U.S. REPORT (November 11, 1991)

Less than five months after the official opening the Van Stone zinc-lead mine in northeastern Washington, Equinox Resources (TSE) has been forced to suspend operations because of low zinc prices.

The company announced a suspension of mining operations in September and has been feeding the mill from a 100,000-ton stockpile since. Equinox, 60% owner of the mine, notes that the project has been profitable on an operating basis, but adds that the resumption of mining operations would only deplete reserves on a break-even basis.

Equinox plans to put the mine on a care-and-maintenance basis in November until zinc prices improve to the US55-cent level. Care-and-maintenance costs are estimated at about US$18,000 per month.

Following receipt of regulatory approval for a previously announced unit deal, Equinox received $4.64 million. Part of the funds will be used to retire project debt of US$2.35 million owed to Cominco Ltd.

Good drilling results have prompted LAC Minerals (TSE) to continue drilling on its 51% owned Rosebud property in Nevada until late November.

The company, along with 49% partner Equinox Resources (TSE), plans to drill an additional 6-7 stepout holes to the east and south of hole 217. Hole 217, drilled on the eastern edge of the East zone, intersected 180 ft. from 645 ft. to 825 ft. grading 0.12 oz. gold per ton. The hole included an upper zone from 645 ft. to 675 ft. grading 0.12 oz. gold, a middle zone from 720 ft. to 745 ft. grading 0.45 oz. gold and a lower zone from 785 ft. to 810 ft. grading 0.17 oz. gold. The hole bottomed in low-grade mineralization at 825 ft.

Hole 219 represents the most easterly stepout to date, about 300 east and 150 ft. south of hole 142 which intersected 5 ft. grading 0.20 oz. gold. Hole 213, about 180 ft. east and 50 ft. north of hole 142 intersected 15 ft. from 765 ft. to 780 ft. grading 0.24 oz. gold.

Hole 214, about 250 ft. south and 100 ft. east of hole 142 intersected 15 ft. from 835 ft. to 850 ft. grading 0.33 oz. gold.

The East zone extends on to 100% owned LAC ground to the northwest and may connect with the Dozer Hill zone on joint venture ground to the southwest. LAC’s last estimate of preliminary reserves on the Dozer Hill zone totalled 5.2 million tons grading 0.12 oz. gold at a 0.02 oz. cutoff or 2.3 million tons grading 0.23 oz. gold at a 0.05 oz. cutoff. About 45% of the reserve is estimated to sit under LAC’s wholly owned ground to the north. LAC is currently working on a reserve estimate for the East zone.

An increase in gold and silver production at the Denton-Rawhide mine in Nevada helped Plexus Resources (TSE) report a net gain of US$135,000 for its third quarter ended Sept. 30. This compares to a loss of US$417,000 in the third quarter of 1990.

Plexus’ share of gold production from the 24% owned Denton-Rawhide mine increased to 5,250 oz. for the quarter from 3,850 oz. last year. The company’s results were also helped by a drop in cash operating costs to US$192 per oz. from an average of US$280 per oz. in the third quarter of 1990. Plexus reports a net loss of US$319,000 for the nine months ended Sept. 30 on sales of US$6.5 million. This compares with a net loss of US$462,000 for the first nine months of 1990 on sales of US$2.4 million.

Losses in 1990 were reduced by an investment gain of US$1.8 million.

As might be expected, it wasn’t all smooth sailing for the Crow Butte joint venture, which had its share of hurdles before it was developed into a mine. (The mining project was officially opened in mid-October. See Page One story.)

The process from discovery to development began in the 1970s when an original participant encountered favorable geology and radioactive anomalies in the Crow Butte area during an oil and gas exploration program. A subsequent exploration program directed at the property’s potential to host a uranium deposit began in earnest in 1978. The program led to the official announcement of a discovery in 1981. Confirmation drilling continued to 1985, while environmental baseline data were collected and applications made to the U.S. Regulatory Commission and the Nebraska Department of Environmental Control.

In 1985, the joint venture got approval to build a 100-gallon-per-minute research and development facility which began operations in 1986. The objectives at the time, Morris said, were to confirm that the extraction process was both technically and economically feasible and to assure regulatory agencies of the environmentally safe performance of the project. The pilot plant was a success on both fronts as regulatory agencies made a finding of no significant impact for commercial operation, and issued a commercial operating licence at the end of 1989.

A used processing plant was bought and moved from Texas to Crow Butte, and after overcoming hurdles put up by groups opposed to the project, Crow Butte began commercial operations in April.

The mine permit area covers about 2,560 acres, of which only about 20% will be directly affected by operations. The commercial permit is for 27 million lb. of reserves at an average grade of 0.25% uranium oxide, contained in an overall preliminary reserve of about 100 million lb. within a 6-mile-long mineralized trend. The mine life is considered to be in excess of 20 years. The Northern Miner was told during the recent site visit that the plant is currently operating at about half its 2,500-gallon-per-minute capacity. Current operations are from mine unit one, which includes 38 production wells and 72 injection wells. Recoveries are projected to range from 72% to 84%, depending on well spacing and duration of leaching. (New mine units are brought on stream when recoveries at producing mine units fall below an economic cutoff.)

By the spring of 1992, the joint venture expects to achieve full operating capacity by bringing on the second mine unit. This would translate into about one million pounds of uranium production per year. With some modifications, the plant could have a production capacity potential of 5,000 gallons per minute, for an annual production capability of two million pounds.

Management and labor will gather together for the 65th annual meeting of the Society for Mining Metallurgy & Exploration, Minnesota section, on Jan. 15, 1992.

Theme of the meeting, geared toward mining operators, managers, engineers and technicians, is “Teamwork and Technology: Keys to the Future.” The 2-day conference will be held in the Duluth Entertainment Centre in Duluth, Minn. Speakers include Renold Thompson, president of Oglebay Norton, and Lynn Williams, international president of the United Steelworkers of America.

A $100-million expansion of facilities at the Mission mine of Asarco (NYSE) in Arizona will see an increase in contained copper from 90,000 tons to 124,000 tons, with full production scheduled before year-end, the company reports.

The copper producer, which recorded net earnings of US$10.3 million (25 cents per share) for the 1991 third quarter compared with US$59.4 million ($1.43 per share) for the same period last year, announced a number of plant expansions.

Output at the Ray mine will increase to 182,000 tons by 1993. To date, $169 million has been spent at Ray and completion of ongoing construction is expected for the 1992 second quarter.

The company’s El Paso copper smelter is to be upgraded with an $81-million ConTop furnace scheduled for startup in 1993.

A solvent extraction-electrowinning plant at the Arizona Silver Bell mine, costing $54 million, is scheduled to come into operation in 1994. Overall, modernization costs will amount to $429 million and increase annual mine capacity to 366,000 tons.

Asarco’s copper reserves now stand at 1.8 billion tons, including 626.1 million tons at Ray and 600 million at Mission. Copper grade at the two mines is 0.69% and 0.68%, respectively.