Grouse Creek mine gets reprieve from Hecla

The Grouse Creek gold mine in central Idaho will continue to operate for at least one year while the Sunbeam open pit is mined out.

The future of the mine had been in doubt since Hecla Mining (NYSE) announced last year that it was re-evaluating the operation following shortfalls of both ore tonnage and grade in the Sunbeam pit.

Hecla, which has an 80% interest in the mine, and Toronto-based Great Lakes Minerals (TSE), which owns the remaining 20%, both wrote down the carrying value of their respective investments in the project during the third quarter of 1995.

Hecla has revised the reserve estimate for the Sunbeam pit, which stands at 2.4 million tons grading 0.042 oz. gold per ton, or 100,800 contained ounces.

The stripping ratio is 2.6-to-1. It is expected the new reserve calculation will keep Grouse Creek operating through the first quarter of 1997.

Milling, however, will be suspended for two months, and mining for one month, while the project’s tailings pond is enlarged. The pond reached capacity earlier than expected as a result of heavy winter snowfall and spring runoff.

The cost of the upgrade is projected at US$3 million.

Last year, Grouse Creek produced 83,609 oz. gold and 676,915 oz. silver from nearly 2 million tons of ore grading 0.044 oz. gold and 0.64 oz. silver at a cost of US$344 per oz. gold.

For the first quarter of 1996, the mine produced 22,924 oz. gold and 126,525 oz. silver from 551,104 tons of ore grading 0.043 oz. gold and 0.41 oz.

silver. Cash costs last year averaged US$296 per oz. gold.

When operations began in late 1994, the Sunbeam pit was calculated to contain 8.6 million tons grading 0.042 oz. gold and 0.32 oz. silver at a stripping ratio of 3.5-to-1. At the time, Hecla projected the mine’s life at nine years, based on the combined reserves of the Sunbeam and the adjacent Grouse deposit (13.2 million tons grading 0.038 oz. gold and 1.3 oz. silver).

Hecla will decide later this year whether to continue mining the Grouse deposit once the Sunbeam is mined out; the company has vowed to remain there as long as the operation is economic. Vicki Veltkamp, a spokesman for Hecla, says drilling has confirmed reserve estimates and that metallurgical testing continues.

Meanwhile, Hecla’s partner at Grouse Creek is about to pour its first gold at the Lluvia de Oro mine in Mexico’s Sonora state.

Great Lakes Minerals is leaching 80,000 tonnes of ore with grades 10% above the predicted blast model. Once in production, Lluvia de Oro is expected to produce 25,000 oz. gold per year over an initial 4-year period at a cash cost of US$250 per oz. Reserves are calculated at 5.5 million tons grading 0.029 oz.

Farther south, in the state of Sinaloa, Great Lakes is conducting metallurgical tests on its Palmarito silver-gold project in preparation for a prefeasibility study. Initial bottle roll tests indicate gold and silver recoveries exceeding 90%.

Palmarito hosts 3.7 million tons grading 4.11 oz. silver and 0.016 oz. gold.

An additional 276,000 tons grading 8.2 oz. silver and 0.015 oz. gold is contained in mining dumps.