Canyon ponders underground mine at Briggs

Denver — Low gold prices are putting a damper on the North Briggs project, in southeastern California, reducing the size of what was to be a real cost-saver for owner Canyon Resources (CAU-X).

The Denver-based company reports that nearly two-thirds of the deposit is no longer accessible by open-pit methods, forcing it to look at underground mining.

Prestripping of 3.5 million tons of waste material, which sat atop a portion of North Briggs, was recently completed, and the higher-grade ore is already on the heap-leach pad. Since this material is soft and requires little crushing, it should contribute to lower cash costs. The ore is also entirely oxidized, resulting in higher leach recoveries of up to 85%.

Canyon expected initial production from North Briggs by mid-May; in the meantime, mining from the lower-grade Briggs deposit continues.

North Briggs contains 2.5 million tons grading 0.056 oz. per ton, or 135,000 oz. However, the highest-grade mineralization, which ranges between 0.1 and 0.5 oz. per ton, is too deep, and would now require excessive stripping. Under the revised mine plan, the stripping ratio would still be 4-to-1.

Canyon says that if it opts for underground mining at North Briggs, it will probably continue to use heap leaching. The company is putting the finishing touches on a leach-pad expansion, which will increase capacity by 4.5 million tons.

Over the next six months, the company will perform stepout drilling around the Briggs, North Briggs and Goldtooth deposits. Also, earlier this year, Canyon submitted a permit application for exploration of the Cecil R and Jackson areas, north of the mine.

At Goldtooth, recent infill drilling has yielded average grades of 0.04 oz. per ton. Open-pit mining is envisaged for the deposit.

Briggs is expected to produce up to 120,000 oz. gold for 2001, up from last year’s 86,621 oz. Cash operating costs are pegged at US$200 per oz.

For the first quarter, the mine produced 22,527 oz. at a cash operating cost of US$250, compared with 20,419 oz. at US$267 per oz. in the first quarter of 2000.

Canyon realized a price of US$304 per oz. gold-equivalent on sales of 24,097 oz. gold and 4,400 oz. silver, compared with a year-ago price of US$372 per oz. on sales of 23,753 oz. gold and 5,000 oz. silver.

The company reported a net loss of US$875,800 (or 7 per share) for the recent quarter, compared with a loss of US$812,900 (7 per share) in the corresponding period of 2000.