Ahead of schedule Pegasus output climbing

With mining and processing operations under way one month ahead of schedule in Montana, Pegasus Gold is projecting cumulative gold production for 1987 of approximately 225,000 oz. Last year the company reported net earnings of $4.7 million(US) from 90,000 oz gold production — less than half the output expected this year.

Off to an early start, the company’s Zortman and Landusky heap leach operations are expected to produce 80,000 oz gold and 225,000 oz silver in 1987. This production will be supplemented with output from three other mines: two leaching operations in Nevada and a conventional hard rock mine near Helena, Mont.

Swiss investors have converted part of a debenture completed last October into Pegasus shares; the result is that Pegasus’ long-term debt has been reduced from $100 million to $85 million. President James Foreman notes the conversion will reduce Pegasus’ debt-to- equity ratio by approximately 29% to 0.98- to-1. Full conversion would reduce the ratio even more to 0.58- to-1 and “further strengthen the balance sheet of the company,” he adds.

Construction work on the first phase of the 1987 Super Pad at Zortman/Landusky has been completed on schedule and up to 7.5 million tons of new ore will be loaded onto this pad, says Pegasus. The normal operating season there is from February to November, unlike its operations in Nevada. Planned mining exceeds six million tons of ore per year and more than four million tons of waste rock. The mine is among the lowest grade in the world with reserves of 36 million tons grading 0.019 oz gold per ton. At present there are more than 750,000 oz in the deposit.

The orebody is syenite-hosted and occurs in major structural zones which are oxidized to depths of 600 ft or greater. The gold and silver mineralization is extremely fine and thus amenable to heap leaching.

The Florida Canyon project 40 miles southwest of Winnemucca, Nev., is a year-round operation which started production last November. At full capacity four million tons of ore will be mined annually with a strip ratio of less than 1-to-1. About 65,000 oz of gold should be produced from the property this year.

To ensure adequate recoveries, ore is crushed and agglomerated, then it is deposited on leach pads by an innovative material conveyor system. This is believed to be a first for a U.S. heap leach operation although similar systems are used in the coal industry. Relief Canyon reactivated

Forty miles to the south, Pegasus has reactivated the Relief Canyon project which was previously operated by Lacana Mining. Reserves are estimated to be 5.3 million tons grading 0.03 oz gold and production is forecast at 30,000 oz per year from 1.5 million tons of ore. The mine restarted production in November when a review of earlier operating practices demonstrated improved recoveries with crushing and agglomeration.

Montana Tunnels is the largest single mining project undertaken by Pegasus and the first conventional operation. Production is expected to begin this April and the mine will produce about 106,000 oz gold per year, 1.7 million oz silver, and significant zinc and lead in concentrate form. Mill throughput will be 12,500 tons per day and mine life is at least 10 years. Reserves are estimated to be 41.2 million tons averaging 0.027 oz gold, 0.52 oz silver, 0.72% zinc and 0.27% lead. The plant, which is designed to treat 4.4 million tons per year, includes conventional crushing, semi-autogenous and ball mill grinding, followed by bulk flotation. The sulphide concentrate will be leached with cyanide and the precious metals will be recovered in dore form.