Mill to start up in May Malartic eyes U.S. potential

The historic Congress gold mine near this small western community is providing an operating base for Malartic Hygrade Gold Mines (VSE) to pursue expansion opportunities into the southwestern U.S.

When production gets up to full bore, the small underground mining operation is expected to boost the company’s gold production by about 32,000 oz each year. This would be in addition to Malartic’s share of production (14,084 oz for the first nine months of 1989) from several gold mining operations in the Val d’Or region of Quebec.

But unlike the Val d’Or operations where ore from the company’s properties is milled off site, the Congress gold mine will have its own plant. When The Northern Miner visited the property recently, foundations for the 350-ton-per-day mill had been poured, ready for steel erection to begin after the Christmas break. Capital costs for the plant are expected to be a modest $4.4 million(US), which includes an assay office and a 15% contingency fund.

“Our mill building is on schedule and should be under budget as well,” said James Sullivan, vice- president of operations, adding that the mill will have excess capacity to boost production to 500 tons per day if warranted. The mill will be diesel-powered, as this was found to be a less expensive proposition than having a power line brought in to service the road-accessed mine site. And because of the warm, dry desert climate, mill facilities will be open except for the refinery and leach tanks.

Sullivan expects that contractor Orocon Inc. will have the mill completed in May, 1990, which would be less than a year after the company signed a letter of intent agreement with Echo Bay Minerals to acquire the 2,238-acre mine property.

Under the terms of the agreement, Echo Bay receives a combination of cash, Malartic securities (about 10% of the company) and an assignment of Malartic’s 21.3% shareholding in Gold Texas Resources. (Malartic acquired its position in Gold Texas during a thwarted attempt to take control of the junior which had a stake in the Kettle River/Overlook gold project in Washington State. It is being developed by Echo Bay.)

When Malartic took on Congress, Echo Bay had already spent about $11 million to develop the former producer. Although the mine’s major production period (370,000 oz from 692,000 tons with a recovered grade of 0.53 oz gold) was in the early 1900s, Congress had a short production run (16,176 oz) during 1988 when Echo Bay trucked crushed ore as flux to a smelter in New Mexico.

After trucking and smelting costs, it was only marginally economic. Production costs were in excess of $300(US) per oz. With a mill, Malartic is looking to get production costs to about $250 per oz or less.

The Congress mine project is expected to be watched closely by local residents and the mining industry as Arizona hasn’t experienced the gold boom of some of its neighboring states. (But what is still remembered is the closure earlier this year of Stan West Mining’s underground gold mine after a short and unprofitable operating run.)

Current proven and probable reserves — established by Echo Bay and verified by an independent engineering firm — are 480,000 tons grading 0.29 oz gold per ton in an oreshoot of the Niagara vein. This represents about five years of production.

But officials of Malartic are optimistic that given additional possible reserves, and the potential for treatment of on-site tailings and material mined below cutoff grade by previous operators, the mine life can be extended to about 10 years.

The Niagara oreshoot dips at about 45 degrees and will be mined by end slicing and open stoping. Jacklegs in the stopes and trackless equipment for mucking and tramming will be used. Malartic retained much of the Echo Bay workforce, including key personnel, and acquired on-site mining equipment.

Mineralization at Congress occurs in quartz veins in granitic rocks, and the hardness of this material seems to keep local drillbit salesmen in clover. The Niagara vein oreshoot is continuous, appears easy to trace and averages about four feet thick. But a quartz stringer zone often envelops the main quartz vein which is sometimes mineralized, and can add additional thickness to the oreshoot.

Mine manager Robert Stoughton, who joined Malartic from Echo Bay, said visible gold is rare as the yellow metal typically occurs as microscopic particles disseminated in pyrite.

A tour of underground revealed well-advanced development by sublevels off an 11×15-ft spiral ramp driven by Echo Bay. Because water is a valuable resource in Arizona, any pumped from underground is stored for later use. Most of the water for the mill, however, will be supplied from wells on the property.

At the time of our visit, some 11,000 tons grading an average of 0.26 oz gold had been stockpiled on surface. Stoughton expects to have 10 stope s ready to supply the mill at startup.

Having reviewed a number of processing options, Malartic opted for direct cyanidation as the simplest and most cost-effective choice. We gather the fine-grained nature of the gold requires a fine grind for liberation during the cyanidation process.

This capacity will be supplied by closed circuit crushing followed by primary grinding in a ball mill and regrinding in another ball mill. According to Sullivan, recoveries are expected to be at least 92% for gold, based on 87% minus 200 mesh and leaching for 72 hours.

The mine will also produce silver in a 2:1 ratio to gold. A work index of about 18-20 is anticipated because of the highly siliceous run- of-mine ore.

If one considers additional reserve potential in the mine, tailings and GOB (ore and waste used as fill at the turn of the century), total reserves at Congress exceed one million tons averaging about 0.17 oz gold.

But Malartic is also planning to carry out exploration programs on the minesite property at a cost of $500,000 this year, plus a regional program of equal value aimed at acquiring other prospective properties. The depth potential of the Niagara vein will also be tested, as will other known veins on the property.

One of the more immediate exploration targets will be for parallel vein systems to the Niagara vein and the mined-out Congress vein, as Echo Bay is reported to have done little surface exploration work on the property.

“The potential for more of these things is tremendous,” said Sullivan. “Exploration is going to be very important here over the next few years.”