USMX set to mine gold at Illinois Creek

With the first gold pour slated for early November, USMX (USMX-Q) is putting the finishing touches on its Illinois Creek gold mine in western Alaska.

Construction of the heap-leach pads is almost complete and the company will soon begin mining and unloading the first 500,000 tons of ore.

This portion carries an average grade of 0.083 oz. gold — 23% higher than the life-of-mine ore — and is estimated to contain 41,000 oz.

gold-equivalent. The cash cost of mining it is pegged at US$218 per oz.

Reserves are estimated at 6 million tons grading 0.069 oz. gold-equivalent per ton at a stripping ratio of 2.5-to-1. The company expects to produce 60,000 oz. gold-equivalent annually over the mine’s 7-year life, beginning with 20,000 oz. in 1996.

Capital costs are estimated at US$36.7 million, most of which is being provided, as a loan, by NM Rothschild & Sons. USMX has also raised funds through a 6-million-share equity offering, which closed Oct. 11.

Only a small portion of the property has been explored, and Dennis Lance, vice-president of exploration, is confident reserves will be expanded.

During construction, USMX transported 3,500 tons of machinery and materials by railroad, barge (up the Yukon River) and airplane.

Since its discovery by Anaconda in 1980, more than 135,000 ft. of drilling have been completed. USMX acquired the rights in July 1994.

The deposit is hosted in an oxidized gossan in a massive sulphide horizon in Paleozoic rocks. The gossan was encountered in a trench to the east, and the deposit remains open in that direction. The company is also evaluating the potential of the Macho Grande and Five O’Clock zones, which lie west of the deposit.

Gossans such as the one hosting the deposit are highly faulted and folded but can be traced, for several miles, by geology, geochemistry and geophysics.

USMX is also active in Alaska at the Ophir district, 75 miles to the southwest.