Canyon ready to reopen Briggs gold mine

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

Feasibility study results are in and residual gold production from the leach pads has been ongoing since mining from the open pit stopped in 2004.

“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 it’s a fully permitted facility.”

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

“We can take advantage of today’s market, instead of hoping the market’s 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 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 the first year, 45,000 oz. in the second, 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 the open pit alone, 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 the gold price would have a US$1.1-million impact on the net return.

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

“There hadn’t been any new investment during the downturn in gold price, so things naturally came to a halt,” Hesketh says, referring to a gold price that, at the time, 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.

Proven and probable open-pit reserves currently stand at 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.

Canyon’s not stopping there. The plan is to add to reserves as the company moves to increase production and reduce operating costs. Initially, less than 50% of the plant capacity will be used.

Because it’s expensive to prove up an underground reserve with surface drilling, Hesketh says the company has only drilled enough to justify the start 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. wide with a dip between 60 and 80. Goldtooth has been drilled over a strike length of 3,200 ft. with the last fences of drilling remaining in ore-grade material. Underground mining will be done by mechanized long-hole stoping with backfill and the incremental production cost underground is estimated at US$384 per oz.

The feasibility study did not include any of the underground potential from the high-grade Briggs North structure or from several satellite deposits, including Cecil-R 3.2 km north of the Briggs mine, which hosts 2.2 million tons of mineralized rock grading 0.038 oz. per ton or 84,000 oz. gold. 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 96.5 km north of Briggs. It, too, is being viewed as a satellite property. The resource at Reward is estimated at 14 million tons grading 0.021 oz. gold per ton with a cutoff of 0.005 oz. per ton.