EDITORIAL & OPINION — A one-of-a-kind alluvial deposit? — Mining for miracles

A century ago, the poet Robert Service observed that there are “strange things done in the midnight sun by the men who moil for gold.” Had he met the boys from Busang, he could have added a few new stanzas about the strange things done under the jungle sun. In these dog days of summer, we’re finding that strange things are still being done, even with gold at prices that hardly make it worthwhile.

Take the case of Golden Eagle International, which stunned the mining world a year or so ago when it announced it had more than a hundred million ounces of gold at its alluvial project in Bolivia. The company isn’t saying that anymore, not since the Securities and Exchange Commission rapped it on the knuckles. But it still believes it has the makings of a mine, one capable of producing gold at somewhere between U$31 and US$126 per oz., “depending on the feed grade and tonnage.”

The company cautions that these projections, put forward by a PhD-sporting metallurgical consultant on its advisory board, “were not based on estimates of resources of reserves.” Why? Because they don’t have any.

Despite this minor problem, the consultant has recommended installing an 8,800-ton-per-day mining operation and recovery plant at the site. Plant construction, mining equipment and operating and administrative costs for the startup phase are estimated at US$3 million, or less if they begin on a smaller scale. We were stunned, thinking US$300 million sounded more reasonable for a plant that size.

Golden Eagle admits it has a tough row to hoe. Despite three attempts to achieve commercial production on a smaller scale, it was thwarted each time because the recovery plants were unable to recover the fine gold, which is described as being “extremely flat.”

The gold is there, though. The company hired an independent consultant who placed grease on his hand and let the post sluice-box water flow over it for five minutes, “after which his hand showed very minute particles of gold trapped in the grease.”

The grease experiment had us scratching our heads, but this fellow had a PhD too, so we thought, what the heck, there’s a first time for everything. But even Golden Eagle knows that collecting gold through greased hands isn’t scalable up to 8,800 tons per day.

Golden Eagle doesn’t give up easily. And based on some recent work, the advisory board PhD now says gold recoveries can be expected to be in excess of 95%, “through enhanced acceleration in the centrifugal concentrator systems.” We thought that enhancing the acceleration would make the flat flour gold fly out farther and faster, but what do we know? Maybe nature bends its rules for doctors of philosophy.

Golden Eagle’s management is excited by all this, saying they now have “a practical framework for the future.” They have a unique deposit too — dare we say, one of a kind.

In typical alluvial deposits, the gold occurs at or near the bedrock-gravel contact. But at Golden Eagle’s project, a consultant found that that “gold appears to have been deposited throughout the entire 1,600-ft. thickness of the conglomerate deposit.”

The company cautions that the consultant took a limited number of samples during his investigation, and that, “for various reasons,” the program was not designed to be a representative sample analysis. The main reasons cited were the areal extent (often called “size”) of the property (about 61 sq. km), the 490-metre thickness of the conglomerate (which has large boulders in it), and the steep terrain.

Golden Eagle remains optimistic, saying “visible alluvial gold” was recovered from 68 of 73 samples taken from six widely separated areas. Seventeen of the 73 samples were deemed as have a threshold grade of 0.5 gram gold per tonne — “sufficient to warrant further consideration.” Of the 17, only five were above 1 gram, with one of these taken from within the town limits.

Golden Eagle has another PhD on its board. A former mineralogist, he concedes the grades are “erratic” but attributes this to “nugget effects” from samples to sample, which “confirms that coarse gold occurs widely throughout the deposit.” We thought it was fine gold, but keeping up with this many PhDs is not easy.

Coarse or fine, the grade is far too low for anyone to get excited about, particularly in this price environment. It’s safe to say Golden Eagle will have trouble financing its 8,800-ton-per-day operation. In fact, the company concedes it may have trouble too.

Golden Eagle still hopes to find areas with higher grades. It is encouraged by “unsubstantiated” historical records showing that locals mined higher-grade “pay zones” by underground methods some five miles up-river from the concessions.

We hope they were paid well, and that most of the 600 labourers who supposedly extracted these gravels survived the less-than-ideal ground conditions.