Granges, Hycroft fast learners in Nevada region

In terms of natural beauty it’s safe to say that Mother Nature hasn’t been kind to Nevada. But looks can be deceiving and, indeed, much of the state’s wealth lies hidden beneath its barren, inhospitable, landscape.

Hycroft Resources & Development (VSE), a 58%-owned subsidiary of Granges Exploration (TSE) learned this first-hand several years ago when it began exploring the Crofoot property, Nevada’s newest gold producer. The low grade heap leach operation is the largest in the Granges group and it will be the foundation for its future growth.

The official opening took place about a week ago with the outside temperature registering about 105 degrees F. (Things did cool off at night as they have over the millenniums. But it’s these temperature extremes that are largely responsible for the abundance of oxide reserves in Nevada — much of which are heap leachable).

As one government official pointed out during the opening ceremonies, Nevada’s gold is typically microscopic in nature and most deposits require specialized treatment. Nevertheless, Nevada is still the largest gold-producing state, accounting for 63% of the nation’s output. Last year’s output reached 2.7 million oz and it’s expected to rise sharply again during 1988.

Because heap leach deposits tend to be very low grade (by Canadian standards, anyway) technological innovation is required to offset this feature, not only in mining, but also on the extraction side.

Hycroft opted for a conveyor/ stacker system which is designed to enhance leaching by eliminating compaction problems on heaps which is common to traditional truck loading methods. The system also reduces haulage costs but this wasn’t a key factor there because haulage distances are short and relatively flat.

Technical problems have delayed implementation of the $1.5-million conveyor/stacker system and some redesign work will be required. Hycroft noted the system represents about 5% of the total capital cost of the mine and the expenditure should be recovered quickly when it’s fully operational.

The recovery plant has been handling 2,500 gallons per minute but it has achieved 2,800 gallons on occasion, above design capacity.

Granges and Hycroft are planning a merger, something that Granges President Michael Muzylowski insisted would “reduce confusion and consolidate production under one roof.” (Goldbelt Mines, which has no production at the moment, will also participate). The merger should be completed in about 90 days. Hycroft will continue to be Granges’ exploration arm in the United States and retain its existing name.

“There is more gold production out of Hycroft than Granges but with our 58% interest in Hycroft it works out about equal. The merger is just to reduce confusion,” Muzylowski told The Northern Miner.

He said the recent grade at Crofoot has been up to forecast and the “month average cyanide soluble was 0.022,” slightly higher than anticipated. (Only a portion (70- 80%) of the gold content in oxidized material is recoverable and the “cyanide soluble” grade represents that amount). The combined Crofoot and Lewis mine property is producing about 240 oz gold per day “but we expect to average between 250 and 300 oz per day when we get up to speed.”

Douglas McRae, senior vice- president and chief financial officer for Granges, noted the mine has only been running since April 1; and he estimated operating cash costs at $210 per oz, adding: “We expect that figure to drop.”

The Crofoot mine alone should produce 80,000 oz next year (versus 60,000 oz in 1988) and the Lewis about 20,000 oz. Negotiations are planned with the vendor of the Lewis mine property regarding co-mingling of ore from the two properties. There is a somewhat hefty 5% net smelter return applicable to the Lewis mine and a much more reasonable 4% net profits royalty at Crofoot to a maximum of $300,000 per year. 120,000 oz per year

On a consolidated basis, production for the Granges group could reach 120,000 oz in 1989 which includes the Tartan Lake mine near Flin Flon, Man., where some operational difficulties have been encountered. Muzylowski conceded that Crofoot has become even more important to Granges in light of the situation at Tartan Lake which incidentally has started to turn around.

“Tartan seems to be working a whole lot better, especially in the last six weeks. It’s all been rationalized, I’ve seen the preliminary report on the bulk sample, and it’s not bad at all,” he stated.

“We anticipated the grade would drop because of a severe nugget effect. But I expect some day it could come back the other way. Lately the production grades have been fairly good, about 7 g (0.21 oz) for over 400 tons a day, and recoveries are somewhere around 83-85%.”

“We should be there a long time because we haven’t filled in that gap below the 330-m level and we found some new ore on the east zone which looks like a whole new orebody,” he added.

Muzylowski conceded that Granges made a mistake by not beginning Tartan production at 500 tons per day, rather than shutting down to expand the mill. “Had we done this we’d all be smiling now,” he said.

In any event, he was very bullish about the situation at Crofoot, citing a 6-year mine life and the strong possibility of outlining new reserves. “We are adding to reserves on the south and we found a parallel zone called the East Fault area which could add a couple of years.”

“The property is really not that well explored outside the main mineralized area.” he added.