Former gold producer — Miramar aims to reopen Flowery

Management of Miramar Mining (TSE) hopes to bring the Flowery gold mine back into full-scale production. The former producer is in Storey Cty., Nev., about 10 miles east of the famous Comstock Lode.

The area contains some of the oldest mining claims in the state, dating back to 1850 when the Comstock went into production and the town of Virginia City boomed into existence.

The town sits directly above the old workings of the seven major mining operations, and old tailings piles are in evidence in and around the area. During its 70 years of production, the Comstock produced over eight million ounces gold and 192 million oz. silver.

Because of the area’s history, the district has been heavily prospected for Comstock-type mineralization over the years, producing a wealth of geological data.

The Flowery mine, discovered in the 1880s, 10 miles to the east of the Comstock, produced an estimated 550,000 tons of material grading 0.19 oz. gold per ton from two glory holes, the Lady Bryan and the Berry. The property was brought into production once again in 1987 by Alhambra Mines which mined and partially leached 100,000 tons at a recovered grade of about 0.026 oz. gold from the Lady Bryan.

Low grades in combination with an ambitious prestrip program of over 900,000 tons proved too much of a burden, and the company was forced to shut down operations.

In September, 1989, Miramar and its 16% owned affiliate, American Eagle, acquired the operations from creditors of Alhambra on a 60-40 basis respectively.

Miramar and American Eagle re-evaluated the reserve picture on the Lady Bryan area, and estimated a preliminary reserve of about 1.4 million tons grading 0.037 oz. gold.

To conserve cash, the two companies brought in a contract miner which resumed mining operations in October, 1989.

Under the mining contract, Miramar and American Eagle had a shared 12.5% net smelter return royalty on production. The companies also received US$14,000 per month from the contractor for the use of on-site equipment including a stacker and agglomerator, a 500,000-ton capacity leach pad, collecting ponds, and a Merrill-Crowe plant.

Roberta Tejedor, a director of Miramar, said the company did not have any cost or revenue figures for the contractor’s operations but noted that Miramar was not covering its costs through the payments.

As a result, the contract was cancelled by mutual agreement and mining ceased on Oct. 31, 1990.

The contractor stacked a total of 229,000 tons on the pad during the period and total ounces recovered to the end of November, 1991, amounted to 6,866 oz. gold and 79,931 oz. silver for an estimated recovery of about 73%. The company is still conducting a limited amount of leaching. Stephen Quin, president of Miramar, said the operation is producing in the order of 100 oz. gold-equivalent per month, which is sufficient to cover site costs. In 1991, Miramar conducted infill drilling using 50 ft. centres on the Lady Bryan zone as well as the Berry area about 1,000 ft. to the northeast. The company also drilled a number of exploratory holes in the Bonanza area to the east.

Miramar is now calculating a new reserve figure for the project. Proven reserves in the Lady Bryan zone were previously estimated at 141,000 tons grading 0.05 oz. gold at a 2.45-to-1 strip ratio plus probable reserves of 1.2 million tons grading 0.041 oz. gold.

Proven reserves in the Berry pit were estimated at 166,000 tons grading 0.069 oz. gold plus an additional 1.7 million tons of probable reserves grading 0.03 oz. gold.

Gold mineralization in the Lady Bryan is in a stockwork vein system ranging in width from 10 to 15 ft., up to 75-100 ft. Drilling has outlined the zone over an 800-ft. strike length and up to 200 ft. below the bottom of the existing pit.

The drilling in the Bonanza zone, about 3,000 ft. to the east of the Lady Bryan and Berry zones returned some impressive assays including 20 ft. grading 0.60 oz. gold and 1.4 oz. silver in hole NZ9 and 85 ft. grading 0.36 oz. gold and 2.1 oz. silver in hole NZ10.

The Bonanza was tested over a strike length of 700 ft. and to depths of up to 250 ft.

Quin hopes to complete a new ore reserve calculation by mid-February and make a production decision on the Lady Bryan zone in March.

Permitting is not expected to be a problem since the property is currently permitted for the existing leach operation plus an additional 1.5 million-ton pad.

Miramar is well funded with about $2.6 million in working capital and no debt. Quin said he is studying the possibility of buying some used mining equipment although he added that it was more likely that the company would use a contract miner when the property is brought back into production.