Permit applications will be submitted early this year for an open-pit, heap-leaching operation at the McDonald gold property in the northwestern corner of Montana.
This decision is based on a positive feasibility study conducted by Davy International for the Seven-Up Pete joint venture, held 28% by Canyon Resources (NASDAQ). (The majority owner and operator is New York-listed Phelps Dodge.)
At a gold price of US$375 per oz., the study projects production of 3.7 million oz. gold and 8 million oz. silver over 12 years. Average annual production would be 308,000 oz., with 85,000 oz. attributable to Canyon. Minable reserves are forecast as being 205.1 million tons grading 0.025 oz. gold per ton, with a strip ratio of 2.1:1.
Initial capital costs are projected at US$188 million, plus an additional US$74 million for replacing equipment and expanding pads during the life of the mine. Cash operating costs are expected to be US$231 per oz. of recovered gold.
The project, near Lincoln Cty., is on state and private lands, thus minimal impact is expected from anticipated changes to the federal Mining Law. Canyon President Richard De Voto said development of the McDonald mine, as well as the wholly owned Briggs project in southeastern California, will triple Canyon’s current level of gold production to 160,000 oz. per year. Canyon has commissioned an independent firm to prepare
a bankable feasibility study of Briggs. The open-pit, heap-leach operation is targeted to produce 75,000 oz. gold per year.
On the exploration front, Canyon has discovered a “significant area and thickness of gold mineralization” on its 60%-owned Mountain View property in northwestern Nevada. Further drilling is testing the size and extent of the discovery.
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