TORONTO (miningweekly.com) – California’s glory days as a world-leading gold-producing region are long gone. Or are they? With the gold upside still very much in play, mines long thought played out or considered uneconomic are being reassessed.
But unlike the stampede of the mid-nineteenth century, this is not a mad rush of all-comers. Instead, only a handful of companies are involved and many of their projects have been years in the planning, waiting for the support of higher gold prices to awaken their potential. This includes Sutter Gold’s Lincoln underground project in Amador County, 45 miles south-east of Sacramento.
The property comprises three main zones: Lincoln, Comet and Keystone. All lie on a 3.6-mile stretch of the 120-mile-long Mother Lode goldbelt and contain eight old mines, including the original Lincoln mine that came into play in 1851.
Historically, these eight mines produced around 3.375-million ounces of gold from the 1850s to the 1950s. Many became unviable because of US government policy during the Second World War. “A lot of [California’s] mines were closed by the government during the conflict because gold wasn’t a strategic metal. Between the cost of reopening them and because of the lower gold price they were uneconomic after the war,” Sutter Gold’s CFO Bob Hutmacher told Mining Weekly Online.
All of the operations were dormant by the end of the 1950s, becoming historic relics, although they were never quite lost to the memory of the mining community. Indeed, low-level maintenance continued at some of the sites and, by the 1980s, serious consideration was given to rehabilitation of the old workings. Progress at this time included the installation of a modern decline at the Lincoln mine zone.
“But the property probably wasn’t quite economic enough under the old gold prices,” Hutmacher said. “However, people kept the site active, conducting maintenance and other aspects. Importantly, they also kept the permitting going, which takes a long time to secure. So these issues were taken care of and we’re now benefiting.”
Sutter Gold completed a National Instrument (NI) 43-101-compliant resource estimate in 2008, with Lincoln-Comet containing an indicated 188 481 oz of gold and Keystone an indicated 34 563 oz of gold. Inferred resources for all zones comprised 458 914 oz of gold. Since 2008, further exploratory work has been undertaken and remains important as the company seeks to increase resource levels further.
“We’ve had some great exploration results and there are a lot of unexplored areas but we haven’t been able to spend quite as much as we like. But once we turn cash-flow positive in Q2 2013, then we’ll be able to get a bit more aggressive in exploration,” Hutmacher said. “Further exploration will occur underground. We could also do additional drilling at the Keystone area … this will probably be the next target to look at.”
Encouraging results from the most recent drill campaign were released on August 16. The company focused on exploring the zone between Lincoln and Comet and discovered two unknown gold-bearing veins in the process. It also probed for mineralisation north of Comet towards the Keystone zone.
Before starting preproduction work and construction, Sutter Gold held tours for the general public, exploring the heritage of the region and becoming something of a regional attraction.
“We did some tours before construction and underground development started … It was an interesting tour; you’d even get to see some gold in certain parts of the mine. We may take another look at doing tours once we get our project up and running. But obviously that’s very much a secondary consideration right now,” Hutmacher said.
Still, it was a useful tool to engage the region’s wider public, many of whom are proud of their community’s mining heritage and who welcomed a chance to see the old operations before they were fully revamped. “This is an old mining community; it understands mining and supports mining,” he said.
The area has also been blighted by high unemployment, so a project of this scale, while small compared with world-class operations, is, nonetheless, a boon to the local economy and for jobs. “There’s high unemployment in the region, so this is a welcome economic development. Work has been created from our mining construction and there will be permanent positions at the mine as well,” Hutmacher adds.
The effects have been particularly apparent in recent months as construction and building work on the project has ramped up. “Our mine site has been transformed in the past six months,” president and CEO Leanne Baker said in October. “The mill building is closed in and equipment is being installed … our new sand barn and tailings thickener are under construction. We continue to hire for new positions. Most exciting, we are advancing mine development."
The company aims to achieve the objectives it outlined with the release of a NI 43-101 preliminary economic assessment in 2011. The upper portion of the Lincoln-Comet deposit will be the centre of attention, with the current mining plan calling for 244 800 t of run-of-mine ore at 15.8 g/t for the first five years at a cutoff grade of 7.5 g/t. About 70% of the gold will be obtained via gravity circuit and 30% as concentrate.
The company hopes to pour its first gold shortly. “We’re looking to pour a little gold during December,” Hutmacher said. “We’ll ramp up from there into the first half of 2013. We won’t be using highest-grade ore for first pour as that will be saved for later. We’ll be using this [the first pour] for mill testing.”
“Once fully operational, we aim to produce about 23 000 ounces of gold a year. We’ll be fully on stream in later 2013,” he added.
For the longer term, and with a nod to the pioneer days, Hutmacher was bullish not only for the project’s outlook but also for California as a whole. “Remember, California was the biggest gold producer in the world at one point during the 1800s. We think there’s still a lot of gold to be had.”