Canyon looks at Hycroft

Vancouver — With the Briggs mine eking out its last remaining ounces of gold, Canyon Resources (CAU-A) has begun a due-diligence review of the dormant Hycroft mine, near Winnemucca, Nev.

The company can acquire the gold-silver asset from Vista Gold (VGZ-A) by paying US$4 million in cash and issuing equity units valued at US$6 million. A unit consists of one share and half a warrant.

The former open-pit mine produced more than 1 million oz. gold and 2 million oz. silver from 1983 to 2004. There are 56 million tons of remaining oxide resources averaging 0.018 oz. gold per ton, as well as 37.7 million tons of minable reserves at the same grade.

Canyon intends to turn Hycroft into a heap-leach operation capable of producing 409,250 oz. gold and 1.6 million oz. silver over five years. The company has until late August to complete the due diligence and develop an operating plan.

Currently, Canyon’s only production comes from residual leaching at the Briggs mine in California, where mining ceased a year ago. The company produced 2,634 oz. gold in the first quarter of this year, compared with 5,681 oz. a year earlier.

Canyon posted a net loss of US$2.3 million in the first three months of this year, compared with a loss of US$3.9 million a year earlier. Cash and cash equivalents at the end of the quarter stood at US$6.2 million.

The company also owns the McDonald gold project in Montana, which has been stalled by a state ban on the use of cyanide. The company is seeking compensation from the state for the lost value of the property.