achieve a mine life greater than five years.”