There is obviously an element of luck in whether or not a deposit turns out to be large. But only if a company is out there rolling the dice does it stand a chance of winning big. At the McCoy/Cove gold-silver deposit in north-central Nevada, Echo Bay Mines appears to have struck it lucky.
The size of the winnings has yet to be determined. But at the very least, this open pit heap leach project illustrates how a successful exploration program can boost the over-all reserves of a company — even when the deposit was thought to have been completely drilled out by previous operators.
The numbers speak for themselves:
At year-end 1986, Echo Bay’s company-wide reserves stood at 5.6 million oz gold (proven and probable). One year later, the figure had practically doubled to 10.4 million oz gold equivalent.
(In light of significant silver reserves at the Cove deposit and a small amount from the company’s Sunnyside mine in southwest Colorado, silver ounces to gold have been converted using a silver-to- gold price ratio of 70:1. This approximates current market values for both metals. The combined gold and silver content is called “gold equivalent.”)
This substantial increase is largely due to the Cove and, to a lesser degree, the McCoy open pits. Potential cornerstone
When asked whether the Cove/ McCoy operation might eventually become the cornerstone of the company, President John Zigarlick told The Northern Miner: “There is a reasonable chance, but it would first have to succeed the roughly 195,000 oz gold which the Lupin mine (in the Northwest Territories) produced in 1987.”
Because of their proximity, Cove and McCoy are considered part of the same operation, though they are actually separate. While McCoy’s first gold was poured in April, 1986 (by then-owner Tenneco Minerals Co.), the first ore from the near-surface portion of the Cove deposit went on to the leach pad in January of this year.
“The difference between Cove and McCoy is the difference between a world-class orebody and a nice, little mine,” according to Safety Officer Stephen Jarvis. “Cove is a long-life mine, and quite a bit deeper than McCoy.”
When The Northern Miner dropped by the bustling operation last week, 75,000 tons of ore and waste per day were being mined from the Cove over a 5-day work week. And more than 10,000 tons per day were being crushed and leached on a continuous basis. McCoy on hold
Production from McCoy has been put on hold, but only so that mining of the upper portion of the Cove can get fully under way. The ore here, which is amenable to heap leaching, is being mined so as to generate fast cash flow for ongoing development.
Less than a mile exists between the two deposits, which are embedded in the north-central part of the Fish Creek Mountains. To the immediate southeast stretch hundreds of acres of desert-like open range dotted with lazy cattle. The nearest town, Battle Mountain, lies about 30 miles southwest.
Despite being known as a gold district, McCoy has had little historical production — fewer than 10,000 oz from shallow underground working during the late 1920s and early ’30s. It wasn’t until the 1960s, when several companies began hunting for porphyry-type copper deposits, that the area started to buzz with exploration activity. In 1977, Houston Minerals, a predecessor of Tenneco, purchased the property from Summa Corp. (owned by the late millionaire Howard Hughes). And in 1985, the holdings passed hands from Consolidated Goldfields back to Tenneco. Following a detailed reappraisal, Tenneco brought the McCoy gold-skarn deposit into production. The decision was based on a geological reserve of 280,000 oz gold. Tenneco sale
In October, 1986, immediately before gold prices began a short- term decline, Tenneco sold to Echo Bay three operating mines and all its precious metals exploration properties. The majority of these, including the McCoy mine, were in Nevada. The price? A mere $130 million(US).
Subsequent exploration and development drilling of McCoy has caused reserves to practically double. At year-end 1987, proven and probable reserves at the deposit stood at 521,000 oz gold, including some high-grade underground ore. The average grade of current reserves is 0.045 oz per ton.
Exploration work on the large 100-sq-mile claim block which contains the Cove/McCoy operation began in early 1986. By 1987, the Cove deposit had been discovered immediately northeast of McCoy. Current reserves (proven and probable) for Cove are 2.1 million oz gold and 97.7 million oz silver.
“But by year-end, the Cove deposit could potentially have a mineable reserve approaching four million oz gold and 250 million oz silver grading 0.061 oz gold equivalent per ton,” says Neil Muncaster, vice- president exploration. Geology
The Cove orebody consists of an upper, oxidized zone and a lower, sulphide zone. The upper zone crops out at the surface and extends to a depth of about 400 ft. Laterally, the upper zone extends 800×1,000 ft. The lower zone extends to more than 1,500 ft; laterally, it extends at least 1,200×3,000 ft. While the average vein thickness is about 0.1 inches or less, a considerable range is present, according to geologists.
To date, 442 reverse circulation holes have been drilled for a total of 308,650 ft. In addition, nine core holes have been drilled for a total of 17,163 ft. Rigs are continuing to work round the clock to define the deposit, though all drilling is now concentrated on the lower ore zone. Two conventional circualtion drill rigs, two reverse circulation rigs and four core rigs are operating 24 hours a day.
So far, Hole 245 has proven the best hole for gold, with a 540-ft intercept of more than a quarter of an ounce.
The company now has holes that have encountered gold and silver as deep as 2,500 ft. “But the mineralization is questionable ore at this depth,” explains General Manager David Naccarati. “It’s either not high enough grade or not sufficient quality at this time.”
According to Muncaster: “Many of the 12,000-ft-deep holes in the centre of the Cove deposit ended at mineral, and our recent drilling indicates there is a significant zone below this depth. Whether or not it is ore remains one of our big unanswered questions. More detailed drilling is required before we can say if it’s economic to mine.” 5,000 tons per day
A study is under way to determine the best mining method for the two deposits. The final plan is expected to be a combination of open pit (for the near-surface ore) and underground extraction (for the deeper areas), with a 5,000-ton-per- day mill.
The mill can be expanded to process double that amount if final reserves prove higher than expected. Concrete is expected to begin being poured this month, but construction won’t be completed until next March or April. In July, the company expects to be up to the 5,000- ton-per-day rate, says Naccarati.
Because of the high silver content of the Cove ore, a Merrill- Crowe recovery system is to be used. In other words, zinc powder added to a de-aerated pregnant solution will precipitate the gold. The mill will feature a grinding section and a flotation/gravity system, combined with an agitation leach and counter-current decantation. The decantation will allow for a clearer solution to be used in the Merrill- Crowe recovery.
Crushing and leaching will drop back to 5,000-7,000 from 10,000 tons per day after milling begins. Fast Track
“The minesite has been in a constant state of change over the past year,” said Naccarati, “and it’s not letting up. We’re definitely on a fast-track approach.”
Miners are engaged in the first stage of stripping the Cove deposit. South of the Cove pit, core drillers are busy trying to determine the shaft site.
In April, a decline at the Cove deposit was started towards a particularly high-grade horizon between 600 ft and 700 ft. Meanwhile, a McCoy decline is going down beneath the planned pit. It was begun in January and is now down about 800 ft laterally.
Already constructed is a 10,000- ton-per-day crusher utilizing a jaw crusher fo
r the primary ore, with cone secondary and tertiary crushers. Also completed are a carbon filtration plant and about half the shop/office complex.
Two leach pads are being used. A new, expandable pad now measures one million square feet and is capable of handling about three million tons of ore. The other pad measures about two million square feet and is capable of handling six million tons. It has been used since 1986.
About 240 Echo Bay workers are on-site, compared with 35 at the same time last year, according to Safety Officer Jarvis.
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