Canyon ready to re-open Briggs gold mine in California

All Canyon Resources (CAU-A) needs to get things rolling at its Briggs gold mine in Inyo County, California is some cash.

Feasibility study results are in and residual gold production from the leach pads has been ongoing since mining stopped in the open pit three years ago.

We have the plants and facilities already existing, so that gives us the ability to move quite rapidly once we have financing in hand, says Canyon president and CEO James Hesketh. We have to renew some minor permits, such as our blasting permit, but otherwise its a fully permitted facility and we can move quite rapidly.

Hesketh estimates production at Briggs could start within five months of the company receiving funding.

We can take advantage of todays market, instead of hoping the markets going to be there in three years, Hesketh says.

Canyon, based in Colarado, needs to raise US$8.25 million to bring the open pit mine back into production, followed by another US$4.6 million in the next year to develop a small underground mine.

According to the feasibility study, the combined open pit and underground mine would produce 30,000 oz. gold in year one, 45,000 oz. in year two, 33,000 oz. in year three and 4,500 oz. in year four. The cash operating cost is estimated at US$430 per oz., which includes offsite refining. With just the open pit, the cash cost is estimated at US$449 per oz.

The total project has a net return of US$4.7 million at a gold price of US$600 per oz. A US$10 change in gold price would have an impact on the net return by US$1.1 million.

More than 550,000 oz. gold has been produced since Briggs opened in 1996. Open pit production ended in 2004 after the company stopped forward development of the mine two years earlier.

There hadnt been any new investment during the downturn in gold price so things naturally came to a halt, Hesketh says, referring to when gold was below US$300 per oz.

The large leach pad had 24 million tons of material and has provided the company with a little extra cash over the last three years.

It was just last year that Hesketh says the company decided to do more drilling to see if it was worth restarting the project.

The current proven and probable open pit reserves are about 4.2 million tons grading 0.026 oz. gold per ton with a cutoff of 0.013 oz. gold per ton, or 108,500 oz. gold. The open pit study developed a combined reserve for three pits with an average strip ratio of 3.4 tons of waste per ton of ore.

Underground reserves are 183,000 tons grading 0.118 oz. gold per ton with a cutoff grade of 0.08 oz. gold per ton, or 21,500 oz.

Canyons not stopping there. The plan is to add more reserves as they go to increase production and reduce operating costs. Initially, less than 50% of the plant capacity will be used.

Because its expensive to prove an underground reserve with surface drilling, Hesketh says the company has only drilled enough to justify the initiation of underground mining so the drill team can get underground and drill from there.

The Goldtooth fault is on the south end of the Briggs mine complex and forms the footwall of the Brigs Main and North orebodies.

Canyon will finish a final underground study this quarter for the Goldtooth mineralization, which ranges from 6 to 25 ft. in width with a dip between 60 and 80 degrees. Goldtooth has been drilled over a strike length of 3,200 ft. with the last fences of drilling remaining in ore grade material. The mining method in the stopes will be mechanized longhole stoping with backfill and the incremental production cost underground is estimated at US$384 per oz.

The feasibility study also did not include any of the underground potential from the high grade Briggs North structure or from several satellite deposits, including Cecil-R two miles north of the Briggs mine, which has 2.2 million tons of mineralized rock containing 84,000 oz. gold grading 0.038 oz. per ton. Drilling at the nearby Jackson deposit has returned grades of 0.064 oz. gold per ton over 50 ft. 0.068 oz. gold over 75 ft. and 0.116 oz. over 30 ft.

Canyon is also working on a feasibility study and permitting for the Reward gold property in Nevada, which is 60 miles north of Briggs. It, too, is being viewed as a satellite property. Reward has an estimated resource of 14 million tons grading 0.021 oz. gold per ton with a cutoff of 0.005 oz. per ton.