Coin Lake prevails for U.S. gold mine

Gold production from the Golden Reward property in South Dakota is expected to begin within six months, Thomas Skimming, chairman and chief executive officer of Coin Lake Gold Mines (TSE), told shareholders at the annual meeting. However, the commencement of production will be no mean achievement for Coin Lake. Since first acquiring an interest in the property in 1985, the company and its partners have been involved in a quagmire of environmental and corporate roadblocks which effectively stalled the development for years.

In order to appease certain key landowners in the area, the company went so far as to spend $1.3 million(US) on a ski hill and lodge in return for a 30% interest. Compounding the environmental problems, Coin Lake also found itself in court with St. Joe American, a large U.S. mining company. St. Joe alleged that it had a right to a royalty when Coin Lake and its partners purchased the property from Anaconda Minerals in 1984. The legal action was settled out of court with St. Joe getting a 3% net smelter royalty.

While representatives of the joint venture partners attended numerous heated public meetings with area residents, exploration work continued on the property, outlining open pit reserves of 15.26 million tons grading 0.048 oz gold per ton and 0.2 oz silver in five deposits. “We expect total reserves to exceed 20 million tons,” Skimming told The Northern Miner after the meeting.

Located in the Black Hills, the historic tribal homeland of the Sioux, the operation will mine 12 months of the year and will heap leach during a 9-month period. The end result will be 65,000 oz of gold and 50,000 oz of silver per year. Operating costs are estimated at $165(US) per oz of gold, including a silver credit.

Negotiations are also in progress with regards to financing, Skimming says. Capital costs are estimated at $19.6 million(US). Coin Lake, which holds a 33.33% interest in the project via a share in the Golden Reward Mining Co, will increase this interest to 66.66% following the completion of a merger with Moruya Gold Mines. An Australian company, Moruya will receive 7.9 million Coin Lake common shares for the interest. Fully diluted, Coin Lake will have approximately 20 million shares out, Skimming added. The remaining stake in Golden Reward is held by Ventures Trident, a U.S. mining investment company.