Minnova and Rea Gold plan mill at silver bet

Minnova Inc. (TSE) and junior partner Rea Gold (TSE) say a 465-ton-per-day mill could be commissioned and fully operational by mid-June 1989 on the Samatosum project near Adams Lake, B.C.

Although the mine will mainly churn out silver — about 5.1 million oz in each of its first two years at a projected cost of $2.43 per oz — it will also produce secondary amounts of lead, zinc, copper and gold. The $25-million operation is expected to produce for at least five years, but what will make this project fly (besides the high grade silver), is the first several years of low cost, open pit production. John Fisher, a director of Rea Gold, said silver production will account for about 80-85% of revenues, and gold and base metal production will make up the remaining 15-20% of revenues.

Minnova is the operator and holds a 70% interest, while Rea Gold holds a 30% working interest and a 5% net smelter royalty. A Stage I report was submitted in June and Minnova hopes to begin site construction before mid-September and to finish by mid-May, 1989. Proton Systems of Vancouver has the contract to design and construct the mill and ancillary facilities while development of the open pit and tailing facilities will be handled in house or by other consultants. The present timetable, however, is contingent upon all government approvals being granted no later than Sept 1, of this year.

Minnova first became active on the Samatosum property in late 1983 when it optioned a block of claims containing a massive sulphide outcropping from Rea Gold. The mineralization had been partially exposed in a logging roadcut and was discovered by two local prospectors who optioned the property to Rea Gold.

The showing had significant gold values but Minnova at that time considered it too small and potentially difficult from a metallurgical standpoint. The company negotiated a new agreement with Rea Gold that returned the small concession area covering the mineralization in exchange for an increased interest in the rest of the property. Rea Gold continued to explore what became known as the Discovery Zone on its own; its latest program involves underground bulk sampling and diamond drilling. The company is looking at bioleaching methods to treat the refractory ore that grades in the range of 0.2-0.25 oz gold per ton.

Minnova then drilled other geochemical and geophysical targets on the property which eventually led to the discovery, in July of 1986, of what is now known as the Samatosum deposit.

Minnova’s work to date has given the project an undiluted mineral inventory of 661,000 tons grading 32.10 oz silver, 0.052 oz gold, 1.2% copper, 3.5% zinc and 1.7% lead.

Minnova says much of the flat plunging, tabular orebody is actually a stratabound quartz vein with lesser portions consisting of mineralized and altered wallrock material. Both ore types contain tetrahedrite, sphalerite, galena, chalcopyrite and electrum. The quartz vein mineralization is thought to represent a remobilized component of an original volcanogenic massive sulphide deposit within the muddy tuff which formed as a result of deformation and regional metamorphism.

This deposit will be mined by a combination of open pit and underground methods. In the initial 2.5 years, production will be from an open pit and the mill grade is expected to be 33.6 oz silver. The third year is a transitional period with ore coming from both the open pit and from underground while the following 1.5 years will take production from underground. Over-all the average grade is expected at 24.8 oz. The average annual mine site operating costs are projected to be $12.5 million.

John Purkis, Samatosum project manager, said Dynatec is now doing an engineering conceptual look at the underground aspect of the operation. It will be a complex problem to select a mining method he told The Northern Miner, because of the variability of dip and thickness and the fairly bad roof conditions. “We’ve played with a couple of ideas, but we’re probably looking at a costly, low productivity type of methodology,” he said. “We couldn’t start a mine on the underground part of this operation, but we can finish a mine on it.”

Alex Davidson, Minnova’s exploration manager in Western Canada said other areas of the property hold potential for the discovery of additional lenses. “It certainly hasn’t been thoroughly explored yet.”

Davidson estimates that Minnova will spend about $1.5 million for exploration and drill programs this year on a number of properties it has optioned in the Adams Lake area, including further exploration work on the Rea Gold property.

The metallurgy of the Samatosum deposit is relatively straightforward. Pilot plant tests on a 50 ton bulk sample to confirm the metallurgy have recently been completed at Lakefield Research of Canada Ltd. Minnova reports that the tests confirmed good grades and high rates of recovery of copper- silver-gold; lead-zinc-silver-gold; and zinc with minor silver. The test work was done by Noranda Minerals (TSE) on behalf of the joint venture partners.

Minnova’s report states that waste material produced at the mine would be predominately non- acid generating, and this material would be used to buffer the maximum 10% of the waste that has acid generating potential. About 19.7 tons of waste is produced for every ton of ore (diluted).

Larry Reaugh, president and CEO of Rea Gold, said the successful completion of the project will create about 110-140 new jobs, directly and indirectly, in an area where unemployment is currently running at twice the average British columbia rate.