Production called for at Cheni’s Lawyers bet

The preliminary prospectus of Cheni Gold Mines outlines in considerable detail its plans for the Lawyers property north of Smithers, B.C. (N.M., April 13/87). A report by Wright Engineers recommends the property be put into production at a cost of $35.9 million. The milling rate would be 550 tons per day.

The breakdown of major costs includes approximately $3.4 million for mine development, $8.9 million for mill construction, another $7.6 million for surface facilities, and $6.5 million for road access of which $3.2 million would be loaned by the B.C. government. In addition, the total figure includes a $2.7 million contingency cost, working capital of $2.6 million, and indirect costs of $4.2 million.

Mineable reserves are estimated to be 1.04 million tons (in three zones) grading 7.6 oz silver, 0.21 oz gold or 0.32 oz gold equivalent. To date, the AGB zone has been partially developed by adits on three levels at 165-ft intervals and interconnected by three raises extending to surface. About 780 ft of drifting, 3,494 ft of cross cutting and 587 ft of raising have been carried out to prove the continuity of the zone. No underground development work has been done on the two other zones, the Cliff Creek and Duke’s Ridge.

When the access road has been completed, the company proposes to drive a lower level adit into the AGB zone for haulage purposes. This would be 165 ft below the lowest existing level and it would be equipped for rail tramming to the mill site. The other two zones would probably be accessed in 1990 by an adit from the head of Cliff Creek valley, with ore haulage carried out by underground diesel trucks via internal ramps.

Construction work on the 64.3 mi gravel road into the property will begin this June. The route will actually be an extension of the Omineca mine road from its present terminus at Moose Valley to the Sturdee Valley air strip which was used to supply the Baker mine property. During the winter months the road would be closed and light freight transported into the property by air.

The steeply dipping vein configuration on the Lawyers property is conducive to shrinkage stope mining and all three zones will be mined with trackless loading equipment. According to Wright’s preliminary production and grade schedule, 1989 gold production would be 24,370 oz and silver 664,000 oz. Gold output would rise to 43,980 oz in 1990 and silver to 1.2 million oz. The following year it would be 46,000 oz gold and 968,000 oz silver with gold output dropping to around 32,000 oz in the two subsequent years and silver only slightly. The average should be 38,000 oz gold and one million oz silver.

The mine plan will allow Cheni to select ore grades and mining methods in response to price fluctuations for both gold and silver. And there is still considerable exploration potential for blocking out additional reserves, the company notes.

The plant would be located equidistant from the three zones with tailings disposal 1.5 mi further down the valley. The flow sheet is very straight forward and consists of two-stage crushing, grinding, and primary cyanidation which will recover most of the gold. Flotation is planned for the cyanide residue to recover the silver and residual gold content. The precious metals content would be precipitated out with a conventional Merrill-Crowe process and the end product would be dore bullion.

Metallurgical test results indicate a 95% recovery rate for gold and 75% for silver. The recovery rate for silver could be higher because of superior leaching conditions in a full-scale plant, says Wright Engineers. At full production, operating costs are anticipated to be approximately $210(US) per gold equivalent oz produced.

Earlier this year, Cheni bought out the residual interest holders in the Lawyers property for approximately $3.2 million. Separate agreements were completed with each of the four parties including Kennco Explorations, Semco Mining, Agnico-Eagle Mines and Sudbury Contact Mines.