Tapia de Casariego, Spain — The Salave project, near the northern coast in Spain’s Asturias province, is western Europe’s largest undeveloped gold project, and
Between 1970 and 1997, previous operators Charter Consolidated Mining,
The historic drilling resulted in resource projections ranging from 10 million to 20 million tonnes grading between 3 and 5 grams gold per tonne. Rio Narcea says the estimates do not conform to National Instrument 43-101 standards.
Three rigs are currently carrying out infill drilling in an attempt to close the drill hole grid in the planned open-pit area to 25 by 25 metres and confirm the historic resource figures. In all, the company plans to sink some 15,000 metres of drilling by March 2005. The company is also re-checking assay results from most of the historic drilling, which was sunk on a grid measuring 25 by 50 metres.
The company intends to complete some of the infill drilling and establish a geologic model before calculating a resource figure of its own. That estimate will form the basis for a 43-101 report, due sometime in the third quarter.
“The deposit has been kicked around by a number of companies, and unless a company such as Rio Narcea develops it, it may never enter production,” says Eugene Spiering, Rio’s vice-president of exploration. “Not only do we have the technical capacity; we have an existing relationship with the permitting authorities in Spain.”
Salave is an intrusive-related, disseminated deposit hosted in granodiorite below a shallow-dipping, altered but unmineralized roof pendant of quartzites and siltstones. The mineralization is refractory, with the sulphides mainly consisting of pyrite, arsenopyrite and minor molybdenite, with lesser amounts of sphalerite, stibnite and chalcopyrite.
The deposit includes a 30-metre-thick high-grade zone in the north. An albitite-propylite alteration envelope that dips 30 to the northwest hosts the zone, which is overlain by about 100 metres of siltstones and sandstones. It remains open to the northwest.
Drilling on the high-grade zone by previous operators was highlighted by 58.5 metres grading 8.2 grams gold per tonne, 41.7 metres averaging 8.6 grams gold, 12 metres running 20 grams gold, and 22 metres of 6.6 grams gold.
Those intersections are followed by about 100 metres of fresh granodiorite and then another zone of alteration-hosted mineralization. Limited previous drilling there cut an 18.5-metre interval containing 13.8 grams gold per tonne and 13 metres of 15.3 grams gold.
“These alteration packages are not that definable,” says Spiering. “Generally the mineralization is better near the upper contact. We’re also not sure why the granodiorite is fresh and not altered itself. There are a lot of things about the controls we don’t yet understand.
“With the hodgepodge of companies that have drilled out here, there really isn’t a geologic model of what the continuities are and what the package really looks like.”
Salave does pose the challenge of refractory ore.
“Anglo did quite a lot of metallurgical work on the project in the late 1980s, and found that both pressure- and bio-oxidation would work on the refractory ore,” says Alan Riles, Rio Narcea’s chief operating officer. “But both technologies were at an early stage as far as commercialization was concerned. They have come a long way since then, with numerous pressure-oxidation plants and perhaps ten bio-oxidation plants operating worldwide.”
Rio has already done a preliminary study of the capital and operating expenses and environmental issues related to both oxidation methods. Riles says pressure-oxidation probably gives a more predictable metallurgical outcome, but at a slightly higher cost. He adds that bio-oxidation, though a bit cheaper, is hard to manage. Conventional cyanide leaching would follow either process.
Rio Narcea recently commissioned Australian-based Ausenco to do an initial scoping study of the various processing options for Salave’s refractory gold, with the focus on pressure- and bio-oxidation. Ausenco will also take a look at two or three other possible routes. Rio expects to receive Ausenco’s initial evaluation and recommendations for further test work in about a month.
The current drilling program is providing a representative sample for metallurgical tests. Riles expects to have the sample within a month or two, with test work slated for the third quarter; results would follow sometime early in the fourth quarter.
The front end of the proposed processing circuit is fairly straightforward, with crushing and grinding followed by bulk froth flotation to produce a concentrate running 60 grams gold per tonne. Results from previous metallurgical tests indicated that froth flotation could recover around 95% of the gold to a concentrate. Likewise, pressure- and bio-oxidation of the concentrate yielded 95% of the gold, for an overall recovery rate of about 90%.
Mining plan
Initial plans at Salave call for an open-pit operation that would see ore and waste transported via a single conveyor belt up from the pit and underneath a highway to an underground crusher about 400 metres due south. From there, crushed ore would travel along another conveyor to the mill site, about 1.5 km away; the resulting flotation concentrate would be trucked 120 km to the southeast for conventional cyanide leaching at the company’s El Valle plant, which is already home to permitted cyanide facilities. The highway to El Valle is currently being twinned.
The company plans to buy used conveyor belts and a crusher from the Lignitos de Meirama lignite mine in La Coruna, which is run by one of Rio’s former partners. That mine is expected to close in a couple of years.
CEO Alberto Lavandeira says Salave’s planned pit includes a 200-metre buffer zone to the coast — twice what is required. The buffer zone will leave a stand of trees in place to obscure the view of the operation from the coast. The company will also look at building a walkway along the rocky coast to help control the safe movement of tourists in the area.
The company also plans to update hydrological studies previously carried out by Newmont. This work will include pumping tests to study the rate of seawater infiltration. Lavandeira does not expect infiltration to pose problems, thanks to the compact nature of the granite. “It has cracks of course, that’s why the mineralization is there, but it doesn’t have too many,” he says. Lavandeira figures that if the fracturing were significant, the oxide cap would have reached as deep as sea level; in actuality, the zone only made it to within 20 metres of that mark.
The planned pit is expected to stretch to a depth of 100 metres below sea level; a fence of holes will be sunk to pump-off incoming seawater before it gets into the pit. Any mining below 100 metres would have to be by underground methods, as the relatively gentle dip of the deposit would result in an impractical stripping ratio.
“Initially we’re looking at an open pit, and, depending on the drilling we’re doing now, some underground mining,” says Riles. “Certainly the deposit is open at depth; we just don’t have enough information yet.”
Permits for a decline and a pilot plant issued to mining promoter J.P. Sheridan in 1997 are still in good standing with no attached time limits.
The company envisages sending tailings from the operation to a pond in the upper part of one of two nearby valleys, with another belt transporting waste granite to construct a dam. The rest of the waste would be deposited in dumps downstream.
The tailings are not expected to generate significant acid. The presence of albite, some carbonate, dolomite (and calcite and quartz) in the tailings also provides neutralizing potential, and the company plans to recover most of the sulphides
in any event. Also, Rio will avoid acid generation from the waste rock by employing a continually advancing waste dump, whereby the waste material is covered and planted over with trees as soon as possible to remove it from oxygen and prevent water infiltration.
The entire operation would be obscured by forests of eucalyptus and pine, and only visible from the air.
On the permitting front, Rio has begun preparing for a baseline environmental study in anticipation of an environmental impact study. The work is part of the Spanish equivalent of an internal feasibility study, which will be submitted for public scrutiny that may result in recommendations for further work. Once those recommendations are complied with, the study will be resubmitted. The project first requires an environmental declaration followed by a mining permit.
Historically significant
Environmental studies at Salave will include archeological work, as the project is home to two Roman-era pits, which mined out the oxide cap. An archeologist is on site in the event significant discoveries are made. The company is no stranger to the archeological considerations required for working in the historic Asturias region, which supplied much of the gold used to expand the Roman Empire.
The El Valle project, 60 km to the southeast, was also home to a Roman pit, and to a village that included a 17th-century palace and a small church. The company successfully relocated the villagers and moved the protected structures.
Lavandeira expects less trouble with the Roman workings at Salave, which he describes as “abandoned quarries.” He also cites the company’s track record (including El Valle) with provincial permitting bodies.
“The conditions at El Valle were really tough in terms of zero discharge, site restoration, ponds, archeological concerns, and the proximity of villages,” Lavandeira says. “Permitting there took a little more than a year.”
Permitting at the nearby Carls gold operation took about 18 months, as the process was complicated by the proximity of a town and major road. The town did not have to be moved. Permitting at the Aguablanca nickel sulphide project, northwest of Seville, took a little more than 1.5 years; negotiations involved two provinces and the federal government.
Riles says that based on the company’s experience at El Valle and Carls, he expects to have all the environmental impact work largely completed by the end of the year, with the consultative process beginning in the first half of 2005.
Looking ahead to reclamation, plans call for the pit to be flooded to avoid any problem with acid generation. The company will also look at the possibility of excavating the buffer zone between the coastline and the pit to create an artificial inlet once the deposit is depleted.
Looking ahead, the company expects to make a production decision probably by mid-2005, followed by financing and construction in 2006. Construction is expected to take about 9-10 months, like at El Valle and Aguablanca.
Acquisition
Rio Narcea acquired the rights to Salave from Sheridan in March. The deal is potentially valued at more than US$30 million.
Under the deal, Sheridan terminated a lease agreement inked with Rio Narcea in late 1992. In return, Rio Narcea agreed to pay Sheridan US$5 million in cash plus 2 million Rio Narcea warrants exercisable at $5 per share until Sept. 11, 2008.
As additional consideration, Rio Narcea agreed to pay Sheridan a further US$25 million, based on the achievement of certain milestones. A first US$5-million instalment would be payable once construction permits are received. Four other US$5-million payments are due after production begins and after 200,000 oz., 500,000 oz. and 800,000 oz., respectively, are produced. Thereafter, Sheridan is entitled to a royalty calculated at 5% of the ounces produced and paid for, multiplied by the average gold price received, minus US$200 per oz.
Payments under the gold royalty can be suspended if the price of gold falls below 300 euros per oz.; the payments will be made up when the price exceeds 500 euros per oz.
Rio can halve the gold royalty by paying US$5 million within 90 days of its becoming effective. Sheridan also retains a 5% royalty on all other minerals produced and sold.
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