Pegasus to catapult into major leagues

Silver production from Nevada helped finance the civil war and the metal’s name appears on state licence plates. But far from being the Silver State, Nevada is becoming known as a gold producer — lots of it — even though its mines are among the lowest grade anywhere.

Among U.S.-based heap leach producers, Pegasus Gold ranks near the top in its ability to profitably develop such deposits. The company’s two mining operations near Landusky, Mont., average approximately 0.021 oz gold per ton. And their cutoff grade is almost outside the detection limits of conventional assay techniques.Those two mines together will produce more than 80,000 oz gold in 1986, about one- third more than last year.

But two new heap leach developments are under way in Nevada which will catapult Pegasus into the hierarchy of North American gold producers within a year — Florida Canyon and Relief Canyon. Production from its low grade but conventional mining operation near Helena, Mont., (Montana Tunnels) will boost that output even further. At full production, these combined operations will produce nearly 300,000 oz gold per year.

The Relief Canyon project, which was developed by Lacana Mining, shut down shortly after opening because of operational difficulties. (In this particular case the new operator is optimistic that Relief will be spelled P-e-g-a-s-u-s.) No matter what the result, Pegasus doesn’t stand to lose much on the project. It purchased the mine and plant facilities for 325,000 shares and a cash payment of $200,000. Lacana also received a sliding royalty based on the gold price. Cash costs at Florida Canyon are expected to be about $220(US) and $240 for Relief.

Florida Canyon is a brand new project for Pegasus and the company plans to utilize the latest in materials handling technology to reduce operating costs. Leach pads will be loaded to an ultimate height of 60 ft by a mobile stacking conveyor, similar to many coal handling facilities. When The Northern Miner visited the property ore had recently been stacked on the pad and operators were overcoming minor difficulties in keeping the material level. There were 300,000 tons on the pad during our visit and the stacker system was impressive, to say the least.

Mine reserves are 24 million tons grading 0.024 oz gold and crushing and agglomeration is required, unlike the Pegasus operations in Montana. Naturally the cost is higher, but that fact has been offset to some extent by better grades and a longer operating season. They do get some cold snaps but the company says interruptions of the spray cycle will not affect operations significantly.

Mine run material is crushed to 1/2 in and cement is added to consol idate fines and clay into a porous aggregate which is readily leachable. Had this not been done the clay and fines would have formed an impermeable layer or umbrella in the leach pile, preventing solutions from reaching the gold. Lacana didn’t crush or agglomerate at Relief Canyon which was the main reason the project went under. Using mining contractors 005

Both Florida and Relief canyons will employ mining contractors to reduce capital costs. In the former’s case it will represent a saving of about $6 million. And Bob Turner, general mine manager for the two operations, says bidding was extremely competitive which, in part, reflects the depressed state economy.

N.A. Degerstrom Inc., Pegasus’ contractor in Montana, won the contract at Florida Canyon and a much smaller firm the other. Degerstrom is one of the largest rock movers in the U.S. and Pegasus represents about three-quarters of its business.

About four million tons will be loaded on to leach pads at Florida Canyon in 1987, which should generate approximately 65,000 oz gold. Production at Relief should be about 30,000 oz if all goes according to plan, says Pegasus.

As discussed earlier, crushing and agglomeration are costs that must be offset by higher recoveries. Mr Turner estimates those two items add about 80 cents per ton to over- all costs and he predicted the use of conveyors would save them about 30 cents per ton over conventional road haulage. Total mining costs at Florida Canyon are estimated to be $2 per ton at a 0.88 to one strip ratio. Ore there is friable but abrasive and “pushers” (dozers) are used to move rock into loader buckets. This reduces wear on loader tires and also on hydraulic cylinders, etc.

Estimated leach cycle is 15-20 days or a 10-day cycle per lift, he notes. Because of the stacker, there is no traffic on the leach pile so compaction, which affects leaching, is not a problem. The single leach pad at Florida Canyon will last the life of the mine and Mr Turner says: “We can move down the valley forever by changing the pivot point for the stacker.”

The limiting factor in production is the crusher which will handle three ore types which will be segregated and blended. The highly altered clay is agglomerated and indeed it averages about the same as hard rock ore. Recoveries from clay-bearing material, however, are better than hard rock because of the agglomeration, he claims.

For any heap leach operation, extensive test work is required before production and Florida Canyon was no exception. There are a number of heap leach operations in the U.S. (many Canadian-owned) which simply didn’t do enough test work and they paid the price. The test program at Florida Canyon was a 2-year project and 20-ft-high columns were used to determine the leaching characteristics of the ore. Heap leaching looks deceptively simple but it’s a science as well as an art. In each case, you only get good marks by doing your homework.

Sticking with what it knows best, Pegasus opted for the Merrill- Crowe process (zinc precipitation) to recover gold in solution. “Just about any gallonage can be run through the plant,” says Mr Turner, who claims capital costs are lower and operating costs about the same as a carbon plant. Relief Canyon, on the other hand, has a first-rate carbon plant and he is anxi ous to see the difference (if any) between the two.

Pegasus owns the Relief Canyon mine and the plant facilities on which it spent approximately $125,000 to refurbish. Located about 23 road miles from Florida Canyon, the company expects to realize some operating economies through centralized administration. More importantly, however, Pegasus will crush and agglomerate to 1.5 in, something Lacana didn’t do, which is expected to improve recoveries significantly.

The property has an estimated 5.3 million tons of reserves grading 0.03 oz gold or 150,000 oz of recoverable gold. Next year the company expects to process about 1.5 million tons of ore and the current rate is 10,000 tons per day. Pegasus is spraying Lacana’s No 1 pad which has been ripped by a dozer to improve percolation and it expects to get “a few ounces out of it.”

The No 3 pad is being unloaded because there is clay in it and new ore is being heaped on the No 2 pad. A load-unload system will be used to eliminate leach pad construction and loading costs at Relief are expected to be 14 cents per ton or 2 cents higher than Florida Canyon. The company’s objective is to “pluck the eyeballs out of the deposit,” according to Douglas Belanger, vice-president corporate affairs. “There is no way we can lose our investment,” he says, noting they could get a return of 97%.