Dee syndicate drilling deep

Rayrock Resources, one of the early birds in what has since developed into a major gold play in Nevada — and certainly one of the pioneers in the heap leaching that is changing the whole economics of gold mining in that country — is now reaping the rewards, as well as sharing in the mining excitement currently sweeping that state.

While too early for bottom line figures, the past year could well prove the company’s best ever, The Northern Miner gathers from conversation with David R. Crombie, its president and chief executive officer. And 1988 should be very interesting.

To be watched closely is some deep drilling to get under way shortly on the Dee Gold project at the north end of the prolific Carlin belt adjoining Newmont’s Bootstrap mine. Rayrock holds a 29.3% interest and is operator of this highly profitable mine which has its own 1,250-ton mill as well as a heap leach operation.

A 1,400-ft hole is to be drilled from the bottom of the Dee open pit “just as soon as we can get a rig,” says David A. Hutton, vice- president exploration and development. In view of some remarkable deep ore discoveries being made elsewhere along this belt, manage ment is naturally anxious to see just what lies below its own oxidized ore zone.

The Dee mine is owned by Ray rock, Lacana Mining (29.3%), Silver State Mining (29.3%), and John Livermore (12%).

In addition to the Dee, Rayrock operates two other producing mines in Nevada, with another coming up — its 26.5%-owned veteran Pinson which has its own 1,500-ton mill as well as a heap leach operation and a similar interest in the Preble mine from which high grade ore is trucked the 14 miles to the Pinson mill. That, too, has an on-site leaching operation for sub-mill- grade ores.

These three operations turned out 137,866 oz gold in 1986 at an average cost of $145.07(US). Total output was down about 5% for this past year, but because of the better price, gold earnings will be higher. Pinson and Preble are owned by Ray rock, American Barrick Resources (26.25%), Lacana (26.25%), and indi viduals sharing the remaining 21%.

Looming very large is the upcom ing Marigold project which holds a 35-sq-mile spread in central Nevada near Battle Mountain. This is an other joint venture in which Ray rock, Placer Dome and Lacana Mining each hold a 23.3% direct interest.

With the largest reserves and best potential, Marigold already boasts 12 million tons in four separate deposits, of which the 8 South is the most important, geologist Hutton tells The Northern Miner. In the same general Carlin area, this ore is of that same type — disseminated gold in oxidation that extends to depths of 500-600 ft. There are no sulphides, which makes it ideal for heap leaching.

A production decision for Marigold is to be made shortly. It could include both milling and heap leaching, but either way it looks viable. While it’s all leachable with recoveries of 65-70%, there are three million tons of free milling material grading 0.12 oz which would yield a 95% recovery if milled. Being considered is a 1,200-1,500-ton plant which, together with tailings disposal, would cost in the order of $8-9 million. Strong financial position

Being somewhat concerned about the price of gold during the past quarter, Rayrock sold a quantity ahead at what Crombie describes as “a good price.” So if it averages today’s price through 1988, the company’s average for the year would be better than it was in 1987, earnings will be higher.

This company now enjoys a very healthy financial position, with cash and liquids in excess of $40 million. And with a strong and rising cash flow, it is now in a position to tackle bigger projects that may lie ahead. Indeed it has come a long way from the junior exploration firm formed by the famed Byrne mining group after the war and which put it on this present growth tack.

For instance, Rayrock recently acquired a 55% controlling interest in Vancouver-based Midland Energy Corp., which is developing a promising gold-silver situation in Costa Rica and a copper-silver project in Chile. Shareholders of Midland have just authorized an increase in capitalization from 20,000,000 common shares to 40,000,000 shares and a change of name to Midland Gold Corp.