Nevada Goldfields Aurora mill could be utilized by Freeport

The company is exploring the area from existing mine workings after drilling 12 surface holes on their common boundary with Freeport McMoRan. Topographical constraints prevented further drilling from surface, he noted.

Bell said Freeport has been getting good results but he conceded no ore grade material was encountered in the surface program on Nevada Goldfield’s side-just “favorable structure.” Any discovery on Freeport’s ground could be beneficial to Nevada Goldfields because it has a mill with unused capacity nearby, the economics of which Freeport obviously recognizes.

“They made an approach to us and asked whether we would be interested in toll milling because they want to go underground next year on their side,” he said. More discussions are planned this month including the possibility of joint venturing Freeport’s property, he confirmed.

The Kingston mill isn’t running at full capacity because the underground mine can’t sustain it. Current throughput is 520 tons per day but the plant is rated at about 700 tons.

“Ideally, what we are hoping to do is to get sufficient faces opened up ourselves to fill that mill. The trouble is that mine capacity is at a maximum. And if we have to get another suite of equipment you are looking at a million dollars or more.”

Development of the company’s Empire mine project in Colorado is expected to begin later this year so he doesn’t want to “spend that kind of money right now, ” he said. “There’s a lot of justification for it and that would be the cheapest incremental ounces we could possibly produce.”

Additional production will hopefully come from newly explored areas which will not fall under its net profits agreement with New Beginnings Resources (VSE), he said.

Gold production from Nevada Goldfield’s two mining operations (Kingston and Aurora) is on target, he added. But Bell conceded there will probably be a 3,000-oz shortfall from projected output this year “because we won’t be producing from Empire by the end of fiscal year (June 30/89) as planned.” The company had forecasted 57,000 oz of gold production in the latest fiscal year.

Production from existing operations is expected to be pretty well as forecast “unless we can get the mill feed up prior to that. We are working on it but I’m not banking on it,” he said. First quarter production was right on but he said they had some really poor grade in the second quarter. “Hopefully, if we can keep it up where it is right now we will catch up without any problem at all.”

Engineering for the Empire mine has nearly been completed and they are almost ready to begin construction. But the company is attempting to modify the joint venture agreement with its two partners, one of whom has failed to come on side.

The average grade at Aurora last year was approximately 0.2 oz gold but he said the average for this year is a little under 0.15 oz. “But that’s on our budget anyway,”he noted. A ramp is being driven to access the deeper extension of the Prospectus vein and production should begin here in late February. The Aurora mill has a 300 ton capacity but it’s running at 220 tons. Also, the company is looking into rationalizing operations in the area in conjunction with Minerex Resources (VSE). Winnipeg-based, David James, an analyst with Richardson Greenshields of Canada, says Nevada Goldfields was recently “trading at about 10 times this year’s estimated earnings and about seven times projected fiscal 1990 earnings. “The stock is seen as having very limited downside from current levels.”

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