GOLDEN, Colo., Feb. 6 /PRNewswire/ -- Canyon Resources Corporation , a Colorado-based mining company is pleased to announce the results of its open pit and underground feasibility studies to re-start mining operations at its Briggs Mine located in Inyo County, California. The Briggs Mine is a permitted mining facility with ongoing residual gold production from its existing leach pad and has produced over 555,000 ounces of gold since 1996. The feasibility studies were designed to develop an accelerated approach to putting the mine back into operation. This plan utilizes the current robust gold markets by initially starting as a small scale low-grade open pit operation with concurrent development of a small scale underground mining operation. This re-start plan is contingent on the closing of appropriate financing.
The combined underground and open pit operation, based on the feasibility studies, would produce gold at a rate of 30,000 ounces in year one of operation, 45,000 ounces in year two, 33,000 ounces in year three and 4,500 ounces in year four. Project cash operating cost, including offsite refining, through the projected mine life is estimated to be $430 per ounce of gold produced. Total capital cost is $8.25 million to initiate open pit gold production spent over a five month period. In addition, $4.6 million will be required in the next year to develop and initiate underground mining. The total project develops an IRR of 15% and a net return of $4.7 million at a gold price of $600 per ounce. A ten dollar change in gold price will impact net return by $1.1 million. Reserves developed from these studies are shown in the following table:
Proven & Probable Reserves Tons Gold Grade (opt) Gold Ounces
Open-Pit 4,160,000 0.026 108,500
Underground 183,000 0.118 21,500
Total Proven & Probable 4,343,000 0.030 130,000
An additional 100,500 tons of in-situ mineralized material at an average grade of 0.116 ounces per ton is contained in the underground mine designs and has been included in the production schedule. In-fill drilling has been completed on this material, however, the results were not available to meet the deadline for this study. A gold cutoff grade of 0.08 ounces per ton was used for underground stope designs and a cutoff grade of 0.013 ounces per ton was utilized for open pit estimation and underground development material which must be mined regardless of grade. A $500 gold price was utilized for mine design purposes.
"The Company is excited about the re-start of the Briggs Mine. This project will provide cash flow, take advantage of the strong and improving gold price, and be the first step in rebuilding the Company as a gold producer. We look forward to continuing progress at our Reward Property in Nevada which is currently undergoing permitting and feasibility, and in the future, at our 7-Up Pete deposit in Montana," states James Hesketh, President & CEO. "It is estimated that gold production at Briggs may commence as early as five months from the receipt of funding. The initial re-start plan will utilize approximately 50% of our plant capacity. Therefore, its our plan to add additional reserves to increase production and reduce overall operating costs, thereby increasing profitability. Due to the high cost of proving underground reserve with surface drilling, we have only drilled sufficient mineralization at this time to justify the initiation of underground mining. The Goldtooth mineralization remains open for extension along strike in both directions and possibly at depth. Once underground mining has commenced, we intend to continue to develop reserves from more cost effective underground drill positions. In addition, the studies did not include any of the underground potential demonstrated by drilled mineralization on the high grade Briggs North structure or from any of our four satellite deposits to the Brigg Mine. Ultimately, we believe that the reserve potential at Briggs is larger than what we have indicated in these initial studies."
The open pit study developed a combined reserve for three pits at an average strip ratio of 3.4 tons of waste per ton of ore. The costs utilized to develop these designs were based on new mine designs and past operating parameters adjusted for current fuel, consumable and labor costs. Cash cost of operation for the open pit case on a stand alone basis, with no contribution from the underground, is $449 per ounce produced. Total capital cost for this project is $8.25 million. The stand-alone open pit project economics include pre-development costs, site refurbishment and capital costs, with the exception of underground development cost, and all site reclamation and closure costs, including existing closure liabilities. This case generates an IRR of 16% and a net return of $3.8 million over a three year mine life and four year leaching period using a gold price of $600 per ounce.
A final underground study will be completed in the first quarter 2007 when final assays have been received. Underground mining at Goldtooth will utilize a contract miner and any ore mined will be commingled at the crusher with surface ores from the open pit for both crushing and leaching. Leach pad gold recovery on crushed underground ore is expected to exceed 80%, which is consistent with past metallurgical experience and results from current test-work. The structure of the Goldtooth orebody ranges from 6 to 25 feet in true width at a dip of between 60 and 80 degrees. This mineralization has been drilled over a strike length of 3,200 feet with the last fences of drilling remaining in ore grade material. The mining method in the stopes will be mechanized longhole stoping with backfill. Incremental cost of production for the underground is estimated to average $384 per ounce.
The following team of highly experienced independent contractors and consultants were involved in developing these studies and final results were compiled and summarized by Canyon:
Mr. Bill Fleshman, P. Geo AUSIMM, Reno, Nevada - Drilling Operations
Mr. John Taylor, P E Arizona, Reno, Nevada - Resource Estimation
WLR Consulting Inc., Lakewood, Colorado - Open Pit Mine Reserves & Costing
Golder Associates, Lakewood, Colorado - Leach Pad Expansion Design &
Costing
Practical Mining LLC, Spring Creek, Nevada - Underground Mine Reserves &
Costing
For additional information on Canyon Resources and to access the full content of this Technical Report, please visit our website at http://www.canyonresources.com/.
This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934 as amended. Such
forward-looking statements include, among others, feasibility studies
for the Briggs and Reward projects, mineralized material estimates,
drilling capability and the potential reopening or expansion of the
Briggs Mine. Factors that could cause actual results to differ
materially from these forward-looking statements include, among others:
the volatility of gold prices; potential operating risks of mining,
development and expansion; the uncertainty of estimates of mineralized
material and gold deposits; and environmental and governmental
regulations; availability of financing; the outcome of litigation, as
well as judicial proceedings and force majeure events and other risk
factors as described from time to time in the Company's filings with the
Securities and Exchange Commission. Most of these factors are beyond the
Company's ability to control or predict.
FOR FURTHER INFORMATION, CONTACT:
James Hesketh, President and CEO (303) 278-8464
Valerie Kimball, Investor Relations (303) 278-8464
http://www.canyonresources.com/
