Golden Queen developing Soledad gold project

The permitting process to develop an open-pit, heap-leach mine is under way on the Soledad Mountain property in southern California. Owner Golden Queen Mining (TSE) is confident all permits will be completed in 12-18 months.

Kern County is receptive towards development of its natural resources. Besides being a productive agricultural area, it is a leading oil producer and hosts 50 active mines (mostly aggregate). During the past 10 years, five heap-leach operations have sprung up.

The Northern Miner visited the Soledad Mountain property following a summer exploration program which led to increased reserves and reduced stripping ratios. The 60-hole program consisted of 20,600 ft. of reverse-circulation drilling. Using a gold price of $350 per oz. and a cutoff grade of 0.01 oz. gold per ton, Denver-based Mine Reserve Associates calculated a minable reserve of 15.6 million tons of 0.029 oz. gold and 0.532 oz. silver (0.036 oz. gold equivalent) per ton, with a stripping ratio of 3-to-1. Annual production of 2 million tons will allow for a mine life of eight years, with heap leaching extending beyond this time frame.

Alternatively, based on a gold price of $375 per oz., the consulting firm estimates a potential minable reserve of 30 million tons grading 0.029 oz. gold and 0.532 oz. silver, with a stripping ratio of 4-to-1. However, before reserves can be classified as proven or probable, more drilling is required at depth. The mine life remains at eight years, owing to increased production of 4 million tons per year.

Mineralization occurs within a series of northwest-trending quartz veins and associated silicified margins which are 20-50 ft. wide and adjacent to both the hangingwall and footwall. The veins occur within fault and shear zones hosted by flow-banded rhyolite, porphyry quartz latite and intervening pyroclastics. Soledad Mountain is thought to be part of a collapsed caldera. Mining operations on the mountain date back to the 1890s, and in the period 1935-1942, Consolidated Goldfields produced 180,000 oz. gold. Metallurgical testing is being conducted by H.C. Osborne and Associates. Short-term column tests indicate an 80% gold recovery, which compares favorably with the neighboring pits of Cactus Gold Mines where, despite the cessation of mining in 1992, heap leaching continues to recover up to 1,000 oz. gold per month.

Paul Blair, president of Golden Queen’s U.S. operating subsidiary and former general manager of Cactus Gold, is confident that the projected 80% recovery rate will become greater over time. The Shumake pit at Cactus Gold had a projected recovery of 73%, yet continued recovery, to date, is 86%. The land package at Soledad is complicated, involving 133 different owners. Nevertheless, Golden Queen controls all the land it needs in order to begin mining. It is currently negotiating for an additional property, which contains an estimated 2.5 million tons of 0.030 oz. gold equivalent, with a stripping ratio of 1-to-1. Mineral leases are subject to an average sliding-scale 4% net smelter return royalty. Land-holding costs are expected to exceed $400,000 per year.

Mining plans call for conventional drilling and blasting, with ore to be trucked to a 3-stage crushing operation and leached with a cyanide solution. The capital cost for an open pit mine, based on $350 per oz. gold is estimated at $28.7 million, with the operating cost projected at $5.57 per ton of ore. The production cost is projected at $208 per oz. gold equivalent, and 89 jobs would be created.

Based on a price of $375 per oz., the capital cost is estimated at $47.9 million, the operating cost at $5.58 per ton of ore and the production cost at $209 per oz. gold equivalent.

A potential aggregate exists in the waste rock, which is believed suitable for concrete and railroad ballast.

Power, natural gas and water are within 1 mile of the site, and a road leads directly to the mine.

Golden Queen is seeking a partner to invest in the development of the project. The company has 13.5 million shares outstanding and US$250,000 in working capital. VenturesTrident holds a 43% interest in Golden Queen.