MINERAL EXPLORATION — CASE STUDIES — Ruby Hill gold mine invigorates Nevada camp

The town of Eureka in central Nevada was the birthplace of American silver and lead smelting technology. Recently, after more than a century of mining, the region has seen a resurgence in activity, the culmination of which is the new Ruby Hill gold mine of Homestake Mining (HM-N).

The mine extends the southern limit of the Battle Mountain trend. In the early days of Nevada mining, however, trend geology was unheard of.

Hard-bitten prospectors discovered the first ores in the Eureka area in 1864, but smelting methods were unsuitable for processing because of the high iron content. It was not until 1869 that the ores began yielding their high-grade gold, silver and lead values. The town blossomed to 9,000 residents and became Nevada’s second-largest city.

The district became the largest lead producer in the U.S., with numerous smelters housing 16 furnaces in the immediate area. By 1885, however, the ores began running out, sending the town into decline. Sporadic episodes of mining, including a brief period before the First World War, kept the city alive.

For a brief period prior to 1872, George Hearst, one of the founders of Homestake, had come to Eureka and invested in the Ruby Hill mine. But it was not until the early 1990s that Homestake returned and set about exploring for gold just west of town. Company geologists believed the area was a good place to look for sediment-hosted Carlin-type deposits. Homestake leased the property from Ruby Hill Mining in 1992 and started the initial exploration on ground just north of the known Ruby Hill district. A thorough surface sampling program returned oxide gold anomalies with no base metals and good arsenic and mercury values, which are characteristic of Carlin-type deposits, says Kevin Russell, mine geologist at Ruby Hill.

Much of the historic work had focused on the Ruby Hill district, yet Homestake concentrated its effort over an area of alluvial cover. The first hole drilled at the property hit potential ore grade values, giving the geologists a hint of the target they were searching for. Beneath as much as 100 ft. of gravel, the first holes encountered encouraging oxide mineralization just above the water table. However, it was not until about the 60th hole that the company realized it had a deposit, Russell says.

By the following year, Homestake had delineated the Archimedes deposit (named after the Greek mathematician who, legend has it, proclaimed “Eureka!” upon discovering the law of buoyancy). Initial reserves were 7.6 million tons grading 0.099 oz. gold per ton, including 2 million tons of higher-grade material at 0.23 oz. gold and 5.6 million tons of lower-grade material at 0.053 oz. gold. In 1994, the company exercised its option with Ruby Hill Mining and purchased the property.

By 1996, it had submitted a plan of operation to the Bureau of Land Management, completed permitting for the operation and announced a production decision. Construction began in February of the following year on the US$65-million project.

Initial production began in late 1997 and commercial production is slated for early 1998. The operation is expected to crank out 105,000-110,000 oz.

gold annually with cash costs projected to fall in the range of US$130 per oz.

Along with the West Archimedes deposit, Homestake outlined the East Archimedes deposit, which lies beneath deeper cover at the eastern edge of the pit. The company is studying the possibility of gaining access to this mineralization. In addition, Homestake has encountered significant higher-grade mineralization well beneath the main deposits in what are called the East Deep and Ruby Deep deposits. In the East Deep, this higher-grade sulphide mineralization contains high base metal values.

Significant intervals include 143 ft. grading 0.21 oz. gold, and 160 ft. of 0.2 oz. gold plus 0.32% zinc; another hole encountered 71 ft. grading 0.053 gold and 2.2 oz. silver plus 23% zinc. The Ruby Deep, situated 1,400 ft.

below surface, was discovered in 1996 and contains negligible base metal values, more like the oxide West Archimedes deposit.

The discovery of Ruby Hill has attracted other companies to properties in the district. Alta Gold (ALTA-Q) is evaluating the Lookout Mountain project several miles to the south, whereas tiny European American Resources (EPAR-O) controls patented claims that are surrounded by Homestake’s property. Inmet Mining (IMN-T) is earning a 51% interest in the Yahoo property, 6 miles west of Ruby Hill, from White Knight Resources (WKR-V).