VANCOUVER — Scorpio Gold (SGN-V) has released the first compliant resource estimate for its Mineral Ridge gold project almost a year after completing its initial due diligence on the property.
Various owners operated the southwest Nevada-based project as an open pit between 1989 and 2005, while it was an underground operation before that. So far, almost 575,000 oz. gold have been produced from the site.
Scorpio is looking to restart Mineral Ridge. It’s working through a drill program to confirm historic data on the site, while both expanding and defining the resource.
The newly released resource estimate on the project covers the historic Drinkwater and Mary pits. The estimate contains 4.23 million indicated tonnes grading 1.46 grams gold per tonne for 221,000 contained ounces gold and 3.44 million inferred tonnes of 1.12 grams gold for 136,000 oz.
Scorpio owns 70% of the project through a joint venture finalized in January with Golden Phoenix Minerals (GPXM-O). Scorpio is responsible for the cost of restarting the project, and paid Golden Phoenix US$7 million in cash and shares.
The company also spent US$3 million buying an 8% net smelter return royalty on the gold project from Mary Mining Trust last October.
Golden Phoenix has provided a US$3-million bond, and the project is permitted for heap-leach gold processing and production. The property has a heap-leach pad, crushing circuit and adsorption-desorption- recovery plant, which the company describes as in “fair to good condition.” The site also has road access, power lines and water wells.
The land package currently spans 41.2 sq. km over 351 claims following an extensive expansion by Scorpio in February. The known mineralization zones occur over an area roughly 4.3 km north-south and 4.6 km east-west, with deposits consisting of structurally controlled epithermal gold mineralization associated with quartz veins and veinlets.
Scorpio has the option of earning a further 10% in the joint venture by taking the project to commercial production within 30 months of closing the agreement with Golden. Scorpio can earn the final 20% needed for full ownership by buying Golden’s remaining stake within 2 years after starting production. The price of Golden’s share will be based on the net asset value of the project minus a 10% discount.
In March, Scorpio closed a $12.5-million private placement, selling 27.8 million units at 45¢ each. Each unit contains one share and one half warrant, with a full warrant redeemable at 60¢ until Sept. 10, 2011.
In June, roughly 4.5 million warrants were exercised, bringing another $2.7 million to the company’s coffers.
Scorpio’s stock price closed at 73¢ on news of the recent resource. The company has 45 million shares outstanding.
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