Viceroy sets standard for California mines

The official opening of the Castle Mountain gold mine in this historic mining district was a day of celebration for Viceroy Resource (TSE), a persistent and progressive junior company which overcame a barrage of obstacles to make its open pit, heap leach mine a reality.

As operator and 75% owner of the 8,000-ton-per-day operation, Viceroy hosted a western-style celebration to mark the May 2 event at its newly restored Walking Box Ranch, former home of silent screen movie stars Clara Bow and Rex Bell. Also sharing in the festivities were MK Gold, 25% partner and contract miner, and invited guests which included many local residents. Earlier in the day, Viceroy President Ross Fitzpatrick told guests gathered at the mine site that the “birth” of the Castle Mountain mine took nine years (rather than nine months) of exploration, engineering and environmental studies leading to permitting and construction, and culminating in the first gold pour in February of this year.

Fitzpatrick said the company’s “environmental impact statement/report” and reclamation plan formed the most comprehensive set of documents ever completed for a mine in California. (The final document took three years and cost more than US$3 million to complete.)

“We have set new environmental standards others will have to follow,” Fitzpatrick said, adding that the company has already been recognized as an industry leader in reclamation. The company received the California Mining Association’s 1991 Excellence in Reclamation Award.

Fitzpatrick said construction of the US$49.8-million mine was completed on time and within budget. The mine’s startup was relatively smooth, and gold pours are ahead of schedule.

“Our mining experience is better than anticipated,” Fitzpatrick told The Northern Miner. “We are getting more ounces than we anticipated as a result of better grade and more tonnage.”

Although the Castle Mountain property has a production history going back to the early 1900s when high-grade gold was first discovered, Fitzpatrick’s involvement began in 1983 when Bern Brynelsen, a former Noranda explorationist, first acquired claims in the area. A partnership was struck, and the property was subsequently found to have potential for volcanic-hosted epithermal-type mineralization.

Viceroy’s exploration drilling, carried out since 1984 at a cost of about US$13.8 million, resulted in three separate oxide deposits being outlined: Oro Belle, Jumbo South and Lesley Ann. A 1987 feasibility study found the project to be economically viable, and Viceroy set out to join the ranks of new gold producers.

The Castle Mountain property sits in both California and Nevada, with the deposits located on the California side. Had the opposite been true, it’s likely the mine would already be in its second or third year of production. But the Sierra Club, Wilderness Society and other environmental groups opposed Viceroy’s plans, even though the local population was clearly in favor of a mine.

It was at this point, Fitzpatrick recalls, that Viceroy stopped being strictly a mining company and entered the realm of politics and public relations. Fortunately for Viceroy, politics was nothing new for Fitzpatrick, whose political experience (in the Lester Pearson government) and patience helped to guide the project through a lengthy public participation and permitting process.

After 63 meetings with environmental groups and government agencies, and after developing more than 100 mitigation measures, Viceroy got project approval in late 1990. But this was granted only after Viceroy was able to show that its mining operation would not have an adverse impact on the desert tortoise, California’s state reptile and an endangered species. Viceroy agreed to upgrade an existing road at a cost of more than US$300,000 to avoid crossing desert tortoise habitat, and it entered into an agreement with the Nature Conservancy to establish a 45-60,000-acre desert tortoise preserve at the Walking Box Ranch. The joint venture will contribute US$2 million for use on a number of conservation activities within the East Mojave National Scenic Area, and more than US$1 million was posted in bonds to ensure funding for reclamation purposes.

At the mine site, Viceroy uses enclosed solution storage tanks, rather than open cyanide ponds, complete with a leak detection system, to assure protection of soils and ground water (and wildlife). Overall, the operation appears to be well designed, compact and efficient, with many unique features. Mining is done in 20-ft. benches, and because of zoning in the deposits, grade control is important. The leach-grade ore (over 0.03 oz.) is transported by 120-ton haul trucks to the primary crusher.

Viceroy expects its cash production costs at Castle Mountain will be about US$218-220 per oz., and the company has hedged the bulk of its first year production at US$378.

The joint venture expects to produce 100,000 oz. gold annually from current proven and probable reserves of 24.6 million tons grading 0.047 oz. gold per ton for at least the next 10 years. The property also has possible reserves of 13.5 million tons of 0.046 oz. gold.

Exploration is continuing on the property, particularly to test the 621 zone, a recent high-grade discovery more than 3,000 ft. from the main deposits. A hole drilled in this area earlier this year returned 495 ft. averaging 0.5 oz. gold from 505-1,000 ft., and opened up the possibility of underground mining. More drilling is planned to delineate this discovery which is still open to the north and south.