Granges optimistic on Crofoot decision : Nevada heap leaching

With three drills operating on the property and heap leach testing completed, the Crofoot gold project near Lovelock, Nev., is just inches away from a final production decision.

“We’re very optimistic,” Chris Armstrong, project manager with Granges Exploration, tells The Northern Miner. “Feasibility studies are on-going and so far there has been nothing negative in the scenario.”

Granges, with Vancouver-based Goldbelt Mines, is providing the funding for the exploration and development work on this 3,600- acre property which is held by Hycroft Resources and Development, another Vancouver-based company. Granges and Goldbelt can earn a 51% equity interest on the property on a 60/40 basis through staged share acquisitions of Hycroft totalling approximately $2.7 million.

To date, more than 330 drill holes — well in excess of 60,000 ft — have been completed on the property. By the end of the current drilling program over 400 holes will have been drilled, says Mr Armstrong. Leachable mineral reserves in the North and Central zones are currently calculated at approximately 10 million tons of 0.035 oz gold per ton with an average 1.0-to-1 waste-to-ore stripping ratio.

Mr Armstrong explains that the earlier potential reserve figure of 15 million tons of 0.037 oz gold was based on wide-spaced drilling done in 1981-82 by previous operator Homestake Mining. “Those reserves are still there,” says Mr Armstrong, “but much of that mineralization is refractory and not recoverable by heap leaching methods.”

Two of the three drills now working on the property are focusing on the North zone to upgrade the reserves to the drill proven category. Previous drill holes were on 200-ft centres. Fill-in drilling on 100-ft centres is now being done, says Mr Armstrong.

The third drill is working to expand the possible reserves on the major Fault zone connecting the North and Central zones. With initial drill holes on 400-ft spacings the results have been encouraging so far. Mr Armstrong says he expects further additions to the leachable reserves to come from the Fault zone.

Once the go-ahead decision is officially made, the plan is to initiate mining on two million tons of shallow mineralization averaging about 0.04 oz gold per ton with a 0.7 to 1 stripping ratio. Expansion to 2.5 million tons during the second year is planned. Annual production is expected to run between 40,000 to 50,000 oz of gold.

Although final metallurgical balances will not be completed until mid-November, gold recoveries from the two 4,000 ton test heaps after 45 days of leaching, have surpassed earlier expectations. The two ore types, conglomerate and sinter, both crushed to minus 3/8″ yielded more than 60% and 70% gold recovery, respectively.

Capital costs for a conventional 2-million-ton-per-year heap leaching operation are estimated to come in at $10.4 million(US), employing 3-stage crushing and contract mining. Mr Armstrong says various alternatives are being looked at to handle the financing.

Meanwhile, work is progressing well on environmental studies, mine and plant design and other preparatory work.

So far, in Granges’ financing program with Hycroft, an agreement in principle has been reached that sees Granges accepting shares of Hycroft at $2.08 per share in satisfaction of $1,968,000 advanced by Granges for the development of the mine.

In addition, Granges is negotiating for the purchase of the Lewis mine which adjoins the Crofoot property and which is operated by Standard Slag, a private U.S. company, of Youngstown, Ohio. If acquired, the Lewis mine will be sold to Hycroft for additional shares of Hycroft at $2.08 per share. Mr Armstrong says the Lewis is a producing mine rated at 5,000 tons per day.

To help Hycroft in financing the further development to production of its Crofoot property, Granges will purchase, by way of private placement, 1.2 million shares at $2.08 per share to raise about $2.5 million.

Granges holds outstanding options to purchase 720,000 shares of Hycroft at $1 per share and 453,390 shares of Hycroft at $1.50 per share.

Goldbelt holds options to purchase 782,260 shares of Hycroft and may participate with Granges on a pro-rata basis in the share transactions described .

These transactions are subject to approval of the regulatory bodies.