Open pit mine studied for Big Hurrah

Located about 40 miles by road from Nome, Alaska, Big Hurrah has reserves accessible by open pit mining methods totalling 408,000 tons grading 0.296 oz gold per ton, based on the preliminary figures of the study.

Valhalla’s stake in the project is through its 45.6% equity holding in Solomon Gold Corp. (ASE), which in turn is earning a 70% interest in the project from Golden Zone Resources (VSE).

After a change in control and corporate restructuring, Valhalla and Solomon are both headed by Lawrence Nagy, whose most recent involvement was with the Snip gold project being developed by Cominco Ltd. and Prime Resources in northern British Columbia. Henry Giegerich, known for his work on Cominco’s Red Dog project, and Ronald Netolitzky are also directors.

“Previous operators spent about $750,000 drilling on about 120-ft centres,” said Nagy. “We went and drilled the deposit off on 50-ft centres in 94 holes last season and the numbers still held.”

While Big Hurrah’s reserves are unusually high grade for an open pit operation, the partners are also looking at a high stripping ratio currently calculated at 8.3:1 waste- to-ore. But according to Nagy, this ratio is being improved with further optimization in the pit design to about 7.5:1 or better.

With free gold in quartz veins, recoveries are estimated at 90.8%, and dilution at 12.5%, which accounts for the study’s projection that recoverable gold will total some 109,620 ounces.

A seasonal mining operation from the start of May to the end of October is planned in order to stockpile enough ore to feed a 250-ton-per-day mill continuously for the full year.

Total mine, milling and overhead costs are estimated at $53(US) per ton, or $197.60 per oz, which if sustained, would bear out the company’s prediction the mine could be a very profitable operation, even at current gold prices.

Capital costs of bringing the mine into production are estimated at $8.5 million(US), including working capital. Payback is estimated within 2.1 years, with a 30% internal rate of return.

Nagy said Big Hurrah has good potential for reserve expansion as the orebody is faulted off on both ends at a fault zone. “The rest of it is there somewhere and we just have to find it,” he said, adding that very little regional work has been done in the past.

The feasibility study by Keewatin Engineering is to be completed within the next several weeks, with a production decision anticipated a short time later.

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