Feasibility study underway at Goldstake’s tailings bet

The U.S. subsidiary of Goldstake Explorations (COATS) is conducting a feasibility study on its Whitewood Creek tailings project in South Dakota’s Black Hills area, shareholders were told at the annual meeting in Toronto.

With about 20 million tons of tailings material contained within a 4,420-acre area, the company expects to be in a position to start a 4,000-ton-per-day operation within about two years.

However, when the feasibility study is completed in January, Goldstake will look for a major mining outfit to act as a joint venture partner in the project.

Under an agreement with Strawberry Hill Mining of Deadwood, N.D., Goldstake’s U.S. subsidiary holds an 80% interest while the former company retains 20%.

According to operations manager Reginald Hardy, the company will need to spend about $25 million to bring the project to a production mode.

Whitewood Creek is one of the largest unprocessed tailings deposits in North America.

The tailings were discharged 24 hours daily from the Black Hills gold mines (including the Homestake mine) for nearly 100 years without any treatment and are deposited along the lower Creek at depths of more than four metres and distances from the stream bed of up to 400 m. Channel samples

After spending about $3 million so far, Goldstake says it has about 7.1 million tons of grade 0.48 oz gold per ton in reserves.

Based on channel samples taken from 348 test pits and 600 sample holes Hardy says the Whitewood Creek reserves are divided into the following categories: 4.8 million tons of proven, 178,509 indicated and 2.2 million tons inferred.

During the operation’s 10 to 15-year lifespan, Goldstake will divide the deposit into blocks before the exposed tailings are picked up by front end loaders and dumped into a transfer hopper.

The transfer hopper will mix the tailings with water to form a slurry which the company will pump via pipeline to a processing plant. With an 85% recovery level and pending approval by the Environmental Protection Agency, Hardy said the project could be operated at a cost of less than $200(US) per oz.

After raising $750,000 in overseas financing, Goldstake is also involved in exploration on a number of other projects including another Black Hills area property called the Stowell claims. Homestake mine

According to Goldstake President Robert Cleaver, the 87 Stowell claims lie on strike with the main ore ledges of the Homestake mine. The working faces of the century- old Homestake are located about 1,200 m from the Stowell property’s northern border. Since the Homestake mine opened in about 1876, the San Francisco company has mined the No 7 vein down to a depth of about 6,800 ft.

As the property is virtually unexplored, a pioneering seismic exploration program was conducted over the past year in a bid to locate the down-plunge extension of the No 15 ledge.

By drilling a couple of 8,000-ft holes, Goldstake will attempt to find out if the structure that supports the No 7 vein actually crosses the Stowell claims boundary.

In other news, Goldstake is involved in an Australian joint venture with Sil ver Orchid Pty. and BHP Mining at the Hill End gold field about 130 miles west of Sydney in New South Wales. One of Australia’s richest gold regions, it produced 1.2 million oz gold (including the largest nugget ever found) before development came to a standstill at the turn of the century.

Under the terms of a joint venture, BPH is spending $4 1/2 million to earn a 50% interest. Goldstake holds a 20% interest in Silver Orchid which has identified nine separate prospects on the Hill End leases it currently holds. Hawkins Hill

They include the old Hawkins Hill mine workings where underground sampling on the 33-m level is about to begin. Cleaver said the company has outlined inferred ore reserves of some 825,000 tons by driving 70 m east from the 160-m level of the Patriarch Shaft.

“But due to the fact that Hill End deposits tend to be `nuggety’ in nature, grades won’t be known until a bulk sample is taken,” he said.

After reporting a year-end deficit of $804,118, Goldstake had a first quarter cash position of $228,441 compared with $166,522 at the same time last year. With 9.6 million shares outstanding, the company is contemplating a gold loan to finance exploration at the Whitewood property.

The Goldstake issue was trading recently on the COATS system at $2.70.