Revival of old gold mine studied by Chevron, B.Y.G.

Abruptly closed in 1969, the old Mount Nansen gold mine is now being looked at seriously by Chevron Canada and Vancouver-based B.Y.G Resources. From a distance it still looks like an operating mine and given the success of current exploration it could well be again.

At closure, thousands of dollars in spare parts were left behind which, along with surface facilities, were largely pilfered in subsequent years. But something was left untouched — an underground gold deposit which could be economically viable in conjunction with a small- to medium-sized open pit mining operation.

Archer, Cathro & Associates are managing the program for Chevron as they do for all the major’s Yukon projects. The consulting firm’s data base on Yukon mineral properties is enormous and so is their knowledge of Mount Nansen, The Northern Miner can say after visiting the property.

Chevron’s exploration approach is very conservative and the company has avoided addressing the underground potential in favor of a larger open pit mining operation. By year-end, Chevron will have spent about $2.5 million on the property for drilling, trenching and other exploration work. This year’s expenditure was expected to total about $700,000.

Chevron has yet to announce any reserves for the property despite the large expenditure made. Before exploration commenced, reserves (proven and probable) totalled approximately 184,538 tons grading 0.42 oz gold and 11.7 oz silver. But B.Y.G has calculated an “in- house” reserve, based on drilling and trenching in the Brown McDade zone which Chevron has apparently given tacit approval to. These reserves are estimated to be 800,000 tons grading 0.23 oz gold and 2-3 oz silver. Including all low grade intersections, it jumps to 1.75 million tons grading 0.11 oz gold and 1-2 oz silver.

The Brown McDade dips at 60-70 and there is no significant alteration except in the hangingwall. The nearby Flex zone has similar mineralogy and the gold values are higher but more erratic. The Flex and Webber zones were drilled this year and values ranged from a high of 0.6 oz gold and 8.7 oz silver over six feet to a low of 0.035 oz gold and 1.7 oz silver over 18 ft. The Flex has numerous crossfaults so projecting veins between trenches and drill holes has been difficult.

Most of the Brown McDade is oxidized to a maximum depth of 100 ft on the north end and to over 380 ft at the south. Chevron initially focused on this zone because it had cyanide-recoverable gold and good continuity from hole to hole. Also, there was good correlation between surface and underground sample results. 95% recovery rate

All veins have supergene enrichment which yields a 95% recovery rate with conventional cyanidation, says project manager Douglas Eaton of Archer Cathro. He feels the property will need at least one million tons of 0.1 oz material to justify open pit mining which would be followed by an underground operation. It appears that the open pit potential alone would not be sufficient to warrant production, The Northern Miner gathers.

Underground reserves are generally higher grade but refractory, which was the downfall of the original operation. A 300-ton-per-day mill was installed at the time and production commenced in September, 1968. By April, 1969, 18,000 tons of ore had been run through the mill but only 0.14 oz gold per ton was recovered. Poor grade control and the lack of a cyanide circuit were cited as reasons for the dismal performance. (A large building still exists there for cyanide recovery but the circuit was never installed.) These buildings are still serviceable as is much of the equipment in plant.

The supergene material is readily leachable and appears porous enough to load directly on to leach pads without crushing. On parts of the property, the oxidation level reaches down to 800 ft. Vat leaching could be considered for material with coarse gold and also to reduce the leaching period which is important in northern environments.

B.Y.G. has a strong international following and the company is confident it can finance its share of development costs should the mine be reactivated. In August, B.Y.G. placed one million shares overseas, which put $3 million into its treasury before expenses. This enabled it to repay a $2.7-million note and add approximately $400,000 to working capital.

Chevron can earn a 62% participating interest in the property for $6 million in expenditures over a 5-year period ending Dec 31, 1989. After that B.Y.G. would have to fund its portion or be diluted down to a 15% net profits interest. Chevron is now into the expensive part of its option agreement (approximately $3.5 million in the next two years); so the next few years could see the pace of exploration activity heighten considerably.