Royalty sisters expand Snyder — Former Midas project ahead of budget

Once operational, by May of 1999, the Ken Snyder gold mine in Nevada is expected to yield 250,000 oz. annually at a cash operating cost of US$78 per gold-equivalent ounce.

Equal owners Franco-Nevada Mining (FN-T) and Euro-Nevada Mining (EN-T) predict it will be both the highest-grade and the lowest-Cost gold mine in the U.S.

Pierre Lassonde, president of the royalty companies, recently told shareholders that the mine, situated north of the Carlin trend, is on schedule and ahead of budget. He also noted that the US$84-Million operation could be doubled in size, if warranted, for the modest cost of US$10 million.

Excavation of the decline started in May and has been proceeding at the rate of more than 750 ft. per month in competent ground conditions.

While engineering work continues at the mine site, the companies continue to expand the potential of the property with an US$8-Million exploration and drilling program. With results in hand from the first six weeks of the planned 26-week program, the partners have already increased proven and probable reserves by 20%.

At the end of 1996, the proven and probable figure stood at 1.1 million tons grading 1.32 oz. gold and 14.92 oz. silver per ton, for a total of 1.74 million oz. gold-equivalent. Recent drilling has boosted this number to 2.1 million contained ounces of gold-equivalent. The grades of 1.4 oz. gold and 16.5 oz. silver are about 10% higher than those reported at year-end.

The partners also report that the indicated resource increased 13% to 3.4 million oz. gold-equivalent from 3 million oz. at year-end. When combined with the known resource at the Acme zone, two miles south of the mine, the Midas property hosts total indicated resources of 4.5 million contained ounces of gold-equivalent.

Ongoing drilling is being carried out by five core and three reverse-Circulation rigs. Results from recent holes include: 295 ft. grading 0.94 oz. gold and 8.8 oz. silver from 365 to 660 ft.; 105 ft. of 0.27 oz.

gold and 5.61 oz. silver from 560 to 665 ft.; and 15 ft. of 0.77 oz. gold and 9.25 oz. silver from 605 to 620 ft.

Franco-Nevada and Euro-Nevada intend to use contract miners and to tender the project in the next year. Current reserves extend from 500 ft. to 1,500 ft.

below surface and will be mined using two different stoping methods — long hole and shrinkage — followed by rockfilling.

The development plan envisions a 500-Ton-per-day operation based on a simple flowsheet including crushing, grinding, gravity concentration, staged leaching and thickening circuit, zinc precipitation and smelting.

Ken Snyder will be the first mine to be operated by the Midas partners, whose main assets are the royalties and net profit interests in the Goldstrike mine operated by Barrick Gold in Nevada’s Carlin trend.

While the Nevada mine and the royalty interests from Goldstrike are the cornerstones of Franco and Euro, the companies have also acquired, or are exploring, projects elsewhere in the world. Canada, in particular, is proving to be a fruitful hunting ground for new opportunities.

“The common denominator is that all [the Canadian projects] are in world-Class gold camps,” Lassonde explains. “Our goal is to establish reserves, do a deal with an operator and keep a royalty.”

Earlier this year, Franco-Nevada formed an alliance with Queenston Mining (QMI-T), a junior company with a sizable land package in Ontario’s Kirkland Lake gold camp.

Franco is spending $3 million this year to explore its wholly owned ground in Ontario’s Hemlo district, which includes a property hosting the downdip extension of Canada’s largest producer — the Williams mine, owned by Teck and Homestake Mining. Euro-Nevada has a 3% net smelter return (NSR) royalty in the 620-Acre operation.

Initial results include 24.4 ft. grading 0.11 oz. gold (including 7.7 ft. of 0.29 oz.) and 38.5 ft. of 0.21 oz. gold (including 13.9 ft. of 0.5 oz.). In total, 20 holes are scheduled to be drilled this year.

Franco also holds ground in the Harker-Holloway gold camp, some 30 miles northeast of Kirkland Lake, and it has a 2% NSR royalty in the Goldfields project in northern Saskatchewan, operated by Greater Lenora Resources (GEN-T).

Euro-Nevada’s wholly owned subsidiary, Pacific-Nevada, is focused on royalty investments in the Pacific Rim and Australia.

The royalty companies also have a growing oil and gas division.