Cliff improves recovery rate at Olinghouse placer project

Thanks to a more efficient mining method and some new technology, Cliff Resources (TSE) is planning to extract about 20,000 oz gold this year from its Green Hill placer gold mine at Olinghouse, Nev.

One of the biggest placer gold mines in the U.S. (in terms of throughput), Green Hill is now in operation 20 hours per day at a cost of about $153(US) per oz of gold produced.

As soon as some stockpiled lode material is processed, the mine will operate 24 hours per day at a rate of 450 tons per hour, week round, said Chairman Gary Last at Cliff’s recent annual meeting in Toronto.

First developed in 1985 by the Olinghouse joint venture, the operation produced 8,500 oz gold before it was shut down in early 1987. Despite the need for design changes and capital additions, Cliff paid $1.5 million to the joint venture and committed itself to future payments from production related to mine revenues exceeding $4 per yard.

Last October, Cliff and partner Canaustra Resources (a wholly owned subsidiary of Canaustra Gold Exploration (VSE) borrowed $4.5 million from Australia-based Walhalla Mining N.L. to finance the acquisition and improvements at the mine. However, they recently reduced the cost to 3% annually by converting it to a 10,000-oz gold loan.

Gold repayments are scheduled to begin July 31 and continue through until Sept 30, 1989, when Cliff’s Green Hill obligations will be retired. Drag line

In the interim, Cliff has underlined its confidence in the project by making the following installations:

* A 10-cu-yd Bucyrus-Erie drag line, operating in the open pit. Scheduled to swing into production last week, it has reduced mining costs by allowing for selective mining and grade control for the mill feed.

* A specialized centrifugal bowl technology for gravity recovery of extremely fine gold particles. It has improved gold recovery by at least 30%, Last says.

Cliff has also negotiated the reduction of a royalty payment to the vendor (Oraco) from 15% to a 5% net smelter return.

In a bid to expand the Green Hill operation, Cliff and partner Canaustra are spending $500,000 on some adjacent claims where recent drilling outlined one million tons of grade 0.045 oz gold per ton.

“Our objective is to produce 100,000 oz gold by 1991,” said Last who expects the additional output to come from Cliff’s West Picacho and Laguna properties near Yuma, Ariz.

Located on the Mesquite-Picacho trend, where 175,000 oz gold was produced last year from the Consolidated Goldfields and Glamis Gold (TSE) mines, the properties cover some 14,000 acres. West Picacho

Under an agreement with Yuma- based Golden Eagle Mining, Cliff can earn a 70% interest in the 6,000-acre West Picacho property by spending $1 million on exploration over two years before financing the property to production.

Cliff recently acquired a 70% interest in the 8,000-acre Laguna gold property from Liberty Mining by agreeing to spend $500,000 over two years and financing the property to production. Annual pre- production payments to Liberty amount to $75,000.

“The Laguna property is being pursued initially as a possible low- cost gold placer prospect and lode exploration work is expected to begin later this year,” Cliff says.

Meanwhile, with a cash position of $1.8 million, compared to $121,759 on Dec 31, 1986, Cliff considers itself financially equipped to finance its 1988 program.

The Toronto-based company reported net earnings of $1.04 million or 25 cents per share compared with $77,093 or 2 cents during the same period last year. The Cliff Resources issue was trading recently on the Toronto Stock Exchange at $1.00 in a 52-week range of 70 cents and $1.40.