Amax, U.S. Gold OK $73-million(US) Hayden Hill project

Situated in Lassen Cty., about 55 miles north of Susanville, Calif. the 60%-owned Amax and 40% U.S. Gold project will have the distinction of being one the lowest grade mining operations in which a conventional mill is used.

At an average mill head grade of 0.085 oz gold per ton, the operation is expected to produce 145,000 oz gold and 445,000 oz silver annually for at least eight years, Amax spokesman Gina Wilson told The Northern Miner.

Proven probable reserves of 45.3 million tons of grade 0.032 oz gold and 0.22 oz silver per ton have been delineated by a 180,000 ft drilling program which Amax agreed to complete as part of a feasibility study.

The average depth of 305 drill holes completed since last September is 600 ft. Almost all of those reserves are contained in two separate zones — the Providence and Lookout — which are expected to be mined via open pit methods at an undisclosed cost per oz.

After Amax obtains the necessary environmental permits, it expects to spend about 10 months building heap leach pads and a 3,500-ton-per day carbon-in-pulp milling facility.

As part of the original agreement, Amax took down 1.9 million U.S. Gold shares representing a 4% interest. While U.S. Gold is required to provide 40% of development costs, the Denver company expects to have no trouble in meeting its joint venture obligations.

“When you have a partner like Amax Gold, obtaining project financing isn’t a stumbling block,” said U.S. Gold spokesman William Pass who regards the Hayden Hill project as an important part of the company’s growth plan.

Production attributable to Amax last year from the Sleeper mine in Nevada and the Waihi mine in New Zealand was 239,980 oz gold. But with a second U.S. gold mine (the Wind Mountain near Reno, Nev.) in production, Amax’s 1989 output is expected to be about 300,000 oz.

A 16%-owned affiliate of Vancouver gold producer Placer Dome (TSE), U.S. Gold produced 20,008 oz last year from the White Pine and Dee gold mines in Nevada.

Construction at Hayden Hill is expected to start in early 1991 when an environmental impact report and federal environmental impact statement is completed, according to Wilson.

Of the $73 million, which the joint venture will spend on development, about $11 million has been earmarked for mill construction, according to Wilson. An additional $7.7 million is being spent to build a crusher.

Amax Gold is an 87%-owned subsidiary of Denver-based Amax Inc.

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