Santa Fe boosts reserves at Rabbit Creek

A significant increase in gold reserves was announced by Santa Fe Pacific Minerals, a unit of Santa Fe Southern Pacific (NYSE), for its 100% owned Rabbit Creek gold mine project, 35 miles northeast of Winnemucca, Nev.

The increase in reserves comes as welcome news for the company which is ahead of schedule to meet its projected third-quarter 1990 startup for gold production. When up to full capacity in 1991, the combined milling and heap leach operation at Rabbit Creek is expected to produce about 100,000 oz. gold per year to Santa Fe’s account.

According to Richard Zitting, president of Santa Fe Pacific Minerals, more than 600 drill holes have been completed on the property to date. Proven and probable oxide mill reserves are now estimated at about 12 million tons averaging over 0.13 oz. gold per ton.

Rabbit Creek also contains proven and probable reserves of 38 million tons of oxide heap leach material averaging 0.028 oz. gold and 8.5 million tons of refractory reserves averaging 0.174 oz. gold. The property also has substantial reserves of refractory material not yet classed as ore.

The deposit at Rabbit Creek was discovered through the company’s internal exploration efforts in 1987, as a “blind find” through a cover of overburden that ranges between 300 ft. and 500 ft. thick.

Santa Fe intends to continue drilling the property to prove up additional reserves, although construction of the mill and mine development (prestripping) are currently the main focus on site.

“Construction at the Rabbit Creek mine is ahead of schedule and approximately 56% complete,” Zitting stated.

To date, over 15 million cu. yd. of overburden have been removed from above the deposit. Construction is in progress on the in-pit conveying system and the carbon-in- leach mill facilities.

Santa Fe Pacific Minerals is involved in a number of other gold projects in Nevada, including a 30% interest in the recently opened Marigold gold mine near Battle Mountain.

Rayrock Yellowknife Resources (TSE) operates the combined milling and heap leach operation which is expected to produce 60,000 oz. gold per year with enough proven reserves on hand for at least 10 years of mine life. But the mine life could be increased substantially should positive results cont inue from a major new gold deposit, Stonehouse, that was discovered in the northern part of the property last year.

At the end of October, some 50 exploration holes had been drilled in an area 1,800×1,200 ft. One of the holes, drilled to 900 ft., intersected 315 ft. of oxidized mineralization grading 0.083 oz. gold, followed by 30 ft. of refractory sulphide mineralization grading 0.405 oz. gold.

“We are optimistic that we will be able to expand reserves at the Marigold joint venture,” stated Zitting.

On its own, Santa Fe made a discovery of significant gold mineralization at its 100% owned Lone Tree Hill project, adjacent to the Marigold property.

So far, 13 holes have been drilled which, the company said, indicated mineralization over a length of more than 3,200 ft. When combined with the strike extent of the contiguous Stonehouse deposit on the adjacent Marigold property, the mineralization extends for at least 5,000 ft.

One of the best holes at Lone Tree is reported to have intersected 55 ft. of oxide mineralization (from 130 ft. to 185 ft.) grading 0.12 oz. gold.

“We are very encouraged by these results and are optimistic the Lone Tree deposit will be economically feasible to mine if current market conditions prevail,” Zitting noted.

“The additional reserves discovered at Rabbit Creek and Marigold, and the possibility of an economic orebody at Lone Tree, will move Santa Fe Pacific Minerals toward its goal of becoming a major gold producer by the mid-1990s.”

Santa Fe Southern Pacific is involved in transportation, natural resources and real estate. The company’s resource base comprises more than eight million acres of mineral rights, including mineral rights to property which extends 35 miles in a “checkerboard pattern” between the Marigold mine and the Rabbit Creek project.