Allied Nevada readies for Hycroft reopening

As Allied Nevada Gold (ANV-T, ANV-N) gets ready to reactivate the Hycroft heap-leach gold mine near Winnemucca, Nev., by the fourth quarter, the company has shifted its drill program into high gear.

With a focus on the Brimstone, Central and Boneyard pits and other areas, the company is working to expand the oxide gold and silver resources and test the sulphide zone below the oxides.

The Hycroft property has a measured and indicated resource of 48 million tonnes grading 0.59 gram gold per tonne for 1 million oz. gold.

The company already expects to produce 100,000 oz. gold per year for the first three years of operations and 60,000 oz. during the fourth at an average cost of US$430 per oz.

Gold and silver will be produced using a run-of-mine heap-leach process and a Merrill-Crowe gold recovery plant.

Allied Nevada is drilling at a rate of about 9,000 metres a month with two diamond drills and three reverse-circulation (RC) drills in use.

Between August and the end of January, Allied Nevada had drilled 78 holes (60 RC and 18 core) to an average depth of 300 metres.

Highlights from drilling include 168 metres grading 0.56 gram gold per tonne and 18.75 grams silver (1.03 grams gold equivalent), including 15 metres grading 0.88 gram gold and 41 grams silver (1.7 grams gold equivalent).

Allied Nevada reports that drilling so far demonstrates continuity of the oxide zone as well as the continuity and thickness of mineralization in the sulphide zone continuing south out of the Brimstone pit.

The company says future drilling in the Brimstone pit will focus more on defining additional oxide reserves for production.

Drilling on the Central zone will continue to focus on both the oxides and sulphides.

When production starts late this year, the company plans to hire a contractor for mining while technical, health and safety, environmental and general management positions, as well as those in the process facilities, will be filled by Allied Nevada staff. The Hycroft operation will employ about 135 people.

Allied Nevada estimates capital costs to bring the mine back into production at US$26.6 million.

The Hycroft mine, in production from 1994-1998, was closed and put on care and maintenance due to low gold prices.

Allied Nevada was created by Vista Gold (VGZ-T, VGZ-X), which holds 70% of the company, in May 2007.

It was Vista’s intention to create a Nevada-focused gold company with the 647 sq. km of exploration and development properties it had acquired over the years.