Top of the heap

Skeptics scoffed when Pegasus Gold of Vancouver announced in 1979 that it was planning to put into production its Landusky and Zortman properties in Montana. Wi th a low grade deposit (0.027 oz gold per ton) and, at best, a 10-month operatin g year due to the 5,000-ft elevation, few believed it would be a success. Prices for the company’s shares experienced an early roller-coaster ride. Today Pegasus is considered a model of innovation in heap leaching and expects to produce 270,000 oz of gold from four mining operations. There are many who may follow in Pegasus’ footsteps.

Heap leaching to recover gold — a process whereby ore is placed in a large he ap and cyanide solution percolates through to dissolve the gold into a solution from which it can be easily recovered by conventional zinc precipitation or carb on adsorption — is undergoing improvements and refinements as more and more ope rations are brought on line. The low cost of the technique allows many players t o try heap leaching at a relatively modest capital cost, so innovation should be expected. Initially recoveries in the 60%-70% range were the norm, but today we are seeing higher recovery rates — partly because of the ore characteristics, and partly because of innovation. For example, it was found that after letting a leach pile sit for a period after leaching and then “hitting it with another sh ot” of leaching solution, recoveries could be improved by up to 10%.

Improvements to the process as it is used and studied in full-scale commercial operations is leading to improved recovery rates and lower production costs. Pioneer Metals has a recovery rate of 90% on its 600,000- ton-per-year Stibnite mi ne, near Boise, Idaho, comparable to a conventional milling operation. Meanwhile Beaver Resources boasts of costs around $75(US) per oz for its 600,000- ton- per -year Kramer Hill operation, in San Bernardino Cty., Calif. Although both these operations have had low reserves delineated to date, the initial cost to the com panies of starting up the operations (50% acquisition for Pioneer for $1 million and capital costs for Beaver of $1 million) contributes to the significant return on investment.

If the 90% recovery rate of Pioneer Metals is not an isolated case but an upper limit to the heap leach potential, leaching ore to recover its me tal could bec ome the major mining recovery process. Today it is used almost solely for gold r ecovery, but it could conceivably be economic to recover copper or other base me tals by heap leach methods.

Heap leaching has been used by some of the larger mining companies for higher grade, larger deposits such as those found in Nevada’s Carlin gold belt. But it is small companies on small operations which have been at the forefront in de veloping heap leach technology as a low-cost alternative method for recovering g old from large, low-grade epithermal gold deposits.

Last year we reported that 10 mines were producing gold by heap leaching, most in the southwestern U.S. (see August, 1986 issue). Another 11 were expected to start in 1986 and 14 were considered good bets to start up in 1987 and beyond.

All of last year’s 10 producers are still going strong; and of the 11 projected 1986 startups, all but one delivered as promised. What’s more, three of those pegged to start up in 1987 or later began producing by 1986. This year 22 heap l each producers are on our list (see page 14), more than double the number in 198 6. Eight mines are expected to begin producing in the coming year, and 18 picked to start producing in 1988 or shortly thereafter.

Clearly the business of heap leach gold production is booming. Like any relatively new technique, heap leaching has its problems. But, as our list shows, the potential of being rewarded with “instant producer status” will continue to lure people to explore and discover deposits amenable to heap leaching.

Chester Millar, president of Glamis Gold and one of the pioneers of heap leaching technology, says: “If general contractors realized the process was mainly a bulk material moving process, we would be awash in `mining engineers.'” Im proving efficiency is not a matter of improving an operation’s sophistication. I n 1981, for example, when Pegasus encountered a “constriction” in its operating margin because of the decline in the price of gold, it brought in N. A. Degerstr om, highway and heavy construction contractor.

But not all operations are as easy to mine and process as those of Pioneer and Glamis. Their operations require minimum preparatory work before placing the ore on the leach pads, but it would be wrong to infer from their experience that a ll heap leach projects are a cinch. Lacana Mining might tell a different story a fter having suffered through its ill-fated venture at the Relief Canyon mine in Nevada.

During a period of falling gold prices in late 1984 and early 1985, Lacana proceeded quickly to production at Relief Canyon only to fall victim to poorer-than -expected recovery. By the end of 1985 the operation was shut down. In retrospec t, it appears Lacana failed to recognize that the ore had to be crushed to liber ate the gold and then agglomerated — mixed with cement and water which separate s the clay from the gold ore — to enable proper recovery.

Pegasus optioned the property in 1986 and, with the addition of an agglomerator and improved blasting fragmentation and crushing (capital costs are rumored to be in the $100,000 range), is now profitably producing gold from the deposit.

Lacana is not alone in running into problems. Galactic Resources initiated production on its Summitville property last year and already has to revamp its mini ng plan because of unforeseen problems with clay content. The company’s reported production of more than 40,000 oz of gold during its initial year has lead to some skepticism as to whether or not it will attain the 120,000 oz per year it ex pected from current operations. Ican Minerals has run into problems with taki ng a sizeable indicated reserve (30 million tons grading 0.03-0.04 oz gold per t on) from drill data to the development stage. Although a large reserve of gold i s indicated, whether the deposit is amenable to leaching has been questioned. Wh ile the initial 45%-50% of the gold can be recovered, the remaining gold appears to be “silica-encapsulated,” preventing recovery by heap leaching methods.

Silica encapsulation and sulphide- rich ore are a heap leacher’s nightmare. The surrounding silica prevents the dilute cyanide solution from reaching the gold and leaching it out of the rock. Sulphide-rich ore can pose a similar problem by reacting with the cyanide before it can leach the gold from the rock. Silica e ncapsulation has rendered inoperable a sizeable part of Ican’s geological gold r eserve; and Hycroft Resources, in early 1986, showed the market reaction to the mention of “sulphides.”

Hycroft had reached an agreement with Granges Exploration for the latter to fund exploration on its Nevada Crofoot property in 1985. Rumor and innuendo regard ing the presence of sulphides in the ore helped push the stock to almost 1/3 of its previous value. The company did extensive drill ing and testing in 1986 and has now proven up more than 15 million tons of leach able ore on its property.

Problems aside, heap leaching remains an enticing means to get into the gold production game. What is of particular interest and excitement is the proven pote ntial for a junior exploration company to become a producing gold operation in a relatively short time. A heap leach operation can be exceedingly profitable. Hycroft acquired its Crofoot, Nev., property in early 1985 and by early 1987 was producing gold. Part of this was attributable to the financial involvement of Gra nges in the operation; part to the acquisition of the adjacent existing mining p roperty, the Lewis mine.

That acquisition perhaps best indicates the advantage Canadian public junior companies currently have in the world of heap leaching. The Lewis mine was being operated by a private U.S. company with
poor results. The Canadian company was invited to turn the operation around and, by recent accounts, has done so.

Canadian junior mining companies, at this stage, are the leaders in heap leaching technology and in the ability to successfully develop these deposits. To dat e, the small size and low grade of these deposits have deterred major mining com panies from pursuing them as exploration targets. For example, may of the produc ers or near- producers outlined in our list are located on mineralized zones ori ginally discovered and evaluated, then abandoned as uneconomic, by Homestake, the main U.S. gold producer.

But this is changing. Newmont Gold is moving towards developing its large Mesquite deposit, which was rejected by other majors as too low grade (albeit with h igh capital costs). In the Carlin district many of the majors’ operating mines a re heap leaching their lower grade ore to increase output.

Echo Bay Mines and American Barrick Resources, two Canadian companies, have rapidly moved to the forefront of gold producers with a large portion of their out put coming from heap leaching. Noranda, too, is reported to be contemplating a venture in the heap leach field with its own project in Idaho.

Pegasus has perhaps caught the imagination of most juniors in showing what a heap leach property can do for a small company. From its humble roots in 1979 as a one-mine, 20,000- oz-per-year operation, it has grown to become a 4-mine, 150, 000-oz-per-year producer with more to come. The credibility of establishing cash flow from a heap leach operation can assist in financing the discovery of a “major” deposit. Pioneer Metals can attest to that as its gold-producing status from the Stibnite mine helps it fund development of its Puffy Lake deposit.

Canadian juniors are the major players in the U.S. — the main geological environment in North America for finding epithermal-type gold deposits, which would be uneconomic to mine without heap leaching technology. Our list continues to expand, with numerous junior mining companies rising toward producer status.

Heap leaching has proven to be so successful in the American west that the technique is being used in other, less favorable climates. The concept of poorly ox idized ore in glaciated terrain and problems of a short working season have been challenged by: bp-Selco on its Hope Brook property in Newfoundland; Gordex Minerals which is producing gold from leaching ore at its Cape Spencer property near Saint John, N.B.; La Teko which is producing gold in a test project in Alaska; and erg Resources at Timmins, Ont.

Heap leaching is far from high-tech, but the technique is rapidly developing. We fully expect our 1988 Who’s Who in Heap Leaching to grow at the same rapid ra te as the 1987 list. Laurence Stephenson is a Toronto- based geological and financial consultant.