NEVADA SPECIAL — Rayrock thrives as Canadian pioneer in the Silver State

It is a long way from the Northwest Territories to Nevada, and this was especially true in the early 1970s when few Canadian companies ventured far from home. For Rayrock Yellowknife Mines (RAY-T), which celebrated its 50th anniversary as a resource company in 1995, the trip was well worth taking.

Using cash from its Canadian mining and oil and gas assets, the company, together with three partners, organized and funded the Cordex Syndicate in 1970. Their mandate? To search for Carlin-type gold deposits in Nevada.

The venture proved to be successful, as four mines — Pinson, Dee, Preble and Marigold — were discovered, along with several other gold deposits. The other partners eventually left the syndicate, and exploration is now funded wholly by Rayrock.

The company still operates three open-pit gold mines that were discovered by Cordex, namely Pinson, Dee and Marigold. A fourth, the 35%-owned Daisy, will be developed this year.

Rayrock has since branched out to other parts of the world and, through a subsidiary, owns the producing Ivan copper mine in Chile, and carries out exploration and development in that country, as well as in Costa Rica and Panama.

Meanwhile, Cordex Exploration, now wholly owned by Rayrock, is not resting on its laurels. It has seven gold projects in the state, at various stages of exploration. As Rayrock President David Crombie points out, “Nevada still has one of the best records in the world for gold discovery and reserve additions.”

In 1995, Cordex Exploration spent US$1.9 million to drill-test and explore these projects. This year, at least US$1.3 million is to be spent.

The most advanced property to date is Dry Cannon, which comprises 27 sq.

miles within the southern Battle Mountain trend near Eureka. Rayrock can earn a 60% interest in this project, which is believed to have good potential for containing major gold deposits.

Last year, an exploration program of geophysical surveys, geochemical sampling and drilling resulted in the discovery of gold anomalies and other positive indicators. This year’s program will entail drilling about 60 holes.

Another major project under way is Dixie Flats. The 8-sq.-mile property, which lies south of the Rain mine at the southern end of the Carlin trend, is believed to be underlain by host rocks and structures favorable for disseminated, Carlin-type deposits.

Early this year, Cordex started work at a new property that comprises several mineralized alteration systems within Tertiary volcanics. The project is situated in southeastern Nevada.

At its wholly owned Dee mine near Elko, Rayrock expects to produce 45,000 oz.

gold in 1996, up from 35,867 oz. produced last year. Production will come mainly from the high-grade Deep North deposit, which, in 1995, had high cash costs of US$410 per oz. Another disappointment was that exploration results from last year’s 10-hole, deep-drilling program were not as good as anticipated. A further 10 holes will be drilled to explore the deep potential of the southern part of the property.

The 66.6%-owned, open-pit Marigold mine fared better, having produced 69,832 oz. in 1995 at a direct cash operating cost of US$233 per oz. The ores are processed by heap-leaching, or through a mill, depending on cutoff grades.

The 29-sq.-mile property is at the northern end of the Battle Mountain trend.

In 1995, drilling more than replaced ore mined from reserves during the year.

More work is planned to test the deep 8-South target and other untested areas.

The 26.5%-owned Pinson mine, a 34.4-sq.-mile property on the Getchell trend, produced 47,949 oz. gold in 1995 at a cash cost of US$303 per oz. The partners note that deep drilling on the CX and CX West deposits show some potential for underground mining.

In total, Rayrock’s share of 1995 gold production from the Dee, Marigold and Pinson mines was 95,128 oz. at an average cash operating cost of US$304 per oz. The comparable figure in 1994 was 90,177 oz. at US$253 per oz.