TORONTO (miningweekly.com) – Local authorities and communities are so determined to see Romarco Minerals' Haile gold project, in South Carolina, up and running that the company has been granted tax credits and incentives that will amount to yearly savings of some $3-million, CEO Diane Garrett said in Toronto on Tuesday.

Authorities have approved industrial-incentive-style tax credits, a reduction in the firm's property tax from 10% to 6%, and a lot of the equipment for the project will be altogether tax free.

“They desperately want this project,” Garrett said.

Romarco has also had good success in permitting its operations at Haile: all drilling permits have been granted (and hand delivered) within two weeks of the application being made, and the company is about halfway through the process of securing the permits it needs to build and run the mine.

The region has an unemployment rate of some 20%, and is under pressure to attract new investment.

“So you have a local environment of regulators and state senators that need this economic development for the area, Garrett said.

South Carolina may not be the first place that comes to mind for mining gold in the US, but Garrett is quick to point out that North and South Carolina were, in fact, the first place the yellow metal was mined in the country.

“There is a lot of gold in South Carolina...before the California gold rush, this was the only source of gold production in the United States.”

Romarco is a relatively-unknown junior, but it has some deep-pocketed investors: Sun Valley Gold owns 34%, Sprott Asset management holds about 15% and US Global has 12%. Another 25% of the stock is held by five banks in Zurich.

The firm has C$25-million cash in the bank and no debt.

FIRST GOLD IN 2011

Last month, Romarco completed a bankable feasibility study on the Haile mine, and the firm is currently working on optimising and updating the final figures, with detailed engineering for the first phase scheduled to begin in August.

Capital costs for the project are estimated at $153-million, but this could also be trimmed down if the firm is able to source equipment cheaply.

If all goes to plan, plant construction will start in the second quarter of 2010, with the first gold pour expected by year-end in 2011, Garrett said.

According to the base-case scenario, the mine will produce about 152 000 oz/y of gold, but the actual figures will likely be better than that, as the company proves up additional reserves, she said.

Costs at the Haile mine will be well below the industry average, at just $266/oz, thanks to low power and labour costs, existing infrastructure, and the fact that the overburden will be dug directly, eliminating the need for blasting.

Electricity costs are forecast at just $0,04/kWh, because of the excess power capacity in the area following the closure of textile plants several years ago, Garrett said.

The Haile project contains 1,62-million ounces of gold resources in the measured and indicated categories, and a total of 3,26-million ounces including inferred resources.

However, Garrett said she expects to move much of inferred resources into the mineable categories over the course of this year, and hopes to improve the total contained ounces, which would have a positive effect on annual production and mine life.

Gold reserves currently stand at 1,5-million ounces.

The mineralisation remains open the the north, west, east and at depth, and Romarco announced on Tuesday it will run four drills at the site this year, and has received permits for 500 holes.

“We have high optimism that we will be adding additional ounces,” Garrett added.

Shares in the company rose 5,66% on Tuesday, to C$0,56 apiece by 15:56 in Toronto.