Snip viable only if Iskut River road is built

According to Prime Resources (VSE), which has a 40% interest in the advanced gold project, an access road would result in a significant lowering of both capital and operating costs.

Government agencies are expected to make a decision for an access route into the Iskut region by year-end. In the meantime, project operator and 60%-owner Cominco Ltd. (TSE) is completing a revised feasibility study that is expected to be ready by year-end.

“Road access is a vital issue in terms of ensuring the economic viability of this project,” said David Johnston, Cominco’s vice-president of mine operations. “But we’re taking a positive view that we’ll get a road in there next year.”

Cominco and Prime recently announced revised reserves for Snip totalling 1.03 million tons averaging 0.875 oz gold per ton. The revised grade is a 37% increase over the previous grade estimated by Cominco in 1988. And the major mining company considers the exploration potential below the current reserves in the Twin zone to be “excellent.”

Prior to this season’s work program and recalculation of reserves, the Snip deposit was reported to have 1.57 million tons averaging 0.639 oz gold.

This calculation was based on surface drill intercepts on 164-ft centres for inferred reserves (1.39 million tons), and on surface and underground drill intercepts on 82-ft centres plus limited underground development on two levels for indicated reserves (179,000 tons). The total tonnage estimate included a 25% dilution factor and cutting of all high grade assays to 4.38 oz.

Cominco completed 134,520 ft of underground drilling and 13,780 ft of underground development from August, 1988, to October, 1989, allowing it to recalculate reserves for the deposit.

The new drill-indicated reserves of 876,000 tons averaging 0.888 oz are based on underground development and 41-ft drill sections and centres for 90.1% of the deposit. Drill-inferred reserves of 172,000 tons averaging 0.812 oz are based on drill sections and centres spaced 82-164 ft apart.

Cominco used a cutoff grade of 0.35 oz and dilution factor of 20% at zero grade. All high grade assays were cut to 4.38 oz. The 5% reduction in the dilution factor was based on mining experience gained by Cominco during its latest work program.

“We’ve come down about 10% in total ounces,” said Johnston. “But we’ve increased the grade and upgraded the status of the bulk of reserves from inferred to indicated.”

Johnston also told The Northern Miner that the milling process on site at Snip will now involve only gravity separation and flotation circuits, similar to that being used at the nearby Johnny Mountain mine operated by Skyline Gold.

“We approached Snip first as a cyanidation project but didn’t feel comfortable with being able to meet the environmental constraints put on us,” said Johnston. The project is in a valley near the Iskut River which is a salmon river.

Cominco expects that it will be able to produce about 30% of its gold on site with the gravity circuit. A concentrate containing the remaining gold would then be shipped for final processing using cyanidation off site.

Based on a pilot bulk sample taken from test mining last summer, the company anticipates that gold recoveries will average about 90% from the complete milling process. Preliminary mining studies based on the revised reserve are also reported to be well advanced.

“I would hope that we would be in a position to make a production decision by year-end,” said Johnston.

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