Mark V to produce gold at Montana

In what appears to be one of the decade’s major bargains, Vancouver-based Mark V Petroleums and Mines has announced a production decision — at a rate of 50,000 oz annually — at a Montana gold property it picked up last year for just $750,000(US).

A series of operating permits are all that stands between Mark V and a summer production start-up date at the Bagdad property in Granite Cty., Mont., the company said recently.

Located on U.S. Forest Service land 25 miles west of Philipsburg, the 1,760-acre property is expected to churn out 50,000 oz of gold and 184, 000 oz silver during its first year in operation.

However, current proven reserves are only sufficient to support an 18-month mine life.

Based on a $435-per-oz gold and the $6.35 silver price, Mark V expects the project to generate about $7.7 million in net pre-tax earnings to the company.

Although current reserves are more than adequate to warrant immediate production, consulting geologist Wayne Peterson says June 30 has been chosen for start-up because federal and state agencies say it will take that long to get all the necessary permits.

Hosted in similar precambrian quartzite super group rocks as Inspiration Copper’s Black Pine silver mine, the Bagdad veins lie in quartz-filled shears. Cash cost

With mineable reserves of 116,728 tons grading 0.631 oz gold, 3.68 oz silver and lesser amounts of lead, zinc and copper, production will begin at a rate of 200 tpd, said Peterson who sees a cash cost of around $140(US) per oz produced.

Mark V plans to spend around $500,000 on exploration before production begins. Additional reserves in the South vein where Mark V is chasing a potential inventory of one million tons, promises a higher production rate, the company says.

Under an agreement with the vendor (a Philipsburg family) Mark V must pay advance royalites in varying amounts until $750,000 has been paid out. In addition Mark V is committed to spend $560,000 over five years and $150,000 in each year following the 5-year term.

The agreement also requires Mark V to pay the vendor an annual 10% net profits royalty. However a special clause allows Mark V to apply the net profits and advance royalties ($15,000 paid so far) against the purchase price if the Vancouver company can begin production before $750,000 is paid.

In September, Mark V discovered what it calls a major new mineralized vein 900 ft from the South vein. Named the “China Wall,” because of its physical appearance, the vein stands almost vertically and is exposed for heights of up to 20 ft above the surface. South vein

Having traced the South vein for 3,000 ft along strike and encountered an average 5.45-ft width, Mark V has drifted along the vein for 620 ft.

“By the time production begins this year, reserves in the south vein should reach 278,841 tons (grading 0.6 oz gold),” said Peterson. He expects to develop additional tonnage from at least 10 more veins.

A 1,000-tpd mill located 25 miles away in Philipsburg, will reduce capital cost of the operation and Mark V is also planning to spend $150,000 to build a new access road connecting the property with a county gravel road.

The total cost of mining, milling and haulage is expected to be $67.23 per ton, said President Leslie Hart.

“Having a fully operating mill sitting almost on our doorstep is a unique opportunity and we want to take advantage of it,” said Hart.

A member of the Bomarc Group of companies, Mark V bought the property from a Montana family last January. Since then, it has spent about $1 million on exploration and development, Hart says.

The company is currently using a 3-mile gravel path which was built back around 1900 when the claims were discovered. Haulage level

When production begins, Mark V says it will install a shrinkage stoping mining method using a drift along the south vein as the main haulage level. Reserves below that level will be accessed by driving a decline ramp 150 ft below the main adit.