Goldstake plans tailings project

A tailings project to recover gold by heap leaching is being pursued by Goldstake Explorations in South Dakota.

Goldstake’s U.S. subsidiary has entered into a proposed joint venture with Strawberry Hill Mining of Deadwood, S.D., to explore, develop and mine gold tailings deposited along the Whitewood Creek flood plain in the state. A pre-feasibility study is nearing completion.

Whitewood Creek runs about 20 miles from the old mining area of the Black Hills. Mill tailings, until 1977, were dumped untreated into the headwaters of Whitewood Creek, a tributary of the Missouri River. Meanders of the creek containing tailings have spread as far as half a kilometre from the river channel, in depths ranging from 3-15 ft. The tailings property is located downstream from the Homestake mine, which has experienced 111 years of continuous operation.

The tailings, President Robert Cleaver said at the recent annual meeting, can be heap leached without additional processing. The average transport distance from the tailings deposit to the heap leach pads would be 400 yd. The proposed processing plant could be situated, he said, on impermeable shale bedrock. Reclamation project

Emphasizing the reclamation nature of the project, the company says processing of the arsenic- contaminated tailings could restore the agricultural productivity of land now covered by the tailings and contain the residual waste in a single site that could be controlled and monitored.

An estimated five million tons of tailings are recoverable by the company at present; Mr Cleaver said the company hopes to be able to boost that figure to 10-12 million tons. A 4,000-ton-per-day operation is envisioned. While a 70% gold recovery rate is expected initially, the company hopes eventually to recover 80% or better. Annual gold production is projected to be 42,000-45,000 oz, with an estimated grade of 0.045 oz gold per ton based on a 70% recovery rate. Mr Cleaver gave no estimate of the production cost.

Recovery of some free gold from the flood-plain area, which won’t require heap leaching, should reduce the over-all cost, Mr Cleaver said. Assuming all environmental and other concerns are satisfied, Mr Cleaver foresees a production start-up by the summer of 1988.

Pursuant to the proposed arrangement, Strawberry Hill has assigned to Goldstake’s subsidiary certain properties that it held under lease and will have a carried interest to production. The subsidiary has bought interests in additional properties which will be assigned to the joint venture. The subsidiary will have a 100% interest during the exploration and development phase and pay all exploration and development costs, including direct acquisition costs of the properties. 80/20 split

In the production phase, Strawberry Hill will have a 20% interest and the Goldstake subsidiary an 80% interest and management responsibility for the operations of the venture.

The joint-venture arrangements call for payments by the Goldstake subsidiary to Strawberry Hill of $150,000(US) subject to reduction in part based on properties assigned, and to the issuance of $200,000 of Goldstake shares at $1.50(C) per share following receipt of permits necessary to commenc e mining, milling and processing operations. A final agreement is to be signed by Aug 18.

In addition to the Whitewood Creek properties, Goldstake holds an option on the Stowell property adjoining and along strike of the orebodies of the Homestake mine. Homestake is currently mining at the 6,800-ft level some 4,000 ft north of the Stowell property line; Goldstake is hoping the orebodies come back upward toward the surface and therefore can be intersected on the Stowell property at much shallower depths. A seismic program is under way on the Stowell property to refine the locations of ore targets and potential drilling targets.

Earlier this year, Goldstake raised $750,000 in a private placement.