Hycroft boosts Crofoot/Lewis reserves

A boost in reserves at the Crofoot/Lewis mine prompts owner Hycroft Resources & Development (VSE) to review the possibility of refitting the operation with newer and larger mobile equipment.

Proven ore reserves at the Nevada open pit heap leach mine, as of Oct. 1, are estimated at 18.8 million tons grading 0.022 oz. gold at an average strip ratio of 1.6-to-1.

The figure represents a significant increase from estimated proven reserves at the end of 1991 of about 13.9 million tons grading 0.019 oz. gold.. With a mining rate of about 5.8 million tons per year, the recent reserve estimate represents a mine life extending to the end of 1995. Hycroft also identified a probable ore reserve in its Brimstone deposit of 25.5 million which could extend the mine life even further. Grade and strip ratio estimates for the Brimstone deposit have not been released. The company is initiating a feasibility study on the potential mine refit as well as bringing the Brimstone deposit into production. The Brimstone work will include additional drilling and engineering design, as well as financial analyses, and is expected to be completed by the first quarter of 1993. The increase in ore reserves is of primary interest to Granges (TSE), which is owed $26.3 million, as of June 30, and holds 67% of Hycroft’s 16.4 million outstanding shares.

The loan from Granges stems from the parent company’s guarantee of two Hycroft debenture issues which matured earlier this year.

Under the terms of the Granges loan agreement, Hycroft retains about US$2 million for operating purposes with any excess funds applied against the loan. Hycroft is currently operating in the black, having reported $1.6 million in earnings for the six months ended June 30. The mine produced 51,215 oz. gold and 188,837 oz. silver during the first half of the year, generating about $2.3 million in cash flow after changes in non-cash working capital. Jenna Hardy, a spokesman for Granges, said the mine is expected to produce in the order of 100,000 oz. gold for the year ending Dec. 31 at an estimated cash cost of about US$280 per oz.