Castle Mountain an environmental and economic success

The Castle Mountain gold mine came through its first year with flying colors, shareholders of Viceroy Resource (TSE) were told at the annual meeting.

Viceroy operates and owns 75% of the open-pit, heap-leach mine in southeastern California. The remainder is held by MK Gold, Viceroy’s mining contractor.

The mine turned out more than 104,000 oz. gold at an average cash cost of US$196 per oz. in the fiscal year ended March 31, says Viceroy President Ross Fitzpatrick. Net earnings for the period totaled $5.47 million or 30 cents per share.

“These days, the price of gold is co-operating nicely,” Fitzpatrick said, adding that earnings of $2.5 million during the latest quarter (ended June 30) were more than double the $1.2 million earned during the same period last year. A production record of 33,724 oz. (at an average cash cost of US$208 per oz.) was set during this period.

A new grinding circuit, recently installed, is expected to produce up to 20,000 additional oz. gold annually. The 1,200-ton-per-day mill will pre-process higher-grade ore (0.07 oz. per ton or higher) into a slurry for gold extraction before being transported to the pads as dried tailings. The $6.4-million grinding circuit is expected to recover up to 95% of the gold in the high-grade ore, as opposed to a 65-70% recovery by heap-leaching alone.

Exploration drilling last year maintained proven and probable reserves, and led to four new discoveries. More drilling is planned for this year. On the environmental front, Fitzpatrick said Castle Mountain is designated a “showcase” project under the federal Bureau of Land Management’s program of multiple-use lands. Even though the mine has at least an 8-year life, staff are already preparing to reclaim the mine site.

As part of this process, the company salvaged more than 11,000 plants that are kept in special plots until required for re-vegetation of old mined areas. Some of the measures taken to protect the natural environment are paying off economically — notably a decision to store cyanide solution in closed tanks (rather than open ponds) to prevent contact with wildlife. By doing this, cyanide consumption was reduced by more than 53%, thus lowering operating costs.

Viceroy has more than $34 million in working capital and is investigating opportunities. “We take a careful and prudent approach to examining any exploration project or acquisition,” Fitzpatrick said. The company has already taken on a new gold exploration project in Nevada and a gold concession in the West African country of Mali.