Elko, Nev. — In the 18 months since
“We’re still hitting encouraging mineralization in both areas, and exploration hasn’t been closed off,” said Peter Neilans, the mine’s general manager.
The highlight in the first half of this year’s drilling was the discovery of a new high-grade zone downdip of the area drilled off in 2003.
The delineation of this zone, combined with the closing-off of the deposit to the north and east, resulted in a 2-million-oz. increase in the pit model at mid-year. Cortez Hills contains some spectacular high-grade sections, which have contributed to a 50% increase in the deposit’s overall grade in the past 12 months. A sampling of some of these higher sections stepping down-plunge through the heart of the deposit include individual drill intercepts of: 152 metres grading 26.9 grams; 88 metres of 17.3 grams, followed farther down-hole by a 104-metre section of 14.7 grams; 27 metres of 12.8 grams, followed by 61 metres of 3.91 grams deeper; and 125 metres averaging 35.5 grams at the base of the pit limits.
It is this deep and high-grade zone off to the west that has allowed Placer to extend the bottom of the proposed pit to a planned depth of 550 metres below surface, while incurring a stripping ratio of about 15-to-1.
There is additional high-grade material (though predominantly carbonaceous in nature) extending below the proposed pit in a stratigraphic transition zone, and this material is not classified as either reserves or resources. Placer is delineating the extent of this deeper mineralization, using several rigs which will address the potential for future underground mine development. “We are currently down in the range of 2,000 feet, and there are relatively large stepouts,” Neilans told The Northern Miner. “The mineralization is still encouraging at that level.”
“The discovery of Cortez Hills has been an exciting event for this company,” Peter Tomsett told delegates at the recent Denver Gold Show in his first public address as Placer’s president and CEO. “It’s not often you see a discovery like this, which is such a slam dunk in terms of economics. It’s an outstanding performance in any language.”
The Cortez mine lies along the Battle Mountain trend of north-central Nevada, 130 km southwest of Elko. Placer Dome is the operator and owns a 60% interest in the mine; London-based
Placer has embarked on a feasibility study that will examine how to optimize the mining sequences of Cortez Hills with the Pipeline-South Pipeline pit as a whole. In addition, the study will look at ways to expand the current milling operation by anywhere from 50% to 100%.
There is a declining grade profile for the Pipeline-South Pipeline pit, so Placer is accelerating development of Cortez Hills to take advantage of the higher grades there. The joint venture expects to be in a position to re-initiate the permitting process for the Cortez Hills-Pediment complex in early 2005, once the feasibility study has been completed and an updated plan of operations submitted. The mine already has a head-start on the permitting process: in 2001, an environmental impact statement was submitted with a plan of operations concerning the Pediment deposit. A lot of the baseline work has been done, notes Neilans, adding “we hope to have permits in place by mid-2006, which would allow for production about a year later.”
There are about 30 million tonnes of prestripping to be done at Cortez Hills.
“Permitting is a critical item for us, from the standpoint of both operations and exploration,” said Mine Superintendent Dan Banghart. A small vocal group, called the Great Basin Mine Watch, is monitoring the mine and raising concerns related to cultural aspects and groundwater. Permitting requirements for exploration, in particular, have become more stringent in the last several years. Banghart said it takes at least four years to get a mine environmental impact statement approved.
“The biggest single impact, in terms of time, is getting things through the federal registry in Washington, D.C.,” said Neilans.
The Cortez mine is expected to produce more than 1 million oz. in 2004 (its seventh consecutive year of doing so) from open pits on the Pipeline and South Pipeline deposits. Production costs are pegged at US$160 per oz. In August 2004, the mine produced its 10-millionth ounce of gold. The mine uses a combination of milling and heap-leaching to recover gold from oxide mineralization.
Lower-grade oxide ore is hauled directly to heap-leach pads, whereas higher-grade oxide ore is treated in a 10,000-ton-per-day conventional mill using cyanidation and carbon-in-leach (CIL) processing. A minor portion of production comes from the sale of preg-robbing refractory carbonaceous ore to third-party roasters.
In the first half of 2004, Cortez produced 571,000 oz. (48% by milling, 46% by heap leaching, and 6% by carbonaceous ore sale) from the processing of 18.1 million tonnes averaging 1.3 grams at a cash cost of US$152 per oz. and a total cost of US$188 per oz. In the comparable period of 2003, the mine produced 572,000 oz. (65% by milling, 25% by heap leaching, and 10% by carbonaceous ore sale) as a result of treating 9.2 million tonnes grading 2.4 grams at cash and total costs of US$124 and US$160 per oz., respectively.
So far, Placer has been able to offset a diminishing mill grade in the Pipeline deposits by increasing the level of heap-leach production. Going forward, there will be a couple of years of declining production, somewhere in the order of 800,000-850,000 oz., until Cortez Hills is brought on-stream, at which point (around 2008) the Cortez mine should once again be cranking out 1 million oz. at costs of under US$150 per oz. “The faster we can bring Cortez Hills on, the better,” said Neilans.
Cortez has been a strong, consistent performer for Placer. In 2003, the mine generated operating earnings in excess of US$100 million to Placer’s account. This year looks to be no exception, with half-year earnings in the range of US$65 million. Higher cash costs are attributed to a heavier royalty burden tied to the stronger gold price, rising fuel and power costs, and higher stripping burdens as the Pipeline pit goes deeper. The stripping ratios going forward at Pipeline are nearing 2.7-to-1. To combat the rising costs, the joint venture is upgrading its mining fleet by spending US$45 million to increase capacity with the purchase of eight 400-ton haul trucks.
Royalties
All production at Cortez is subject to a 2.5% gross smelter return royalty (GSR), of which 1.5% is payable to the former shareholders of Idaho Mining, with the remainder split between Placer and Rio Tinto. In addition,
At the end of June 2004, the mine contained about 15.1 million oz. in proven and probable reserves totalling 241 million tonnes of 1.95 grams gold, based on a US$350-per-oz. pit model. Together, the Cortez Hills discovery and nearby
Pediment deposit account for 58% of the contained ounces, with the remainder coming from the Pipeline, South Pipeline and Gap complex. Additional measured and indicated resources hold an extra 8.1 million oz. in 270 million tonnes grading 0.93 gram gold per tonne, and a further 812,000 oz. in 31.7 million tonnes grading 0.79 gram gold are inferred.
Just over half of the 15.1-million-oz. reserve base is in the form of CIL mill feed; 30% is heap-leachable, and the remaining 20% consists of carbonaceous ore.
Cortez Hills was discovered near the end of 2002 during an initial reverse-circulation (RC) drill program north of the 1.2-million-oz. Pediment deposit, 4 km southeast of the original Cortez deposits, and 15 km southeast of the current Pipeline operation. The discovery came in the sixth hole of a 7-hole program that intersected 36.6 metres of 9.5 grams, starting at 150 metres below surface. Follow-up drilling in late 2002 confirmed continuity. By April 2003, Placer had announced the initial discovery of a 3-million-oz. resource grading 2.98 grams.
With the recent update, Cortez Hills is now estimated to contain proven and probable reserves of 42.9 million tonnes grading 5.4 grams, equivalent to almost 7.5 million oz, based on 250-300 holes. An additional 2 million tonnes grading 3.7 grams, representing 240,000 oz., are categorized as measured and indicated, and another 375,000 oz., or 8.2 million tonnes grading 1.4 grams, are inferred. Placer has assigned a 75% overall recovery for Cortez Hills.
The joint venture anticipates it will likely require a capital investment of at least US$170 million to develop Cortez Hills-Pediment. A separate mining fleet, alone, will cost US$113 million, along with US$34 million for crushing, conveyors and leach-pad facilities. It will take an additional US$15 million to build shop facilities, and another US$5 million for dewatering infrastructure. Feasibility studies are addressing the options for mill expansion, as most (85-90%) of the contained ounces at Cortez Hills are millable. The reverse is true at Pediment, where most of the material will be heap-leached. Capital costs to expand the mill by 50% are estimated to run between US$30 million and US$40 million.
The Cortez joint venture comprises a 2,587-sq.-km area of interest, of which 825 sq. km are directly controlled. The immediate area has a rich mining history, with “miles and miles of underground workings,” said Hays. Some US$14 million worth of metals were mined from the district between the 1800s and the early 1900s.
The present Pipeline operation is on the western side of Crescent Valley, 11 km northwest of the original Cortez milling complex. Crescent Valley is a structural and topographic basin between the Northern Shoshone range on the west and the Cortez range on the east. The inactive Cortez mine and mill no. 1 facilities occur along the northern edge of the Cortez range.
The joint venture began mining the Cortez deposits by open-pit methods in 1969. The original mill facilities (mill no. 1) had a nominal capacity of 1,700 tons per day. The mine ran through to 1976 until the ore was virtually exhausted. With the upturn in the price of gold in 1981, mining resumed and mill no. 1 continued operating until 1999, when it was permanently closed. A little more than 1 million oz. were recovered from the Cortez workings.
CIL plant
In 1996, concurrent with the development of the Pipeline and South Pipeline deposits, which were discovered in 1991, Cortez purchased new open-pit mining equipment and constructed a new CIL gold recovery plant (mill no. 2) at a cost of US$250 million. The CIL plant was commissioned in March 1997 and is currently running at a nominal rate of 10,000 tons per day.
A new heap-leach facility, designed to handle 163 million tonnes of lower-grade ore over the life of the mine, came on-stream in 2002.
The Pipeline and South Pipeline deposits are being mined by conventional open-pit methods in nine stages or phases. The mining of stages three through nine is scheduled to continue through to early 2010.
All necessary permits for development of the Pipeline and South Pipeline through to stage seven, and all stages through to the 4100-level elevation, are in place and in good standing. The Cortez joint venture filed an amended plan of operation in January 2001 to deepen stages eight and nine in the Pipeline-South Pipeline pit to the 3400-level and extend the pit into the 3-million-oz. Crossroads deposit to the south. Dewatering remains the critical issue. A record of decision has been pushed back to the first quarter of 2005.
Crossroads was taken out of reserves and put back into resources following the discovery of a high-permeability aquifer. The deposit is deep, and projected dewatering costs are a lot higher than what was originally anticipated a few years ago. “It’s not economic at US$350 per oz.,” said Neilans. “We hope to be able to bring this back at a later date.”
The amended plan of operation entails mining the Gap deposit, between Pipeline and the historical Gold Acres pit, starting in 2010.
Stages eight and nine of the Pipeline pit development are focused mostly on unoxidized, refractory carbonaceous mineralization, although the joint venture is still drilling off additional leach material in stage nine. The Cortez geology team is also getting encouraging results as it steps out to the northwest on Gap.
Carbonaceous ore is now being shipped and processed at the Goldstrike mine operations of
The Cortez Hills pit model is comprised of about 85% oxide and 15% refractory ore. “We are looking at better than Pipeline recoveries in the oxide, and while we are still doing metallurgical testing, there is no reason to suspect we wouldn’t get in the plus 80% recovery in the carbonaceous material if we handle it through either a roaster or autoclave,” said Neilans. “The oxide portion will probably be well above 90% just with our current processing facility,” concurs Bob Hays, exploration and development superintendent at Cortez.
The metallurgical characteristics of the Pipeline and South Pipeline ore have been developed through extensive mill and heap-leach experience and ongoing testwork. Gold recovery is a function of the processing method (milling, heap leaching and roasting) and of ore type. Mill recoveries range from 84% for South Pipeline O-zone material to 94% for Pipeline oxide ore. Heap-leach recoveries approach 68% for lower-grade oxide material. Metallurgical recoveries for refractory, carbonaceous mineralization depend on the process used. Roasting followed by milling recovers 85% of the gold.
Regional exploration work in the Cortez district has identified three distinct primary styles of gold mineralization, including Carlin-type, sediment-hosted disseminated gold deposits, Tertiary porphyry-style deposits and basalt-hosted epithermal deposits. “Our primary focus is on those areas that have the best potential for Carlin-type deposits,” said Hays. “It’s this style of mineralization that can deliver the big, bulk-minable, open-pitable deposits at fairly high grades.”
‘Big picture’
The joint venture has concentrated its exploration efforts on the exposed Cortez and Gold Acres windows of lower-plate carbonate formations. “You have to start with the big picture to understand the smaller picture,” explains Hays. This part of Nevada was once an old continental margin. In Proterozoic times, there was rifting at the margin, which genera
ted major north-northwest- and northeast-striking fault structures that propagate up through the carbonate sequence. These fundamental fabrics were reactivated during the multitude of compressional and extensional activities that influenced the basin’s geometry and development. It is these basement fabrics that guide the joint venture’s exploration activities.
To add to its understanding of the structural framework and stratigraphy of the area, Placer is involved in regional mapping and geochemical sampling. The data compiled, together with results from regional geophysics, are used in two and three-dimensional modelling to identify important basement structures under the pediment cover. “It’s this modelling that helps us become more efficient in targeting future exploration,” said Hays. “Gravity and seismic are probably the two best geophysical tools that help guide our exploration efforts.”
The Cortez geology team continues to refine the area’s stratigraphy by dating available fossils, as well as trying to establish different geophysical signatures. There are inherent zones of weakness between the main formations of the stratigraphic column, which accommodate the structural development in the area. “All our deposits, historically and currently, fall within one of these major contrasts or contacts,” said Hays. Most of the deposits are found at transition between the base of the Devonian Wenban Limestone and the top of the Silurian Roberts Mountains formation; that is the primary host for Pipeline-South Pipeline, Gold Acres, and the old Cortez deposits on the Range front. Prior to the Cortez Hills discovery, this sequence accounted for almost 90% of the mine’s reserve base.
Placer has found only anomalous gold in the underlying Hanson Creek formation beneath Pipeline. “It’s not enough to excite us for any opportunities either underground or at surface,” said Hays.
Crossroads
The Pipeline deposit was discovered by the Cortez joint venture in March 1991 during drilling of deep condemnation holes on the pediment east of Gold Acres. Royal Gold uncovered early signs of South Pipeline during drilling campaigns in 1990 and 1991. Shortly afterward, the Cortez joint venture assumed the role of operator and discovered the South Pipeline deposit. Continued drilling along the northwest structural trends at Pipeline resulted in the 1998 discovery of the Crossroads deposit under deep alluvium cover southeast of South Pipeline.
The Pipeline, South Pipeline and Crossroads deposits are separate zones of the same mineralized system hosted by altered, sheared dolomitic siltstones of the Roberts Mountains formation. The deposits occur in sequence from northwest to southeast along a high-angle fault and are entirely concealed beneath Quaternary pediment gravels that are up to 100 metres thick. The extensively altered and mineralized system is more than 3 km long and 1.5 km wide.
In 1996, Cortez’s geologists began to test for hidden mineralization south of the Cortez mine using deep RC holes.
The Pediment deposit was found 4 km south of the Cortez complex in 1998 under 45-170 metres of cover. Pediment is unique in that it is hosted by a conglomerate, probably Tertiary in age. The gold mineralization is associated with Devonian-age clasts. The Pediment mineralization consists of oxide material, with little or no sulphides. Heap-leach tests suggest a metallurgical response similar to Pipeline ore.
Proven and probable reserves for Pediment are estimated at 34.2 million tonnes grading 1.1 grams gold, equivalent to 1.2 million oz., at a stripping ratio of about 3-to-1. Additional measured and indicated resources contain 101,000 oz. in 4.5 million tonnes grading 0.69 gram gold. In the inferred category are 1.9 million tonnes grading 0.72 gram gold, or 44,000 oz.
Cortez Hills
In October 2002, the sixth hole of a 7-hole RC program north of Pediment resulted in the discovery of Cortez Hills. Hays’s geological team used the faults exposed in the old Cortez pit and projected those fabrics under cover to the south. This corridor is defined by two sub-parallel, high-angle faults that strike north-northwest. The distance between the bounding faults is about 1.6 km. A gravity survey was done over the area to complement the structural projections.
The initial seven holes tested a 2.6-sq.-km area at quite wide spacing. “There were steep contours where we had a pronounced gravity high along a gravity low,” explains Hays. “It was right at the interface that the sixth hole was placed.” The hole intercepted 36.6 metres of 9.5 grams, beginning at 150 metres from surface. Hays believes the gravity contrasts represent alteration.
Cortez Hills is hosted in the hangingwall of the main Cortez fault system in the upper portion of the Devonian carbonate sequence. The deposit dips sub-parallel to the dip of the main Cortez fault at about 50. “It’s a confined, high-angle control,” said Hays. “Basically, we have high volume of fluid confined to a much smaller space, whereas at Pipeline, it was able to come up the fabrics and then bleed out into a low-angle control, so it’s very broad. You are getting comparable amounts of fluids through Cortez Hills, but it has no place to go, and so it drops out in a much smaller area, and that’s what brings the grades up.”
The geometry of the deposit is consistent. The top of the zone, from east to west, starts at 105 metres below the existing topography, extending more than 600 metres from top to bottom, and 550 metres along strike. The true thickness averages 120 metres. The controlling fabric for the mineralization is the plunge of the intersection with the north-northwest fabric train and the northwest train.
Cortez Hills runs the entire length of the Wenban limestone member of the stratigraphic column. The top of the deposit starts in the Horse Canyon member of the upper Devonian sequence, cutting through Wenban, a more micritic limestone member that has been altered to marble. Most of the gold is a later overprint on that earlier marble event, with a strong oxide overprint on the marble.
Transition
The mineralization at depth continues into the upper part of the Roberts Mountains base of the Wenban. It is that transition bet-ween the two formations that hosts Pipeline-South Pipeline, Gold Acres and Cortez.
Cortez Hills is still open to depth and along strike to the south toward the Pediment deposit, less than 1 km away. “The opportunity for the nearest-term bang for the buck still remains between these deposits, where we are picking up discrete zones,” Hays said. “We have a couple of holes to the south that have fairly significant intercepts of pretty high-grade oxides, and we are starting to find suggestions that there are more controlling fabrics between the two deposits.”
Most of the past drilling in the Pediment bottomed in the conglomerates, and no holes ever reached the contact of the Roberts Mountains formation, where the potential remains for low-angle control, stratiform-type mineralization. “We’re looking at the structural controls of Cortez Hills and projecting sub-parallel fabrics under Pediment,” explained Hays. “We’re now in the process of testing those.”
He added: “The geometry that we more typically see is a combination of high-angle and low-angle fabrics, and it’s the high-angle fabric that feeds into the low-angle that is of interest.”
The eastern portions of the exposed lower-plate carbonates in the Gold Acres and Cortez windows have received the bulk of the exploration in the past, consuming about 90% of the joint venture’s exploration budget. Hays’ team is now looking outward into other areas of the joint venture, in particular the Shoshone Range where a look-a-like package of rocks continues under shallow cover on a sub-parallel trend. The joint venture has also turned its attention to the Horse Canyon and ET Blue corridor, sub-parallel to the Cortez corridor. “There is a lot of known opportunity known in the ET Blue and Horse Canyon areas, and the area in between,” said Hays. “Those early signs that you look for — geology, structure, alteration — are of interest, and we’ll put some
more money into it.” This prospective area has been targeted with drilling the past couple of years.
The joint venture is awaiting permitting to begin exploration drilling in the West Pine Valley area. “This is an area that is basically unexplored,” said Hays. “There are shallow, lower-plate carbonates beneath a thin cover. We’re applying whatever we learned from a regional scale to a deposit scale, and vice versa.”
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