1992 — A LOOK BACK — Permitting delays slow U.S. projects

Although a number of companies did manage to bring new mining projects in the U.S. into operation during the year, numerous others continue to face delays in receiving environmental permits.

Atlas (NYSE) had hoped to receive permits this year for its Grassy Mountain project in Malheur Cty., Oreg., with production scheduled for 1993. However, permitting delays pushed a likely approval date into 1993 and Atlas subsequently sold the mining rights for the property to Newmont Mining (NYSE). Newmont also picked up the mining rights to Atlas’ Musgrove Creek property in Idaho as part of the deal, paying Atlas US$22.5 million plus US$7.5 million in advance royalties. Altas retains a 5% production royalty on the properties. A feasibility study on the Grassy Mountain project estimates proven and probable reserves at 15.9 million tons grading 0.06 oz. gold and 0.16 oz. silver per ton, and yearly output is projected at 100,000 oz. gold and 100,000 oz. silver at a cash cost of less than US$100 per oz. The Beartrack gold project, 86% owned by FMC Gold (NYSE), remains on hold while the company waits for improved gold markets. The company halted work on the project in mid-1991, citing uncertainty in the gold price as well as delays in the permitting process.

Although FMC has largely resolved the main permitting issues, the gold price has continued to deteriorate from mid-1991 levels in the US$360 range. As a result, development of the project remains in a holding pattern. Beartrack, located near Salmon, Idaho, contains an estimated proven and probable reserve of about 23.7 million tons grading 0.035 oz. gold. Current feasibility studies put the cost of bringing the heap-leach project into operation at about US$60 million and project yearly gold output at about 100,000 oz. and cash costs in the order of US$205 per oz.

Plexus Resources (TSE) hopes to receive permits for its Bornite underground copper project in western Oregon by next spring. The project contains an estimated 3.1 million tons grading 2.2% copper.

The proposed 1,000 ton-per-day mine and mill is expected to produce about 18 million lb. of copper in concentrate per year at a cash cost of about US64 cents per lb., including gold and silver byproducts.

Based on current reserve estimates, the mine life at Bornite is estimated at about seven years.

Plexus is also working to arrange permits for its 75% owned Western World open pit copper project near Marysville, Calif. Reserves are estimated at about 1.4 million tons grading 2.62% copper.

If approved, a 750-ton-per-day milling operation will produce about 13 million lb. of copper in concentrate per year during its 6-year life. Following the depletion of reserves at the mine, the joint venture plans to reclaim the project and develop it as a single-family housing and equestrian centre around two small lakes. Plexus hopes to receive permits for the project in mid-1993.

Battle Mountain Gold (NYSE) hopes to receive operating permits in 1993 for the Crown Jewel property in northeastern Washington. The company can earn a 51% interest in the open pit gold project from Crown Resources (TSE) by paying all development and capital costs for a 3,000 ton-per-day operation. Reserves are estimated at about 8.7 million tons grading 0.18 oz. gold and Battle Mountain projects gold output from a carbon-in-pulp milling operation of about 175,000 oz. per year at a cash cost of about US$165 per oz. Capital cost of the project is estimated at US$30-40 million. Finally receiving construction and operating permits for its Baltic project at Randsburg, Calif., was Glamis Gold (TSE). The Baltic project is immediately adjacent to Glamis’ Yellow Aster and Lamont mines and is expected to boost the company’s yearly production by about 40,000 oz. per year when it reaches full production in late 1993.

Proven and probable reserves in the Baltic pit are estimated at about 22.6 million tons grading 0.022 oz. gold.

Permitting was delayed significantly by a decision by the Bureau of Land Management in January, 1992, calling for an “environmental impact statement” rather than just an “environmental assessment review.”

Hecla Mining (NYSE) now has the required documents to proceed with construction of the Grouse Creek project in south-central Idaho; design changes delayed final permitting for the project.

Proven and probable reserves at Grouse Creek stand at an estimated 15 million tons grading 0.048 oz. gold. and 1.15 oz. silver. The company plans to begin full-scale construction in 1993 with completion scheduled for late 1994. Capital cost of the 6,000 ton-per-day milling operation is estimated to be about US$73 million. Initial yearly output is expected to reach about 100,000 oz. of gold and 400,000 oz. of silver at a cash operating cost of about US$200 per oz.