Good gold recoveries might improve economics at North Bullfrog

VANCOUVER – Metallurgical testwork is returning good results for Corvus Gold (KOR-T) as the company pushes towards production at its North Bullfrog project in Nevada.

North Bullfrog is a low sulphidation epithermal system with gold disseminated through stratabound zones of altered volcanics and contained in breccias and vein stockworks. There are eight target zones at North Bullfrog, four of which host defined resources.

Corvus released an updated preliminary economic assessment for North Bullfrog in December, which attached an assumed gold recovery to each of those four zones. The study concluded that a 48,000-tonne-per-day (tpd) heap-leach operation at the site would generate a 26% pre-tax internal rate of return, using a 5% discount rate.

In the weeks since, Corvus concluded a series of column leach and bottle roll tests on core samples from the site and the results bode well for improved project economics. In fact, the tests suggest that gold recoveries will be better than assumed in the PEA for all four zones.

Mining at North Bullfrog would start in the Mayflower and Jolly Jane zones. At Mayflower, Corvus assumed a heap leach operation would recover 78% of the contained gold, but column leach tests actually recovered 88% of the gold. Gold recoveries that high suggest the potential to process Mayflower mineralization in a basic run-of-mine operation, which would lower costs by eliminating the need for crushing.

At Jolly Jane, Corvus assumed heap leaching would lead to 68% gold recovery. Column leach testing actually recovered 71% of the contained gold, while bottle roll tests generated recoveries ranging from 76% to 88%.

Bottle roll tests on mineralized rock from the Sierra Blanca zone produced gold recoveries ranging from 72% to 94%, better than the recovery assumed for the zone in the PEA. Rocks from the Savage Valley zone gave up 82% of their gold in column leach tests, an improvement on the 78% recovery used in the PEA.

“The ongoing North Bullfrog project gold recovery results continue to be very encouraging and offer significant upside for this attractive new Nevada mining project,” said Carl Brechtel, Corvus CEO, in a statement. “These results will be integrated with further column tests at larger crush size to help optimize cost versus recovery.”

North Bullfrog is in southern Nevada, 10 km north of Beatty and 8 km north of the historic Bullfrog mine operated by Barrick Gold. A northerly trending district-scale fault extends from the former mine through the North Bullfrog property, with numerous normal faults cutting the volcanic sequence to create localized vein-style gold mineralization.

The North Bullfrog PEA, which came out in December, envisioned a heap leach mine developed in two stages that would operate for 10 years, producing an average of 74,800 oz. of gold annually.

In the first stage of development Corvus would spend US$60 million to build a 7,700 tpd crush and heap leach operation tapping into the Mayflower deposit. In year two the company would incur another US$34 million in expenditures to expand the facility to 48,000 tpd and start mining additional zones.

In-pit resources at North Bullfrog currently stand at 20.8 million indicated tonnes grading 0.31 gram gold per tonne plus 115 million inferred tonnes averaging 0.22 gram gold, for just over 1 million oz. contained gold.

Resources at the project look set to grow in 2013, however, as Corvus continues to explore newfound potential to the north and east. A drill program at the Yellow Jacket zone, which lies just north of Sierra Blanca, produced such results as 72 metres grading 1.74 grams gold and 98 grams silver per tonne in hole 138 and 59 metres of 1.7 grams gold and 32.6 grams silver in hole 184.

Those results prompted Corvus to expand its land holdings at North Bullfrog by adding 297 new federal mining claims to the north. The property now covers 68 sq. km.

Corvus released the updated North Bullfrog PEA in early December and its share price stayed above $1.60 for the rest of that month, not far off its 52-week high of $1.83. In January KOR shares lost some 20% and are currently trading near $1.32. Corvus has 75 million shares outstanding.