Overcomss problems Gags gts gold from Crofoot

Viewing the finished product is always the highlight of any new mining operation whether it be base or precious metals. And it wasn’t any different for the “official” gold pour at Hycroft Resources & Development’s (VSE) Crofoot project in Nevada.

Although it’s the largest gold- producing state, Nevada is ironically called the Silver State — a misnomer if there ever was one. Indeed, Crofoot and its smaller sister mine, the nearby Lewis project, are part of a technological revolution that has pushed Nevada into the forefront of world gold-producing regions. Metal values, which at one time were hardly defined as “anomalous,” are now being mined at unit costs that are comparable to the Canadian average.

The 58%-owned Granges Exploration subsidiary has for the most part overcome start-up problems that are common to all new mining operations. And this year alone, the combined operation should put out approximately 82,000 oz of gold, 60,000 from Crofoot and the remainder from Lewis which has its own plant and equipment.

Incidentally, Crofoot production will only represent a 9-month operational period so on an annualized basis the rate would actually be about 82,000 oz. Although actual costs are not yet available, Hycroft is projecting unit costs of about $226(US) per oz which is comparable to other heap leach operations in the United States, says Granges President Mike Muzylowski. But he adds: “These are cash costs, not counting capital.” The capital cost for Crofoot was about $29 million and he concludes no other major expenditures will be required.

The gold pour The Northern Miner viewed was actually the third (smart companies make sure they have the procedure down pat before making it official) and it weighed in at just over 800 oz and averaged about 85% gold. The three bars have all averaged 82-87% gold because they are mining a sinter cap which contains mainly gold but little silver.

“We will get silver as we go down into the orebody and as we go south it really increases along the central fault. We get holes here like 0.05- to-0.06-oz gold with 2-5 oz silver. We haven’t projected any silver production at all but I’m sure we will get at least 150,000 oz this year,” he states.

To finance the project Hycroft completed a $17-million gold loan, which was guaranteed by Granges, and a $10-million convertible debenture also with Granges. About $750,000 of the gold loan has been converted already, Douglas McRae, senior vice-president and chief financial officer for Granges, notes.

Granges is in excellent financial shape, with a working capital of approximately $25 million and expectations of a $6-million profit from its Trout Lake mine in Manitoba this year. Revenue from the mine has been a stabilizing influence on the company for years and will be in the future.

Crofoot and Lewis mine production will be consolidated into Granges’ books and for the upcoming year production before minority interests should be roughly 100,000 oz and sales revenues about $65 million.

In terms of materials handling, Crofoot is a leader in the Nevada heap leach industry. The mine’s conveyor system was conceptualized by Donald Duncan, a leading authority on heap leaching, and it was custom-designed specifically for Crofoot. The system is still being broken in and approximately one million tons of ore has been stacked on leach pads.

Duncan believes the conveyor system could eventually handle about 20,000 tons per day. However, it’s operating at less than half that rate today. “We were scheduled to take the plant up in stages because in any plant you have design and mechanical problems; but ultimately we have our sites set on that rate.”

In any event, with present equipment that would be the maximum amount of material they could mine in the open pit, he concedes. The cost of the conveyor should be recovered in about one year and it delivers ore to leach pads at about one-third the cost of truck haulage.

Duncan says the low grade (0.028 oz) Crofoot orebody is attractive for a number of reasons including the fact that it’s bulk tonnage, shallow, has a low strip ratio (about 1.2:1) and requires short truck hauls. Mine-run material is currently averaging approximately 0.017 oz gold, twice the current cutoff. A 2-month leach cycle is anticipated, 1.5 months in the first pass and two weeks in the second.

Leach pads are sprayed by a wobbler system in summer and a drip system in winter. The former is so named because the water pressure makes the head of the sprinkler wobble a quarter of an inch which gives a coarser droplet and results in less evaporation during summer.

Ore must be agglomerated because fines tend to migrate, forming an impermeable umbrella for solutions which prevents dissolution of gold values. The cement used in agglomeration also helps control alkalinity.

Duncan is a firm believer in the Merill-Crowe recovery process which is used in the plant. He says that metallurgical accountability is better with this system in comparison to a carbon plant which is plus or minus 10%. Merill-Crowe is also less labor-intensive.

Combined reserves at Crofoot and Lewis now total approximately 31 million tons grading 0.028 oz and there is still reserve potential in the Central fault zone which will be tested further. Hycroft will be approaching the vendor of the Lewis mine property to see whether he is agreeable to commingling ore from the two properties. The company expects to realize savings by centralizing leaching operations at Crofoot.