Pioneer awaiting feasibility on Puffy Lake gold project

A year ago almost no one in mining circles could tell you very much about Pioneer Metals, then a junior exploration company with a low grade gold and silver prospect in New Mexico. Now, the company is hoping to bring its second mine into production by the first quarter of 1988 — if a current feasibility study under way by Kilborn Ltd. gives it the go-ahead.

The project is at Puffy Lake in Manitoba, 45 miles northeast of Flin Flon. It was acquired by Pioneer when it merged a few months ago with Maverick Mountain Resources. So far the company has drill indicated reserves of 1.3 million tons grading 0.21 oz gold per ton to 1,000 vertical ft. That has been estimated across a minimum 2 m mining width with an additional 10% dilution. Pioneer President Robert Willis tells The Northern Miner that the company is contemplating a 500-ton-per-day operation that will be mined, at least initially, through the decline it has been using for underground exploration.

Mr Willis estimates that it would cost the company $15-$20 million to bring the mine in, and that it would eventually employ 65 in full production. The feasibility study is expected next week with an actual mining decision due in January.

The deposit was worked on and off since being discovered by Granges Exploration in 1979, but serious exploration didn’t get under way until Pioneer began funding exploration two years ago. Granges retains a 20% net profit interest after payback.

Pioneer also has a 50% interest in the Stibnite heap leach operation in Idaho, which is expected to produce a total of 30,000 oz gold at about $180 (US) per oz this year.

The contemplated mining method at Puffy Lake is modified room and pillar, as the deposit dips at 30 degrees , and ore would be hauled to surface with either 13- or 26-ton trucks. The decline has already been driven 1,500 ft to a vertical depth of 300 ft, with an additional 1,000 ft of workings. Mr Willis says that at 9 by 13 ft the decline is large enough to be used for mining. All of the decline has been driven through the actual deposit and grades have so far been slightly higher than was indicated by surface drilling. A 25,000-ton low grade stockpile is on surface. He adds that the decline could be used for about five years, or down to the 800 ft level.

Metallurgical testing has indicated up to 75% recovery through gravity separation, with an additional 18%-20% by pulling a flotation concentrate. Both concentrates would be further cleaned on site with a closed cyanide circuit, thereby minimizing environmental problems.

Pioneer hopes to get around building a townsite by utilizing the former mining town of Sheridan, located near the project. Home to about 40 families, it was was a boom town in the 1920s as home to Sherritt Gordon Mines’ first producer.

Mr. Willis says financing for the mine will likely come from a combination of equity financing, gold loans and bank debt. “We don’t want a lot of debt,” he emphasizes, adding that the majority of the funding will likely come through equity.