Transatlantic Mining seeks to restart US Grant in Montana

VANCOUVER — Transatlantic Mining (TSXV: TCO) intends to restart production in the near term at the historic US Grant gold mine in Montana’s prolific Madison County placer gold district as the first step of a district-scale play. The company optioned the asset and mill equipment in early 2016, and has spent US$4.5 million in rehabilitation efforts and trial mining over the past year.

US Grant is part of the broader Alder Mountain project, which Transatlantic leased in January 2016 under an option agreement, wherein it can buy a 100% stake for US$6 million over the next three years. The project lies 2 km southeast of the historic gold mining town of Virginia City, and saw various production stints between 1867 and 1984.

The Madison County district hosts epithermal gold deposits, where there is zonation of gold- and silver-rich ores with secondary zonation of galena and copper-bearing minerals through different parts of a fissure vein system that is distal to buried batholiths. Technical models consider the rocks to be mesothermal,  implying deeper mineralizing systems.

The Alder gold-silver project in Montana hosts the US Grant gold-silver mine and mill. Credit: Transatlantic Mining.

“Our team is active in the region looking at opportunities, and we’ve transitioned from being an explorer to a developer, with the potential for near-term cash flow. It’s important to become self-sustaining, and we want to grow into a district player,” CEO Bernie Sostak says during an interview.

“We liked US Grant because it’s on private land and has a grandfathered cyanide permit in Montana, which is important for the strategy. The asset also had the historic production, with impressive grades. Our team includes experienced operators, so for us it’s a question of understanding the orebody.”

Transatlantic’s team features technical and financial alumni of Australian gold producer Northern Star Resources (ASX: NST), where Sostak served as general manager of business development and technical services. The company hopes to emulate the business model that underpinned Northern Star’s rise to an intermediate miner expected to produce up to 515,000 oz. gold in 2017, at all-in sustaining costs (AISCs) of US$770 per ounce.

At US Grant, Transatlantic has rehabilitated the past-producing underground workings, installed a second ball mill at the site and commissioned a 35-tonne-per-day mill. The near-term goal involves upgrading the facility to 135 tonnes per day and producing 5,000 equivalent oz. gold.

The US Grant gold-silver mine and mill in Montana. Credit: Transatlantic Mining.

In December 2016, Transatlantic tabulated a maiden resource on US Grant of 25,000 measured and indicated tonnes grading 4.5 grams gold per tonne and 201.3 grams silver per tonne for 7,000 contained equivalent oz. gold. Inferred resources add 150,000 tonnes of 5.1 grams gold and 218.3 grams silver for 46,800 contained oz. gold.

The company also released a preliminary economic assessment that models an US$8.8-million operation with a 3.6-year mine life.

Transatlantic aims to leverage cash flows to uncover more gold and silver across its under-explored property package that includes 1,500 veins or workings in the region identified by different owners over the years.

Historic workings at the US Grant gold-silver mine in Montana. Credit: Transatlantic Mining.

“When we acquired the asset, we were going through a process of understanding where we stood,” Sostak says. “We looked at the metallurgy, the orebody and the available equipment. There’s already a lot of capital infrastructure on the site, so it became a question of: ‘How can we get the best value out of this moving forward?’

Sostak says the company has been trial mining to improve its understanding of the metallurgy, and the strike extent of the mineralization.

“Now we can talk to the market about what we have at the moment, and expand on the vision in terms of additional vein sets,” he says. “There’s been limited drilling on a lot of the targets, but the grades look promising.”

Underground development at US Grant includes three access levels and a process plant, with more potential for mineralization on the parallel El Fleeda and Cornucopia veins.

Transatlantic has extracted material for bottle-roll testing and sent samples to a nearby carbon-in-leach plant for metallurgical work.

Under the proposed mine plan, US Grant would eventually produce 10,000 equivalent oz. gold per year based on the 135-tonne-per-day rate.

Transatlantic hopes to double the mill capacity, which could boost annual production to between 20,000 and 30,000 oz. gold equivalent.

But the company aims to generate 5,000 oz. gold equivalent to start, at an AISC of US$905 per oz. gold equivalent.

“The metallurgical work has been successful, and now we’ve obviously progressed to the point where we recently set off a bulk sample for commercial recovery. That allows us to build our business plan with more confidence,” Sostak says.

“We’ll look at suitable financing to take the next step in our strategic move toward production … we’re also looking at other potential projects in the region.”

The company hopes to consolidate the Alder Gulch district through  merger and acquisition, and will turn its eye to property-wide exploration potential. Targets around US Grant include the El Fleeda vein and Golden Boy claim group.

Furthermore, Transatlantic released preliminary assays from a 1,450-metre surface drill program on the US Grant vein in January, highlighted by 2.8 metres grading 19.3 grams gold equivalent in hole 6.

Transatlantic shares have traded in a 52-week range of 3¢ to 14.5¢, and sat at 3.5¢ per share at press time.

The company has 198 million shares outstanding for a $7-million market capitalization.

It closed a $3.9-million private placement in October, wherein it issued 79 million units priced at 5¢. Each unit consists of a share and one-third of a warrant, where a full warrant holds a 10¢ strike price for two years.

“We started expanding our shareholder base in our most recent financing when we brought in investors from Germany and Canada,” Sostak says. “The Australian and Canadian markets are different in terms of how dilution and market capitalization are perceived. We’re building up a growth story to create a mining house, and we’ll need capital at different times. We need to prove ourselves and generate cash flow.”