Equinox plans third mine operation

With the Feb. 27, 1991, unofficial start-up of its 100%-owned Van Stone zinc mine in Washington State, Vancouver-based Equinox Resources (TSE) is rapidly evolving into a top-class mine developer. The mine will be Equinox’s second producing mine and the first base-metal mine in the state in over 13 years. The 24%-owned Buckhorn gold mine in Nevada was the company’s first, and the 100%-owned Zenda mine in California will be the third, upon completion of mine financing.

The company also has two interesting advanced exploration projects on the go in 1991. These are the J&L polymetallic property in southern B.C. and the 49%-owned Rosebud gold-silver property in Nevada.

As President Ross Beaty explained, “Equinox’s long term strategy is to develop gold and base-metal mines and to carry out as much active exploration as possible, through joint ventures and with cash-flow derived from mining operations.”

The 1100-ton-per-day Van Stone zinc mine, brought into production for US$6.35 million, is located in northeastern Washington State about 25 miles south of Cominco’s (TSE) smelter at Trail, B.C. The mine will operate as an open pit for two years and then as an underground operation for another six years.

Infrastructure already in place includes a 1,100-ton-per-day mill, power, roads, office and other facilities. A new tailings dam was constructed and the mine will use the Trail smelter.

Mineable reserves are estimated at 2,550,000 tons grading 5.7% zinc and 1.1% lead. Underground ore grade is slightly higher at 6% zinc versus 4.7% zinc in the open pit material. Annual production is estimated at 32,900 tons of zinc concentrate and 5,300 tons of lead concentrate.

Equinox will receive 30% of the net mine revenue after a project loan of US$2.35 million is retired, and 60% of net mine revenues after the remaining US$4 million project investment by a European syndicate has been paid back.

In 1990, Equinox’s exploration and mine pre-development costs totalled about $4 million. The company expects about $12 million will be spent on the Van Stone, J&L and Rosebud properties in 1991, of which the company will contribute a minimum of $500,000.

At the zinc-lead-silver J&L joint venture near Revelstoke, B.C., Cheni Gold Mines (TSE) is earning a 60% interest from Equinox and Pan-American Minerals (TSE) by completing a $7.5 million 2-phase exploration program and a bankable feasibility study.

In the $3.5-million first phase, three drills are currently testing the Main zone and the newly discovered Yellowjacket zone in the hanging wall above the Main zone. The new zone has been intersected in shallow mineralization over a strike length of 500 ft.

Encouraged by the latest results, Cheni expects to upgrade proven and probable reserves of 890,000 tons grading 5.2% zinc, 2.5% lead, 0.21 oz. gold per ton and 1.93 oz. silver per ton soon.

The Rosebud joint venture, a promising Nevada gold-silver property now at the prefeasibility stage, is located about 46 miles west of Winnemucca. Since May, 1989, LAC Minerals (TSE), the operator, has earned a 51% interest in the property by spending US$700,000 on exploration and 85,000 feet of diamond drilling in 112 drill-holes.

The flat-lying, low-sulphide gold-silver mineralization, amenable to cyanide leaching, has been traced for about ,1000 feet on strike and varies in width from 50 to 150 feet. If results of the current prefeasibility study are satisfactory, drilling will resume this month.

Using a cut-off grade of 0.02 oz per ton gold, LAC has estimated a probable and possible mineral inventory of 5.2 million tons grading 0.123 oz per ton gold (uncut), which becomes 2.3 million tons grading 0.231 oz per ton gold (uncut) at a cut-off of 0.05 oz per ton. About 55% of this resource is located on the Rosebud joint venture with the remainder on wholly-owned LAC ground.

Documentation and regulatory approval for the US$4 million debenture financing of the 100%-owned Zenda mine in California have been completed but, at current gold prices, the project is on hold.

As reserves run out, exploration continues at Equinox’s 24%-owned Buckhorn gold mine in Nevada; Cominco Resources International (TSE) owns 76%. The mine continued to suffer operating losses for the first two quarters in 1990 because of high waste stripping costs and low-grade ore. The company states that 1991 will be the mine’s last year of operation.

Estimated reserves as of Aug. 1, 1990, were 400,000 tons grading 0.062 oz. per ton gold, compared with 707,000 tons grading 0.05 oz per ton gold at Dec. 31, 1989