Amca Starting small, but aiming high

The spectrum of heap leach gold plays in the southwest U.S. is broad indeed. On one side are multi- million dollar projects expecting to produce more than 150,000 oz of gold per year. And on the other extreme are projects such as that run by Amca Resources. Located 30 miles north of Phoenix, Amca’s Silver Cross project is expected to yield a modest 7,000 oz of gold this year from the processing of approximately 100,000 tons of material. And this mining plan comes without a bankable feasibility study and almost no definition drilling. It’s the type of mining scheme which was employed by numerous operators at the turn of the century who explored as they developed, hopefully using funds from cash flow to expand operations.

Whereas many of those early operations failed, Amca is predicting that not only will 1987 be a successful year but others as well as the the operation expands. During a tour of the property, the company had one 14,000-ton pad loaded for cyanide spraying and another larger 25,000-ton heap leach pad under construction. Mining is from a small open cut in the side of a steep hill on which the original discovery zone is situated. In the 1960s, the Silver Cross zone was opened up by a small adit and two drifts. Conventional milling was employed which yielded poor recovery results due to the micron nature of the gold.

Amca, which holds a 67.5% interest in the property, conducted a small mining operation in 1981 treating 20,000 tons of ore to produce 2,400 oz of gold and 10,000 oz of silver. Leach recoveries ranged between 70%-80%. The average grade of the bulk test was 0.16 oz of gold, according to Dr. Robert Heim, Amca’s consulting geologist.

This year’s plan is to mine approximately 100,000 tons of ore from the open pit with a head grade of 0.13 oz gold per ton. Based on a recovery of 80%, the operation will yield approximately 10,000 oz of gold. Flow Resources, which holds a 32.5% interest in the project, will share in the gold production.

Amca also plans to process a small 1,500-ton bulk sample of high grade material which came from a new discovery in the pit. Discovered in April, the high grade material is intensely altered and has yielded grades of 0.5 oz gold per ton, 10 oz silver and 7% copper. Amca President Charles Martin, explained to The Northern Miner that the test will employ a one- month cycle acid leach process using a 1% sulphuric acid solution. Two previous pilot tests on the high grade copper-gold mineralization yielded recoveries of 95%.

The high grade ore comes fom a 2-ft wide unit which is subparallel to the main oxide gold zone. The discovery, which has yet to be followed up by detailed diamond drilling, will be partially tested by Amca’s small $250,000 exploration program this year. As with much of the current mine development, Mr Martin wants to fund exploration from cash flow. To date, he says Amca has spent $1.8 million on capital costs. is expected to come from a low grade stockpile totalling 250,000 tons grading 0.02 oz. Located near the existing t pads, the stockpile will be transported either by truck or convyeor system to the leach pads. Mr Martin says he hopes to begin this part of the mini ng program within two months. Ponding will be used to treat the material during a 6-month cycle, he explained. Gold from the low grade material would then be expected to be poured sometime in February, 1988. Gold production from both the high grade bulk test and the low grade pile is not included in Amca’s 1987 forecasts.

But the real potential at the Silver Cross lies in exploration of the main mineralized zone, which according to Dr. Heim, strikes for at least 3,000 ft. An examination of the main zone by The Northern Miner showed it to be strong across 800 ft of strike from the open pit to the edge of Cave Creek where it has been eroded. The zone then continues on the other side of the creek.

The Silver Cross zones host classic epithermal deposits of large tonnage low grade material, but as is evident, are also capable of hosting much smaller pockets of higher grading material. The main zone, which is associated with an altered and sheared fault zone, ranges up to 800 ft in width. At the creek exposure, it measures more than 40 ft in width. Amca, which has taken more than 15,000 assays from the property, says the entire unit is anomalous in gold with background values, according to Mr Martin, ranging in the 0.02 oz-per-ton range — a grade which is ore to some heap leach operations.

Based on this preliminary assessment, Dr Heim concludes that the property has the potential for hosting reserves in excess of 2 million tons. This reserve, however, remains to be proven and will require plenty of drilling. Based on the observed potential of the property, Paul Esquivel, a mining analyst with Davidson Partners, forecasts gold production increasing to 29,000 oz in 1988. This is based on the heap leach treatment of 300,000 tons of similar grading ore. Silver output would increase to 108,000 oz. Amca’s share would amount to more than 19,000 oz of gold. For 1987, Mr Esquivel estimates earnings per share of 19 cents using a gold price of $380 (US) per oz.