A permit amendment was recently granted by the state of Colorado allowing Battle Mountain Gold (TSE) to increase the mill size at its San Luis gold mine in Costilla Cty. The company originally intended to process half the reserves in a mill and the remainder by heap leach. This was later changed so that all ore will be processed in the mill in order to increase recovery rates and lower cyanide consumption. The move was also in response to environmental concerns expressed by local residents.
The permit amendment was approved by the Colorado Mined Land Reclamation Division which considered Battle Mountain’s plans adequate to safeguard the environment. Tailings exiting the mill will be discharged to a disposal area, and a unique thin-layer deposition concept is used. In addition, Battle Mountain posted a US$3.3-million bond to insure reclamation.
Construction is under way and the mine is expected to begin production early next year. When up to capacity in 1991, the mine is targeted to process annually about 1.74 million tons to produce an estimated 60,000 oz. of gold. Proven and probable reserves are reported as 12.15 million tons grading 0.040 oz. gold per ton, sufficient for at least an 8-year mine life.
Earth Sciences (NASDAQ) will receive a 3.5% gross royalty from all production. The Colorado-based company expects the royalty will generate a cash flow of about US$800,000 per year at current gold prices.
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