Goldstake tailings project moves ahead

New mine development in and around the Black Hills of South Dakota might soon be halted. But that should not affect Goldstake Explorations’ (TSE) Whitewood Creek tailings project.

President Robert Cleaver told The Northern Miner the joint venture tailings project with Homestake Mining (NYSE) is outside the Black Hills boundary as defined by the 2-year moratorium proposed by state Governor George Mickelson. This project is north of Interstate 90, a highway that marks the northernmost boundary of the Black Hills.

And of course, it won’t affect a Wyoming placer project that Goldstake hopes to fast-track into production. However, Goldstake’s Stowell property, adjoining Homestake’s huge operating gold mine in the Black Hills, has been affected by the proposal.

“The open pit potential of the project is on hold now until we find out what will happen with this moratorium,” said Cleaver.

Homestake itself led mining companies in the area to propose the ban, the rationale being that a 2-year breather might give the mining companies and their environmental adversaries time to establish a less emotionally charged debate on mining.

Operating companies and exploration outfits in the Black Hills have had to d efend against a seemingly endless series of anti-mining initiatives by various interest groups. Onerous tax structures, near-impossible site reclamation demands, and a cap on total mining acreage have all been put forward by various groups.

Mickelson is publicly committed to pursuing the 2-year ban during the current legislative session.

Whitewood can still move ahead, ban or no ban. The Environmental Protection Agency (EPA) has recommended that there be “an allowance for future development” once residential areas on the arsenic- laced tailings have been treated at a cost to Homestake of about $930,000. The EPA’s recommendation must now be aired through a public meeting process and, if all goes well, Goldstake could be seeking by late February or early March state permits to mine the tailings.

The tailings contains 14 million tons grading an average 0.052 oz. gold per ton (T.N.M., July 24/89). Fluor Daniel conducted a preliminary feasibility study that notes the project would be profitable at current gold prices. The “mining” will consist of little more than front- end loaders and perhaps some truck haulage.

In its agreement with Homestake, Goldstake will receive a $1- million advance royalty 10 days after permits are issued. It also receives an annual $500,000 from Homestake. With $1 million in the treasury now and another $550,000 expected when outstanding warrants are converted later this year, Goldstake is not an impoverished junior.

“We’re in a comfortable position,” Cleaver said.

Some of that money will come in handy for the Wyoming venture. Goldstake acquired a 60% interest in the 10-square-mile property several months ago and has mapped and drilled portions of the ground.

Large-diameter rotary drilling this spring will establish a grade and reserve for the main target, a gold-bearing ancient river channel. The $500,000 program will begin in May.

According to Cleaver, whose acquaintance with placers dates back to his years in Australia, as few as 100 drill holes could delineate a placer deposit of sufficient size to warrant a dredge.