New gold zone discovery for Cathedral in Nevada

A new gold zone has been discovered at Cathedral Gold Corp.’s 52%-owned Sterling mine project near Beatty, Nev. Since the mine was spun off by Imperial Metals into Cathedral, the property has been explored much more aggressively and it is beginning to pay off. Indeed, a production increase is now warranted over and above the present rate of 200 tons per day.

The new discovery is called the Burro North zone which President Pierre Lebel confirms has some “open pit potential.” Current production is divided almost evenly between underground and open pit mining operations and gold is extracted by conventional heap leach methods.

The zone, which plunges to the south at about 20 degrees, has been defined by a series of 31 holes drilled on 25-ft centres along three parallel fences which are 75 ft apart. Eighteen of these holes encountered ore grade mineralization and approximately 20,000 tons have been outlined so far, says Peter Cain, manager mining projects.

Average Grade Hole #From Thickness Oz/Ton Gold

69 35 ft. 25 ft. 0.582

70 40 ft. 25 ft. 0.282

71 55 ft. 20 ft. 0.148

72 60 ft. 30 ft. 0.208

76 25 ft. 30 ft. 0.119

77 35 ft. 20 ft. 0.196

81 105 ft. 20 ft. 0.257

87 135 ft. 20 ft. 0.171 102 60 ft. 20 ft. 0.239 103 80 ft. 15 ft. 0.180 106 105 ft. 10 ft. 0.145 108 100 ft. 15 ft. 0.165

Located some 120 ft above existing underground workings, the zone was displaced by north-south faulting so it wasn’t that easy to locate. The zone has a rather high strip ratio of 10:1 which should be offset by grade and the fact surface mining typically requires no blasting because the ore is highly fractured and oxidized.

About 6,000-10,000 ft of drilling is planned each month for the next six months at least to outline additional reserves on the property, he confirms. A second down-the-hole rig will probably be brought in but he notes the open pit potential is limited to the south because of heavy overburden.

President Lebel says studies are under way to determine the ideal location for a second decline “which will allow the number of underground working faces to be increased.” This has been an inhibiting factor in increasing production further. Room and pillar stoping

A room and pillar stoping method is employed underground and about one-third of the ore is left in pillars which will be recovered later. There are very few sulphides and they mine to a cutoff grade of about 0.04 oz gold. Mine reserves at present stand at 265,000 tons grading 0.26 oz gold without taking into account any new zones. The average recovered grade is 0.2 oz gold or 85% which compares favorably with many conventional milling operations.

Crush size is fairly coarse (about 2 in) and pads are loaded in 5-ft lifts. Because the ore is heavily fractured it leaches readily but about 0.04 oz is not recoverable at this time. Consideration is being given to crushing this low grade material to a smaller size so the gold can be liberated.

Conveyors would be used to reload the pads to avoid excessive compaction which reduces recoveries because of channeling.

The leach pads are located about 1.25 miles downhill from the underground portal and process water is trucked from a well three miles away.

Cathedral has the only water rights in the area and well capacity is twice existing demand. So adequate water is available to expand production further. At some point it might be economic to pump water to the plant site which will involve a head of about 3,000 ft vertical.

Gold production at Sterling for 1987 should be slightly under 9,000 oz, rising to 12,000 oz next year. Since production started in 1980, revenues have been approximately $18 million and profit about $4.5 million. Cash costs are currently $205(US) per oz but Cain feels they will average $230-$240 next year. The mine is generating a cash flow of 22 cents per share and earnings of 15 cents per share to Cathedral fully diluted on an annualized basis. “We expect to make a tidy profit this year,” says Lebel, who notes all the money will be plowed back into the operation. Imperial controls 56% of Cathedral.