Viceroy opens Yukon gold mine — Gold recovery proved possible during cold temperatures

The discovery of placer gold in the Klondike in 1896 triggered one of the world’s last great gold rushes, attracting thousands of people from all corners of the world. One hundred years later, the search for gold continues in the Yukon Territory — and one producer, Viceroy Resource (VOY-T), is proving heap-leach technology can work effectively year-round in the Far North.

The accomplishment was recently marked by the official opening of Viceroy’s Brewery Creek mine, construction of which began in August 1995, with the setup of a 122-Man camp on site and the preparation of the leach pad and processing plant site areas. Final construction was completed by the autumn of 1996, with the installation of a composite liner in the pad area and the erection of the ADR (adsorption-desorption recovery) plant, assay lab, generator site, pump station, and office complex.

An open-pit operation, Brewery Creek was completed within five weeks of schedule and just slightly over budget at a capital cost of about $60 million. The development of a 19-km network of haulage roads and the expansion of the pad will continue in 1997.

The mine is projected to produce an average of 85,000 oz. annually over a 7.5-year mine life, making it the largest lode gold mine ever constructed in the Yukon. Production from Brewery Creek will nearly double the territory’s total annual gold production.

While attending the mine-opening ceremony, The Northern Miner was informed that cash operating costs over the life of the operation are expected to average US$200 per oz., or $8.19 per tonne.

Situated 57 km due east of Dawson City, Brewery Creek is in the heart of the Klondike and employs 141 people, most of whom are from the Yukon.

Eight near-surface gold deposits are distributed at Brewery Creek over a 5.5-km-long, east-west-striking structure called the Reserve Trend. Proven reserves initially stood at 17.1 million tonnes grading 1.45 grams gold per tonne at an average stripping ratio of 1.2-To-1.

The company is in the process of remodelling the reserve figures based on recent data. Any reduction to the reserve base is expected to be offset by a 10-To-12% increase in grade.

While heap-leaching and the ADR plant operate year-round, mining is carried out seasonally, from April through to October, at a daily rate of roughly 35,000 tonnes of combined ore and waste.

.SNo crushing

Last year, mining began in the Upper Fosters and West Canadian pits. More than 2 million tonnes of oxidized ore had been placed on the leach pad by October.

The run-of-Mine ore requires no crushing and is trucked directly to the pad where it is stacked in three 10-Metre lifts to a maximum height of 30 metres.

The pad area consists of three cells, each of which measures 300 by 80 metres in dimension. By the end of this year, five cells will be in operation; 10 will operate over the life of the mine.

The Brewery Creek mine completed its first gold pour on Nov. 15, 1996, and, by year-end, had produced 10,175 oz. The dore bars are 60% to 65% gold.

During the first quarter of 1997, Brewery Creek produced a further 4,356 oz.

Year-To-date production to the end of May totalled 8,573 oz. Production is expected to increase to 7,500 oz. for the month of June, ramping up to 12,000 oz. by September.

Gold production for 1997 is forecast to exceed 100,000 oz.

That the mine operated smoothly through its first winter is “a credit to its design and to our operations people,” said Viceroy President Paul Saxton.

Temperatures dipped to as low as minus 43.5C, proving that heap leaching during winter months is viable.

To ensure gold recovery through the extremely cold weather, Viceroy took several precautions. These included: covering the ore under leach with a 4-Metre-Thick insulating frost cover layer; insulated and heat-Traced solution pipes; heating of outgoing barren cyanide process solutions using waste heat from diesel-powered generators; and the use of a waste oil-fired heat exchanger.

Metallurgical testwork indicated a gold recovery rate of 78% over 120 days.

Mining of the Kokanee pit resumed in April, and, to date, 532,000 tonnes of ore grading 1.97 grams have been mined from 4-Metre benches at a stripping ratio of about 1.8-To-1.

>From east to west, the other deposits include the Lucky, Golden, Moosehead, Blue and Pacific. “Basically, we will be mining one pit per year,” said mine manager James McCormack.

.SRegional history

The area was discovered only 10 years ago during a grassroots reconnaissance program carried out by Noranda. The work identified soil samples with strongly elevated values in gold, arsenic, antimony and mercury.

A large geochemical anomaly comprising six zones of mineralization was defined during 1988 and 1989. Follow-up work involved geochemical and geophysical surveys, mapping, prospecting, trenching and 2,700 metres of drilling.

Loki Gold acquired a full 100% interest in Brewery Creek in 1993 and, over the next two years, carried out test-pitting, geological mapping, soil geochemistry, trenching, 18,900 metres of drilling in 393 holes, environmental studies, reserve calculations, mine planning, bulk sampling and metallurgical testing.

Viceroy gained control of Brewery Creek after completing a 3-way merger with Loki Gold and Baja Gold in late May 1996. The merger served to transform each company from a one-Mine operation to a multi-Mine enterprise, providing the base for long-Term growth.

The Brewery Creek mine lies within unglaciated terrain in the foothills of the Olgivie Mountains along the northeastern boundary of the Tintina Trench.

The property is underlain by volcanic and sedimentary rocks intruded by sill-like bodies of altered felsic rocks.

Gold mineralization is structurally controlled, occurring primarily in intrusive, as well as sedimentary, rocks in the hangingwall of reactivated thrust faults.

The faults, which dip steeply near the surface, shallow out to 20 to 25 at depth.

The bulk of the reserves are primarily hosted by Cretaceous-Age quartz monzonite sills, though some sediment-hosted mineralization has been identified. The mineralization is oxidized to a 30-To-50-Metre depth before going through a 10-To-30-Metre-Thick transition to refractory sulphide gold mineralization. Viceroy is conducting metallurgical testwork on the sulphide portion.

The existing gold deposits cover less than 25% of a large gold-in-soil anomaly. Several other potential zones of mineralization have been identified along the 12-km-long trend, including the West and East Big Rock zones, which lie to the northwest.

.SOxide resource

Last year’s drilling on the West and East Big Rock zones enabled Viceroy to outline an oxide resource of 2.1 million tonnes grading 1.1 grams. This past March, 13 reverse-Circulation holes were drilled to expand upon the resource in the East Big Rock zone, as well as to follow up on encouraging results at the North Slope and Pacific zones.

Drilling on the North Slope zone has defined sediment-hosted mineralization along a 500-Metre strike length, 1 km north of the main reserve trend. Values of up to 2.54 grams over 16.6 metres have been returned.

In 1996, soil sampling was carried out along a 5-km-long anomaly between the Lucky and Sleemans zones, returning values as high as 15.8 grams.

Viceroy plans to spend about $2 million on exploration in 1997. The program will attempt to expand the oxide reserve outside of the main reserve trend and evaluate the potential for higher-grade sulphide mineralization downdip along the Reserve Trend.

Viceroy also plans to spend $1.5 million to explore the potential for similar deposits along strike on adjacent First Nations lands, as well as conduct a regional reconnaissance exploration program throughout the central Yukon.

At the end of the first quarter of 1997, Viceroy had working capital of $61.5 million, with 50.8 million shares outstanding, or 54.2 million fully diluted.

Viceroy’s other principal assets include a 75% interest of the Castle Mountain open-pit, heap-leach mine in southern California and a 40% stake in the advanced-stage
Paredones Amarillos gold project in Baja California Sur, Mexico.

Castle Mountain is expected to yield 125,000 oz. in 1997. Current reserves are estimated at 17.1 million tonnes grading 1.23 grams, with a stripping ratio of 3.1-To-1. Over the remaining five years of mine life, production is projected to average 100,000 oz. per year at a cash cost of US$285 per oz. MK Gold (MKAU-Q) owns the other 25% interest in Castle Mountain.

A final feasibility study of the Paredones Amarillos project is anticipated shortly. Echo Bay Mines (ECO-T), the operator, owns a 60% interest in the potential open-pit, milling project. Proven and probable reserves stand at 36.2 million tonnes grading 1.1 grams.

Through equity interests in Oro Belle Resources (ORS-V) (47%), Pacific Wildcat Resources (PAW-V) (29%) and Channel Resources (CHU-T) (29%), Viceroy has exposure in South America, Indonesia and Burkino Faso, West Africa. The company also holds a 30% interest in South East Asia Resources, which has negotiated exploration licences on the Gaolong Dome prospects in China.