Pioneer considers reopening Puffy Lake

With an ore reserve study by Kilborn Engineering now in hand, Pioneer Metals (TSE) has retained Tonto Mining to carry out a mining study for the company’s Puffy Lake gold deposit northeast of Flin Flon, Man.

Pioneer is investigating the feasibility of reopening the former underground gold producer. Operating losses resulting from low head grades forced the mine to close in the spring of 1989 after only 15 months of operation.

Pioneer believes the grades were adversely affected by mining dilution as opposed to a grade over-estimation stemming from a nugget effect. Grades during the mine’s operation averaged about 0.12 oz. gold per ton compared with reserve grades of 0.23 oz. gold.

Tonto will review Kilborn’s geometric reserve study and evaluate an optimum mining method and mining rate.

Kilborn estimated proven and probable reserves at about 1.63 million tons grading 0.22 oz. gold plus an additional possible reserve of 742,000 tons grading 0.20 oz. gold.

A study of the mine’s surface facilities, including the 1,100-ton-per-day mill, estimated rehabilitation costs at about $1.6 million.

Steven Sorensen, president of Pioneer Metals, said he does not expect the underground development costs to exceed $4 million despite the likely need for a second decline measuring about 300 ft. long.

Sorensen said although the company could have the mine back up and running within 4-6 months of receiving funding, he is in no hurry to start producing gold at these low prices.

Sorensen noted that Pioneer is now debt-free, has 100% ownership of the mine and has more than $70 million in tax loss carry-forwards to use against future earnings.

With about 45 million shares outstanding, Pioneer trades at a market capitalization of about $6 million.