NEVADA SPECIAL — Santa Fe expands mine complex in Nevada

At the Twin Creeks and Lone Tree gold mines in the desert of northern Nevada, Santa Fe Pacific Gold (GLD-N) has begun constructing several projects that will help boost annual production to 1 million oz. by 1998.

At Twin Creeks, the company is building the Sage mill as part of the first phase of sulphide expansion. The plant will treat carbonaceous refractory ores by employing an autoclave with a daily capacity of 4,000 tons (or 1.5 million tons a year). The building’s frame has been erected and, at presstime, the 19-ft. unit — reputed to be the largest autoclave in the industry — was on its way to Nevada from Salt Lake City, Utah. Once installation is complete, the facility will be commissioned, with production scheduled to begin in early 1997.

As throughput, Santa Fe has accumulated 58 million tons grading 0.12 oz. gold per ton. The refractory ore is ground and fed into the autoclave where it is oxidized at a temperature of 437F and a pressure of 460 lb. per sq. inch. A gold recovery rate of 90% is expected.

Phase two of the expansion project calls for construction of a second 4,000-ton-per-day autoclave. This phase is scheduled for the first quarter of 1998.

Gold reserves at Twin Creeks stand at 10.5 million oz., and the company has budgeted US$3.2 million this year for exploration drilling to test extensions south of the main pit, as well as sulphide mineralization around the Vista pit and two underground targets.

By mid-year, the company expects to publish a draft environmental impact statement as part of its attempt to consolidate the Rabbit Creek and Chimney Creek deposits with Twin Creeks.

At the Lone Tree mine, 35 miles southeast of Winnemucca, three different development projects — a flotation plant and the Mule Canyon and Trenton Canyon deposits — are getting started.

Santa Fe will process low-grade sulphide ores at the flotation plant, which is under construction. The circuit will treat 4,500 tons per day, and improve gold recovery to 80-90% from 25-30%. The upgrade is expected to provide an additional 85,000-90,000 oz. gold per year.

“It’s not anything new, just known technology used in creative ways,” said Kenneth Pavlich, Lone Tree’s general manager, of the proprietary circuit.

About half the material from the flotation circuit will be processed through the existing autoclave at Lone Tree, with the remainder shipped to Twin Creeks. The project, which carries a capital cost of about US$40 million, is scheduled to enter production in early 1997.

The Mule Canyon project, 50 miles southeast of Lone Tree, provides Santa Fe with an additional reserve of 1 million oz. The property contains almost 9 million tons grading 0.112 oz. gold.

High-grade sulphide ores from Mule Canyon will be processed at the Twin Creeks mine, whereas lower-grade ores are likely to be heap-leached on site.

Cash costs are projected at US$240-250 per oz.

A draft environmental assessment for the project was published in mid-May, and comment from the public is expected throughout July. Final approval for the project is not expected until the fourth quarter, though construction has already begun and production is anticipated for next year.

The Trenton Canyon gold deposit, a satellite structure of the Lone Tree operation, lies 11 miles to the south. The deposit contains more than 20 million tons grading 0.029 oz. gold (or 590,000 contained ounces).

Construction has begun there as well, but Santa Fe is still conducting baseline studies for a draft environmental impact statement, final approval of which is expected in late 1997 or early 1998.

Two leach pads capable of processing 2.5 million tons of ore per year (for a production rate of 70,000 oz. gold per year) will be built at Trenton Canyon.

The gold-laden carbon from the leach pads will be processed at Lone Tree.

Cash costs for the project are expected to be US$210-220 per oz.

Santa Fe produced a total of 845,796 oz. gold in 1995 from all its operations, at a cash cost of US$197 per oz. This year, the company expects its total gold production to rise to the 900,000-oz. level. The company’s reserve base at the end of 1995 stood at 17.9 million oz., which represents the addition of 2.5 million contained ounces.