The Mineral Ridge gold mine is located 4 miles northwest of the town of Silver Peak and 32 miles west of Tonopah in Esmeralda County, Nevada. The property consists of 54 patented and 110 unpatented mining claims totaling nearly 2,685 acres, or 4.2 square miles.
On November 8, 2000 Golden Phoenix Minerals purchased the Mineral Ridge gold mine by making a purchase payment of $225,000. The purchase acquired the gold reserve for $1.03 per ounce of gold (the total mineable gold reserve is 209,200 ounces.) Prior mine operators had spent about $30 million on the property, which include about $18 million in office, process, and ancillary facilities, about $2 million in engineering and feasibility studies, about $6 million in drilling and assays, $2 million in past permitting costs, and the remainder in site preparation. The property comes with an active leach pad with room to hold the currently identified ore reserve. Once a new reclamation plan and bond is in place, full mining and production will then proceed.
The Mineral Ridge property holds 4 separate economically mineable gold deposits. The mine reserve, at a 0.035 opt Au cut off grade, is 2,658,340 tons averaging 0.079 opt for 209,226 contained ounces of gold. This reserve is contained in a total resource of 8,314,000 tons averaging 0.061 opt gold (at a 0.02 opt Au cutoff grade) for a total of 506,000 ounces gold. The property further holds excellent exploration potential with identified targets containing a resource of up to a possible 3 to 4.5 million additional ounces on the property.
When the Company obtains the operating capital it needs, then the following operating plan will be initiated in the sequence presented. This plan will realize 1.) gold production from reprocessing the crushed ore on the leach pad through a washing plant and increased gold production from the ADR plant with the addition of new cyanide to the regular leach fluids to aid in gold recovery, 2.) significant new gold production from initiating open pit mining and possibly underground mining to be processed by a new gravity cyanide gold recovery plant, and 3.) recovery of salable industrial minerals derived from the crushed alaskite and quartz rocks. The Company has a business plan that lays out this entire operating plan.
The total value of the gold and industrial mineral sales over nine-year mine life, at a $275 gold price, is $141,555,000. The total operating cost, which includes royalty payments, refining costs, mining costs, milling costs, reclamation costs, and operating expenses is $108,161,000. The average gold production cost is estimated to be $158 per ounce for the nine-year mine life. The net income after taxes is estimated to be $33,394,000.
The Mineral Ridge Mine is found on the northeastern flank of the Silver Peak Range on Mineral Ridge. The mine is located 4 miles northwest of the town of Silver Peak and 32 miles west of Tonopah in Esmeralda County, Nevada. Elevations vary from 4,300 feet at the town of Silver Peak at the western edge of Clayton Valley salt flat and to 8,390 feet at the northwest end of Mineral Ridge.
The
Acquisition Opportunity for Golden Phoenix Minerals in 2000
Golden Phoenix Minerals identified the Mineral Ridge gold mining property as a potentially superior acquisition opportunity in April 2000. At the time, a Federal bankruptcy court in Reno controlled the property. The court was trying to either sell or shut down the property and sell all the rolling stock to settle claims against Mineral Ridge Resources, Inc. All mining permits and bonds were still in place, and no date had been set by the bankruptcy judge to call an end to the bankruptcy. The Company had evaluated the issues surrounding the past operator’s decline into bankruptcy and had determined that the property remained economically viable when both operational and processing changes were instituted.
Golden Phoenix had become very interested in the Mineral Ridge mine after just two visits to the property. There were four aspects of the project that were attractive and include: 1.) A fully permitted mining property in Nevada with on-going gold production from the leach pad, 2.) Potential for expansion of the resource already known on the property, 3.) A proven gold reserve of 209,000 ounces, and 4.) Potential cash flow for Golden Phoenix Minerals, if the Company was successful in winning the bid for the property.
On November 8, 2000 Golden Phoenix Minerals purchased the Mineral Ridge gold mine by making a purchase payment of $225,000. The purchase of the property essentially acquired the gold reserve for $1.03 ounce of gold (the total mineable gold reserve is 209,226 ounces.) Prior mine operators had spent about $30 million on the property, which included about $18 million in office, process, and ancillary facilities, about $2 million in engineering and feasibility studies, about $6 million in drilling and assays, $2 million in past permitting costs, and the remainder in site preparation. The property comes with an active leach pad with room to hold the current ore reserve, exposed ore on the last mine bench, and permits that can be transferred once a new reclamation plan and bond is in place.
After purchase of the Mineral Ridge Mine, the company proceeded with trying to raise some operating capital to put the mine back into operation by open pit mining, crushing, and leaching of the ores. The company also had to submit a new reclamation plan and bond before mining could take place. The new reclamation bond that was required doubled from $1.64 million to $3.16 million, and it had to be posted before mining could proceed.
The Company suffered a set back in May, 2001 when commitments for the operating capital and reclamation bond were withdrawn. Because of this, a new operating plan was designed to bring Mineral Ridge gold mine back into operation.
The original production plans, which included open pit mining, crushing of ore, and placement of the ore on the heap leach pad, was deferred because of difficulties in obtaining both $2 million operational financing and the $3.16 million reclamation bond. (With $2 million of operating capital in a bank for start up operating needs, our bonding company would post the required bond.)
When the Company obtains the operating capital it needs, then the following operating plan will be initiated in the sequence presented. This plan will realize 1.) gold production from reprocessing the crushed ore on the leach pad through a washing plant and increased gold production from the ADR plant with the addition of new cyanide to the regular leach fluids to aid in gold recovery, 2.) significant new gold production from initiating open pit mining and possibly underground mining to be processed by a new gravity cyanide gold recovery plant, and 3.) recovery of salable industrial minerals derived from the crushed alaskite and quartz rocks. The Company has a business plan that lays out this entire operating plan.
The total value of the gold and industrial mineral sales over nine-year mine life, at a $275 gold price, is $141,555,000. The total operating cost, which includes royalty payments, refining costs, mining costs, milling costs, reclamation costs, and operating expenses is $108,161,000. The average gold production cost is estimated to be $158 per ounce for the nine-year mine life. The net income after taxes is estimated to be $33,394,000.
Exploration
and development of numerous and highly prospective targets on the
2,685-acre property will be conducted once mining is initiated.
It is expected that this work will produce significant additional
reserves for both open pit and underground deposits and ultimately
extend the life of the mine.
The property consists of 54 patented and 110 unpatented mining claims totaling nearly 2,685 acres or 4.2 square miles. The Company also controls three private land parcels, which are located outside the main mine area. These are the abandoned Blair town site, the Silver Peak mill site, and deeded land west of Mineral Ridge over some springs. These private lands total about 430 acres.
The
Company is obligated to honor two prior royalty agreements.
The first is to Mary Mining Company, which includes annual
advanced royalty payments of $60,000, and a sliding scale production
royalty (NSR) based on gold price divided by 100 in $50 increments.
The other agreement, which originated from Banquet Corp., is
with private individuals on several patented claims.
This agreement includes a 1.0% NSR royalty on production when
gold prices are below $300 per ounce and 2.0% when gold prices are
above $300 per ounce.
Gold
was discovered in the Mineral Ridge area in 1864. Intermittent mining
operations have occurred from that date to the present. Early production
was from underground high-grade gold ores that averaged from 0.243
opt Au to 1.45 opt Au. In 1989 open pit mining was initiated in the
district with ores ranging from 0.074 opt Au to 0.12 opt Au. The total
production of the district before open pit mining took place was 576,000
ounces of gold.
Modern exploration interest in the Mineral Ridge District commenced in the mid-1970s when Sunshine Mining Company, Homestake Mining Company, and Zephyr Resources became involved in exploring for low-grade ores that could be mined economically through open pit mining. In the early 1980s, a number of companies conducted geologic investigations and exploration programs on the Mary and Drinkwater claims at Mineral Ridge including Houston Oil and Minerals, Occidental Minerals and the Sunshine Mining Company. During this same period Sunshine Mining and FMC Gold Co. conducted exploration programs on the Oromonte claims.
During the 1980’s Sunshine Mining Company operated the 16 to 1 silver mine southwest of Silver Peak, processing the ores in a 750-ton per day cyanide leach mill. By the late-1980’s silver prices were so low that the 16 to 1 ores were no longer economic and Sunshine leased the Mineral Ridge property from the Mary Mining Trust with a view to feeding their mil with gold ore from this area. Sunshine ultimately elected to discontinue operations in the Silver Peak area and leased their 16 to 1 mill to Zephyr Resources Inc., a Reno-based company.
During 1989 and 1990, Zephyr opened the Mineral Ridge mine as an open-pit, trucking ore 17 miles to the 16 to 1 mill. In mid-1990, Homestead Minerals Corp., another Reno-based mining company, purchased Zephyr’s interests in the area and continued mining at Mineral Ridge until early-1992. Unfortunately the cost of trucking the ore to the 16 to 1 mill proved to be uneconomic and Homestead declared bankruptcy in mid-1992. From 1989-1992, Zephyr and Homestead mined 1.4 millions tons of ore grading 0.082 oz/ton (113,961 ounces of contained gold). With Homestead’s bankruptcy, the leased Mineral Ridge property reverted back to the Mary Mining Trust.
In the meantime, both Sunshine Mining and FMC Gold had dropped their respective options on the Oromonte claims. Subsequently, Benguetcorp, USA Inc. (BUSA), a subsidiary of the Philippine mining conglomerate Benguet Corp., purchased the Oromonte claims from the underlying property owners. BUSA undertook extensive exploration programs at Oromonte during the 1991 and 1992 field seasons before a corporate decision to curtail activities in North America brought exploration activities to a halt.
In July 1993 Cornucopia entered into a mining lease on the Mary and Drinkwater claims with the Mary Mining Trust. In May 1995 they entered into an option agreement with BUSA on the Oromonte claims, which generally cover the land on top of the ridge where the crusher is now located. Commencing in July 1993, Cornucopia conducted extensive exploration and development programs on the Mineral Ridge Property, which culminated in the feasibility study prepared by Behre Dolbear in February 1996. The feasibility study, performed at a gold price of $385/oz Au, was positive, although not robust, and, in its executive summary, stressed two main risks: (1) grade control during mining and (2) maintaining the permeability of the heaps by agglomerating with sufficient cement.
A mining contractor did Cornucopia’s mining, which is notoriously not a good omen for exacting ore control procedures. In any event the operation ran for just under a year and failed, reportedly, from a combination of the following:
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Delivery of a lower than planned grade of ore to the leach pad;
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Slower than planned recovery of the gold that was delivered to the leach pads;
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Periodic water shortages due to the one well and inadequate storage capacity;
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Falling gold prices; and
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A lack of working capital to cover the lag in gold recovery from the heaps.
In 1998 the property was transferred to Vista Gold, whose general operating plan included increased placement of ore on the pads, albeit at a somewhat lower grade, and mining of both ore and waste with large equipment (to keep mining costs low), which Vista had available at their Hycroft Mine. The new operations by Vista also ran somewhat less than a year, and also failed at the end of 1999, reportedly from a combination of the following:
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Excessive dilution of the ore (in the last month of operation the delivered grade was 0.04 versus the planned 0.054) due to mining on 15-foot high benches; mining from the foot wall rather than the hanging wall direction; and using the 23 cubic yard hydraulic shovel for loading ore. (The dipper bucket on the shovel was too large for selective mining);
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The use of insufficient cement for agglomeration, causing poor heap permeability and thus slow gold recovery;
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A 10-year low for gold prices;
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A lack of working capital to buy time to fix the operating problems, and
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The large number of personnel on the payroll for the size of the operation. Vista employed between 89 and 125 people, which could have been operated with no more than 50 to 55 people.
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And, a lack of available cash to service the large debt to the bank, which was assumed from Cornucopia’s transfer of the property to Vista.
In
January 2000 Mineral Ridge Resources, a subsidiary of Vista Gold,
filed for Chapter 11 bankruptcy.
A Trustee of the court maintained the property until Golden
Phoenix Minerals acquired the ownership of the mine on November 8,
2000.
The Mineral Ridge gold deposits are located on the northeast flank of the Silver Peak Mountain Range. This range lies in the southern reaches of the Great Basin, within the Walker Lane structural corridor. The Walker Lane is a 60-mile-wide region of right lateral, wrench-faulting which separates the Sierra Nevada batholith to the west and southwest and the Great Basin to the east and northeast.
The
rocks in the Mineral Ridge area consist of Precambrian metasediments
and metamorphosed Tertiary granodiorite. These rocks have been cut
by numerous shallow dipping faults, which have become host to the
gold deposits. The gold is found in sheeted zones of thick quartz
veins, which nearly parallel the current surface topography.
Mineral
Ridge is located near the western edge of the Basin and Range Province
and is part of the large northwest trending Walker Lane mineral belt.
The Walker Lane has been and continues to be a prolific gold producing
region with over 20 million ounces produced.
In the region around Mineral Ridge, mountains composed of upper
Precambrian to Jurassic clastic and carbonate strata are metamorphosed
near granitic plutons, which intrude all stratigraphic levels.
K-Ar and Rb-Sr dates indicate that the plutons are Jurassic
to Tertiary in age. Tertiary non-plutonic rocks, of variable composition,
include ash flows, lava flows, volcanic breccia, and lacustrine sedimentary
rocks, which rest unconformably on the older rocks and fill the Basin-Range
valleys. A Tertiary section several thousand feet thick is exposed
in the Silver Peak Range, but only small erosional remnants remain
on Mineral Ridge.
Mineral Ridge is an anticlinal dome found on the eastern flank of the Silver Peak Range. It has been interpreted as an uplifted metamorphic core complex where unmetamorphosed and unfolded Cambrian strata are in detachment-fault contact with underlying deformed granitoids and Precambrian metamorphic rocks of the core complex. Auriferous quartz lenses of the central gold-quartz district are concordant with foliation in the Precambrian Wyman Formation host rock. Transitional contacts were observed between quartz and alaskite (commonly pegmatitic), and between alaskite and peraluminous two-mica granite, strongly suggesting that the alaskite, quartz, and ore metals were derived hydrothermally from residual granite melt and aqueous fluids.
Gold occurs as free disseminations and in clots associated with pyrite, galena, sphalerite, and arsenopyrite. The local shallow abundance of quartz lenses permits underground or open-pit mining. Considering the scattered gold distribution, coarse nature of the gold, and common absence of visible ore controls within quartz lenses, the most economically viable method is to mine and process large volumes of quartz-rich rock from mineralized areas. Scattered Tertiary epithermal breccias of hot-spring origin also represent potential mineralization targets to be examined.
The granitoid intrusion appears to have been approximately coeval with deformation and metamorphism of Precambrian strata, probably during late Cretaceous time. The presence of magmatic muscovite suggests that minimum physical conditions during initial granitoid crystallization were placed at the depth of 10 to 11 km. The melt rose slightly before emplacement into Precambrian rocks now exposed at the surface, causing contact metamorphism and later weak hydrothermal alteration. Wyman rocks show variable dynamic and thermal metamorphic effects of lower amphibolite and hornblende-hornfels facies, respectively. The uplift of Mineral Ridge probably occurred after Mesozoic ductile deformation and metamorphism, but before late Tertiary extensional faulting.
The apparent genetic link between granitoids and metalliferous quartz bodies on Mineral Ridge supports similar theories documented in recent papers. Numerous peraluminous two-mica plutons affiliated with Cordilleran core complexes have also been documented, at least two (Mineral Ridge and Gold Basin-Lost Basin, Arizona) of which are linked genetically with auriferous quartz bodies. The other peraluminous plutons and associated quartz bodies thus represent potential gold targets.
The
remainder is covered by scattered exposures of Cambrian sedimentary
rocks, lower to middle Tertiary epithermal breccias and hornblende-rich
to plagioclase-rich intrusives, Miocene to Pliocene sedimentary and
volcanic rocks, and minor Quaternary to recent alluvium. Mineral Ridge
has the broad structure of an anticlinal dome, and folds in the metamorphosed
Wyman Formation indicate that at least two deformation events occurred
prior to middle Tertiary time. During late Tertiary time, the northeast
flank of the dome was cut by a northwest-trending, range-front normal
fault. The dome and range-front fault were subsequently cut by northeast-striking
high-angle faults that are younger than 6.9 million years.
Gold mineralization is controlled by the shearing structures that are sub-parallel to the intrusive and metasediment contact. These mineralized shear structures are commonly located within the lower unit of the Wyman Formation near the contact and are generally conformable to the foliation in the host rock. Gold-bearing white milky quartz in filling these shear structures and other fractures forms the primary targets of gold mining in the Mineral Ridge district. Several gold-bearing shear structures could be over-stacking each other, forming a broad mineralized zone over 100 feet in thickness. These mineralized shear zones generally dip at shallow angle on the northeastern side of the metamorphic/intrusive complex, such as the Brodie and the Gold Wedge deposits.
The
gold-bearing milky quartz veins contain only small amounts of sulfides,
including pyrite, sphalerite, galena and minor amounts of chalcopyrite
and arsenopyrite, or their oxidation products.
Gold is present as native gold or electrum and occurs as rounded,
angular, and elongated inclusions in quartz.
Gold is also associated with goethite, sometimes with relict
pyrite, and intergrown with sphalerite, galena, and pyrite.
Encapsulation of gold by quartz makes it necessary to crush
the ore to a relatively smaller size before cyanide heap leaching.
For the most part gold and electrum are fine-grained with particle
size less than 50 microns.
The Mineral Ridge project consists of several gold deposits, which have been defined by drilling and some have been partially mined.
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The Drinkwater Deposit is the largest known ore deposit and is located on the northeastern side of the metamorphic and intrusive core complex. It was partially mined by underground methods from the 1860s to the early 1940s and by open pit methods from 1989 to 1999. The ore zones in the Drinkwater deposit have a general strike of N45W and dips about 20 to 25 degrees to the northeast. Drill defined ore zones have a strike length of more than 2500 feet and down dip width of 2000 feet. Two or more gold-bearing shear zones are present at the central portion of the deposit with an individual ore zone thickness of 5 to 40 feet and an overall thickness of more than 100 feet.
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The Mary deposit is also located on the northeastern side of the metamorphic and intrusive complex and east of the Drinkwater deposit. It is the second largest known deposit on Mineral Ridge. This deposit was partially mined by underground methods before the 1940s along with the Drinkwater deposit, but it was not touched by the recent open-pit mining operations. Ore zones in the Mary deposit have a similar strike and dip as those in the Drinkwater deposit with a drill controlled strike length of over 2000 feet and down-dip with of 1500 feet. These ore zones are thinner and less continuous, but tend to be higher in gold grade than those in the Drinkwater deposit.
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The Gold Wedge deposit is located at the top of the Mineral Ridge and the metamorphic and intrusive core complex, and southwest of the Drinkwater deposit. It consists of several small and nearly horizontal orebodies, which have been mined by both underground and open-pit methods. Any remaining resources in this deposit are not available for further mining as the location has been utilized for the leach pads and processing facilities.
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The Brodie deposit is also located on the top of the Mineral Ridge and the metamorphic intrusive core complex, and south of the Gold Wedge deposit. It is a small deposit with nearly horizontal ore zones. The deposit has been partially mined in the past, but there still remains a small drill-defined reserve. Ore zones in this deposit are still open in several directions, which indicates a potential to increase the reserve.
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The Solberry and Blue Lite deposits are small satellite deposits located southwest of the Gold Wedge deposit. There is a small drill defined reserve in these deposits.
Total
Gold Resource of All Drilling
An
evaluation of all the drill holes on the Mineral Ridge property returned
a significant gold resource.
The following table summarizes the resource at both a 0.005
opt Au cutoff grade and 0.035 opt Au cutoff grade.
| Deposit | Cutoff | Tons of Ore | Average Au Grade | Total Au Ounces |
| All Drilling | 0.005 opt | 11,722,400 | 0.047 opt | 551,245 |
|
.
|
0.035 opt | 5,332,600 | 0.080 opt | 426,971 |
The Mineral Ridge gold mine has several small gold deposits that form the reserve base. The following table summarizes each deposit. The cutoff grade for the reserve calculation is 0.035 opt gold.
| Deposit | Cutoff | Tons of Ore | Average Au Grade | Total Au Ounces |
| Drinkwater | 0.035 opt | 1,618,247 | 0.074 opt | 119,746 |
| Mary | 0.035 opt | 773,996 | 0.095 opt | 73,368 |
| Brodie | 0.035 opt | 120,712 | 0.059 opt | 7,127 |
| Solberry/Blu | 0.035 opt | 145,385 | 0.062 opt | 8,985 |
| Total |
.
|
2,658,340 | 0.079 opt | 209,226 |
The Mineral Ridge gold property has produced over 626,000 ounces of gold from two distinctly different types of deposits. The most important is the mesothermal gold quartz veins and adjacent silicified zones that historically have been recognized as the only gold producing system on the property. The mesothermal veins generally lie conformably at or above the granite contact with the lower Wyman formation. The early miners exploited these high-grade veins by underground mining methods and more recently by open pit mining.
The second most important gold producing system is the recently recognized epithermal quartz-sulfide veins, breccias and related mineralization that overprints the earlier mesothermal veins. The epithermal quartz-sulfide veins and breccias occupy late cross structures formed while the Mineral Ridge core complex was being uplifted from the ductile to the brittle environment. These veins have not been previously recognized, but are distinct and have probably made significant contributions to the total gold inventory of the district.
An analysis of the various favorable geological features associated with the two types of veins has been completed. These include defining the different types of gold veins and when they formed, performing a structural reconstruction of the host rocks through time, and identifying the extent of the favorable geological environment that gold deposits could be found. This work then allowed certain conclusions for discovering significant new gold mineralization in previously unrecognized targets.
The
exploration potential was analyzed by identifying both mesothermal
and epithermal targets. The
5 targets that were identified have potential for the discovery of
3.0 to 4.7 million ounces of gold.
These targets are 1) the down dip extension of the Mary Drinkwater
zone, 2) the up dip extension of the Mary Drinkwater zone under Deep
Springs Hill, 3) The NNE structural zone trending through the Drinkwater
deposit, 4) the Brodie NNE structural zone to Oro Monte, and 5) the
Brodie-Missouri WNW structural zone.
By drilling these targets, the mineable ore reserves held on
the property will increase significantly.
Older
Reports on Exploration Potential
Several large reputable companies such as Freeport Exploration and Sunshine Mining have studied this district. The primary reason these companies did not pick up the project is the relatively small reserve and resource potential by their standards or it was outside the commodities, which make up their primary business.
A
study by Freeport Exploration in 1979 identified a potential of up
to 19 million tons of ore at a grade of 0.16 opt Au. If their
projections were true then we would have a possible expansion of up
to 16 million tons of ore containing a geologic resource of 2.5 million
ounces of gold, which would extend the mine life at proposed production
rates by up to 15 years. This expansion would also allow an
increase in production rate without expansion of the processing facilities,
which has a larger capacity than is being proposed. In 1980
E. J. Collord discussed the potential extension of the underground
workings of the Mary mine that consists of 1-3 million tons of 0.3
opt gold. As stated in the report it was also concluded that
there was a good chance of delineating another deposit in the 8-mile
long Wyman formation on Mineral Ridge.
A
second possible expansion of the production is exploiting the underground
potential, which is known to exist from existing drilling below the
ultimate pit as designed. The Drinkwater deposit has a
measured resource of 253,948 tons with a grade of 0.222 ounces per
ton gold at a 0.1 opt cut off. The Mary mine has a measured
resource of 195,731 tons with a grade of 0.285 ounces per ton at a
0.1 opt cut off. This would add 111,955 ounces to the resource
base if we pursued an underground operation in the area, which is
a viable expansion of the mining operation. One aspect of the
underground potential, which has been overlooked by previous operators,
is the underground sampling of stopes and drifts, which show good
mineralization remaining in the walls, and the back fill of the older
stopes. These stopes were sometimes back filled with low-grade
material at that time; some of the reported grades of the back fill
are as high as 0.5 ounces per ton gold.
There is a possibility of significant increases in the potential resource of the deposit by just re-evaluating the existing data and conducting modern exploration of the remainder of the district. The overall potential could reach 3 million ounces of gold. This is based on work completed by other companies who have evaluated the district and these projections show the tremendous upside potential of the district.
