Denver — The start of mining at the South Pipeline deposit and an ore-sales agreement with the Jerritt Canyon operation are expected to contribute to a 17% increase in gold output at the Pipeline complex in Nevada’s Crescent Valley.
The giant project is held by the Cortez joint venture, operated and 60%-owned by
The joint venture received environmental permits for South Pipeline in late 2000. Pre-stripping began in 2001 and, once production begins in July, nearly a quarter of all production from the complex will come from the deposit. Placer expects cash operating costs to increase by as much as 35% as a result, but still come in less than US$85 per oz. The joint venture also expects to spend US$40 million on dewatering, land-related issues and continued development at South Pipeline during the year.
The partners expect to see a significant increase in Pipeline production as a result of an ore-sales agreement with the Jerritt Canyon mine, a joint venture in northern Nevada between
Under the agreement, signed in in July 2000, Cortez will sell up to 450,000 tonnes of stockpiled refractory ore averaging more than 10 grams per tonne, with an option for another 450,000 tonnes.
Cortez will be able to produce an additional 300,000 oz. over the next 30 months at total costs comparable to the mine’s costs without the capital expenditure required to restart the Cortez roaster. Cortez trucked 75,000 tonnes of ore during the first quarter and expects to have trucked a total of 317,000 tonnes by year-end.
In 2001, the Cortez joint venture expects Pipeline to produce 1.1 million oz. gold; Placer’s share will amount to 660,000 oz.
At the end of last year, reserves at the Pipeline complex stood at 8.3 million oz. (172.5 million tonnes grading 1.5 grams per tonne), including 1.1 million oz. from the Pediment deposit, 4 km southeast of the Cortez mill.
Placer did not include mineralization from the newly discovered South Pipeline Extension (or Crossroads) deposit. It reported an initial resource of 559,000 oz., within 11.5 million tonnes of 1.5 grams per tonne. The company has 10 rigs on the property, and drilling is expected to expand the deposit. Mineralization at Crossroads is found in two zones. The first is below at least 150 metres of gravel, whereas the second sits as much as 300 metres below the surface.
Exploration targets have also been identified south of the South Pipeline deposit, along the projected strike of the Pipeline fault. Placer Dome says these targets “could generate additional mineralized material.” In addition, exploration efforts are showing expansion potential outside of the area of the Pipeline-South Pipeline and Cortez deposits.
Other mines
Elsewhere in Nevada, Placer Dome operates the Bald Mountain, open-pit, heap-leach mine, which has proven and probable reserves equivalent to 509,000 oz. gold. The mine life has been reduced to four years, reflecting the reclassification of reserves into resources because of low gold prices.
Gold output this year is expected to be similar to 2000, when 134,469 oz. were produced. No drilling is planned for the Bald Mountain district, in White Pine Cty., again because of low gold prices.
Placer Dome also owns and operates the Golden Sunlight mine in southwestern Montana. Proven and probable reserves contain 312,000 oz. gold. Mining will be completed this summer, though processing of low-grade stockpiles is to continue for another year.
Placer Dome had hoped to be producing gold by now at its high-profile Getchell gold project in Nevada’s Humboldt Cty., but that decision awaits further work and the completion of a final feasibility study sometime next year.
The company paid more than US$1 billion to acquire the then-producing gold project in the spring of 1999. However, the mine failed to live up to expectations, and production was suspended that summer in order to focus on exploration and development.
Recent work has focused on the N zone, the goal being to verify and expand the resource base. Although this has resulted in a better understanding of the controls of mineralization, delineation of resources and reserves did not progress as quickly as hoped, owing to challenging ground conditions and the complexity of the deposit.
Based on recent drilling, which tightened spacings to 45 from 90 metres, the interpretation of the mineralization has changed from dominantly flat or bed-like zones to five structurally controlled mineralized zones. Gold distribution is related to low-angle structural zones, and intersecting high-angle, north- and northeast-striking faults. Anticlines trending to the northwest and northeast play a significant role in localizing gold.
In late 2000, a new resource calculation was made, bringing measured and indicated resources to 23.1 million tonnes grading 12.8 grams per tonne at a cutoff grade of 6.86 grams. This is equal to 9.5 million contained ounces, up from 8.3 million oz. reported in mid-2000.
Gold at Getchell is associated with arsenic, mercury and, to a lesser extent, antimony. Gold is micron-scale and generally intergrown with arsenical pyrite, which in turn is encrusted in barren pyrite. Late-stage realgar and orpiment are commonly associated with high-grade ores.
In late 2000, Placer Dome wrote down the carrying value of Getchell by US$66 million. This includes US$40 million for underground mine development, US$15 million for a portion of the mill, and US$11 million for previously capitalized exploration, development costs and obselete equipment.
Capital expenditures on development and drilling are expected to total US$26 million this year. Metallurgical tests are continuing, and processing alternatives are being considered. These alternatives include refurbishing the existing mill, constructing a new mill, and processing off-site. The existing mill is capable of processing 3,000 tonnes per day using a combination of pressure-oxidation and carbon-in-leach technology.
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