Neptune test successful, Colomac moving ahead

It gets colder in the Northwest Territories, a lot colder, but at least the test was done under freezing conditions.

For 35 days in October and November, Neptune Resources test-leached 1,500 tons of ore grading 0.09 oz gold per ton in a huge outdoor vat constructed on the Colomac property on the western shore of Baton Lake, 135 miles northwest of Yellowknife, N.W.T.

On Nov 26 the company triumphantly poured a 108-oz dore bar in Burlington, Ont., indicating an 80% recovery — somewhat higher than conventional heap leaching techniques.

Designed to treat 15,000 tons — the 1,500-ton vat test was disappointingly small to many observers. Mechanical problems last summer with a mobile crushing and screening plant and the inability of the company to find a replacement in time forced Neptune to fill the vat to only one-tenth of its capacity.

That was a rude awakening to the logistical problems of operating in the north. However, Margaret K. Witte, president of Neptune, is convinced her company will be able to leach gold from ores mined at Baton Lake for a full 350 days of the year using vat leaching — not just five months as previously thought. Nine-foot-deep test

Instead of having the benefit of a 40-ft-deep test in the vat, she has had to rely instead on a 9-ft-deep test and the advice of John Smith and Associates, a reputable tailings consultant in Edmonton which has performed lab tests on the compaction of Colomac ores.

The consultants say that tailings ponds at the Lupin, Con and Giant mines, all in the Northwest Territories, remain active during the long, cold winter. “This has convinced me,” Whitte told a packed room of bankers, analysts, brokers and investors in Toronto this week. With a big, low grade deposit of 16,027,000 diluted tons averaging 0.064 oz gold per ton, which has taken $15 million so far to prove up on the Colomac property, Neptune now plans to mine an open pit 650 ft below lake level at a rate of 10,000 tons per day; strip 3.35 tons of waste rock for every ton of ore; crush the ore wet to a 10-mesh sand and pump it into even larger, 500,000- ton vats to be leached with dilute cyanide solutions over 35-day periods.

Depending on the reclamation strategy selected by Neptune, leached ore can either be left in the vats and new ones built on top or the ore can be pumped out of the vats and into a deep lake, Dyke Lake, nearby and the vats re-used. That lake has no discharge. Gold extraction in 1989

Gold extracted from the resulting solutions by carbon adsorption, stripping and electrowinning will start in mid-1989.

This high rate of mining means the company could produce an average of 170,000 oz of the yellow metal every year for the following 4 1/2 years of mine life.

At today’s gold prices, and with total costs estimated by Wright Engineers of Vancouver of $15.67(C) per ton, or $230(US) per oz, such an operation would be very profitable.

In fact, with gold prices testing the $490(US)-an-oz level, a mining operation using conventional milling on the property “looks attractive,” Witte says.

In order to meet the mid-1989 start-up, Neptune has to raise about $10 million to bring heavy equipment and supplies into the property this winter. If that equipment is not brought in over the road of lake ice, which remains open from Jan 15 to about the first week in April, the cost of bringing them in by Hercules aircraft during the summer months will escalate the $83.5-million capital costs of the project.

Joint venture partner Johnsby Mines (held 50-50 by two tse-listed companies, Discovery West Corp. and Hydra Explorations) now has 90 days to decide whether or not to put up 40% of the $83-million estimated cost of the project to retain a 40% working interest or to opt for a sliding scale royalty based on the price of gold. (about 17 inches)