Scorpio Gold finds more gold at Mineral Ridge

Scorpio Gold’s (TSXV: SGN; US-OTC: SRCRF) Mineral Ridge asset in Nevada is returning high-grade gold intercepts from satellite deposits and other targets drilled on the property, and its open-pit gold mining operation is on track to produce 38,000 to 40,000 oz. gold this year, at cash costs of US$800 to US$850 per oz.

Scorpio acquired Mineral Ridge in March 2010, and put a conventional heap-leach operation into production in 2012, with ore from its Drinkwater starter pit, which is now depleted. Since then, the company has mined three other pits on the property: Mary, also now depleted; Solberry; Mary LC; and Bluelite. It could bring another three satellite deposits into production: Brodie, Wedge and Oromonte. All of the satellite deposits lie within several hundred metres of one another.

Mineral Ridge — 56 km southwest of Tonopah — is host to multiple gold-bearing structures, veins and lenses at various exploration, development and production stages, and historically produced 575,000 oz. gold (170,000 oz. from open pit and 405,000 oz. from underground).

Scorpio says the mine life could increase with infill and step-out drilling on mineralization that is close to its deposits, as well as exploration drilling on open-pit targets.

“Historically, people had a fixed geological and mineralization model pegged for this deposit, along with numerous failures of past open-pit miners not understanding the controls, metallurgy and geologic controls,” the company’s president and CEO Peter Hawley says in a telephone interview. “Given the new techniques available and out-of-the-box thinking, we believe Mineral Ridge has many more discoveries to uncover, and we have proven so to date.”

The 2015 drill campaign focused on shallow targets and saw 70,000 metres of infill, development and exploration drilling. Exploration targets for 2015 were taken from geophysical signatures, geological interpretation from oriented drill core, field mapping, and soil and rock-chip anomalies.

The latest results, released on Nov. 17, were from its Oromonte target, a zone discovered in 2014 between the Solberry deposit and the Wedge deposit. Highlights from Oromonte include intercepts of 40.40 grams gold per tonne over 7.6 metres, 39.15 grams gold over 1.5 metres, 12.29 grams gold over 4.6 metres and 8.58 grams gold over 6.1 metres.

“It’s shallow — the deepest area we drilled was 40 or 50 metres down — so what we’re seeing at Oromonte is that it dips or comes to surface,” Hawley says. “Imagine a flat pancake dipping 20 to 25 degrees, and the width of the pancake being 200 metres that we know of, and having a thickness of 3 to 4 metres, dipping downwards at depth.”

Earlier this year, the company also reported high-grade RC drill intercepts from the Solberry and Bluelite deposits, and the NW Brodie trend. Highlights include: 9.43 grams gold over 1.5 metres at Solberry, 12.63 grams gold over 3.1 metres from Bluelite and 5.89 grams gold over 6.1 metres at NW Brodie.

The company’s drill campaign this year was the largest in its history, and Hawley says it’s been a great time for drilling, due to the downturn in the exploration industry. This year the company spent US$4 million on its 70,000-metre RC drill program, while the same budget paid for just 40,000 metres in 2014 and 27,000 metres in 2013.

“The moral of the story is that for any kind of exploration or development company, if you’ve got cash, now is the time to drill — because what you can get done for a third of the cost is crazy,” he says. “If you do have a deposit, you can drill it out for one-third of the cost, and hopefully — in a year or two or three, when metal prices improve — you are ready to make a commitment to bring it into production. So you can certainly take advantage of the economics getting there.”

In addition, with the drop in oil prices, Hawley estimates that the company is saving US$65,000 a month on fuel alone.

This year, for the first time, 50% of Scorpio’s drilling was exploration drilling, Hawley says, and as a result, “we discovered these new zones — one of them being Oromonte — and these have never been mined before, so they have high-grade components still left in them.”

Hawley adds that “the property that we’re mining was mined in the past and 500,000 oz. gold was taken from underground, and the average recovered grade was 10 grams gold per tonne … we’ve mined these remnant areas, and our head grade in the open pits is 2 grams gold to 2.5 grams gold, and is the remnants of what the old-timers left behind, because it wasn’t economic to mine.”

Scorpio owns 70% of Mineral Ridge, with Levon, LLC, a subsidiary of Waterton Global Value, holding the other 30%.

Scorpio also wholly owns the Goldwedge project, 50 km northeast of Tonopah in Manhattan, Nev. The property has a fully permitted underground mine with over 600 metres of development work, along with a mill, currently on care and maintenance, that has a 400-tonne daily gravity circuit.