Roca Roja operating Mexican heap-leach property

The wholly-owned Mexican subsidiary of Walhalla Mining of Australia officially opened, in mid-November, its Amelia heap-leach gold mine in the hills of northern Sonora state.

Minera Roca Roja was planning its first gold pour at Amelia, where minable reserves total 1.2 million tonnes grading 3.01 grams per tonne (using a cutoff grade of 0.6 grams), during the week following the opening. The Northern Miner toured the project, which has been under development by Roca Roja since 1991, on the day of the opening. (Previous project owners include Chutine Resources, Terra Mines and an independent Mexican operator.) The Amelia mine property is about 40 km east-northeast of Magdalena, which serves as Roca Roja’s Mexican headquarters. (Roca Roja’s U.S. headquarters are in Tucson, Ariz.) The Santa Gertrudis gold mine of Phelps Dodge sits about 4 km southwest of Amelia.

Walhalla calculates its investment in Amelia at US$6.5 million, including the US$3.8-3.9 million raised in equity financings this year.

“Those financings allowed us to develop the property ourselves,” said Chrisilios Kyriakou, Walhalla chairman.

Kyriakou, a native of Australia, was prominent in Canadian mining circles during the 1980s through ownership interests in the Pamour group of companies and a Toronto-based financing company. More recently, his Walhalla company was the controlling shareholder of Red Rock Mining, which had an option on the Amelia property. Walhalla kept Amelia and made a deal with American Resource Corp. of California for other Red Rock assets. Amelia is Walhalla’s only producing property.

Earlier this year, Walhalla was unsuccessful in trying to sell a 60% interest in Amelia to NASDAQ-listed Nord Pacific. Walhalla’s current 100% interest in Amelia (through Roca Roja) is subject to a 1.5% net smelter royalty. The property, which is situated on the Santa Gertrudis Trend, was mined on a small scale by an independent Mexican operator. Terra Mines acquired the project and was reported to have spent more than $4 million on development work in the late 1980s before running into financial difficulty. The property was returned to the previous owner, and the workers at the project claimed title to the plant and other equipment. For a brief period, Chutine had an option to acquire the property. When Walhalla became the operator, it acquired the plant and equipment from the former workers.

Walhalla reports that 48 holes have been drilled in the immediate mine area, including 12 reverse circulation holes in 1991. A preliminary reserve estimate of 2.2 million tonnes grading 2.6 grams has been calculated for the property.

The mineralization is described as being micron in size and hosted in a sequence of calcarious siltstones and silty carbonates, with the higher gold values associated with an oyster-shell limestone unit.

The area being mined is small in comparison with the size of the property: 7,438 hectares. Roca Roja Vice-president Erland Anderson thinks the potential exists to increase reserves significantly. The limestone units have been mapped along a strike length of 13 km and oxidation noted in several areas. At the Amelia area, where two zones (known as the west and east pits) have been uncovered, drilling to date has encountered only oxide-hosted, disseminated gold mineralization, Anderson said. This oxide zone is open at depth and at both ends.

A new exploration program is set to begin at the end of November. Forty-one holes representing 3,540 metres are planned, commencing with infill drilling at the east pit, to be followed by pit extension drilling at the west pit and finishing at the Santa Teresa mine area. Final results are expected by mid-January, 1994. During the first quarter of next year, drilling will continue to test the Santa Teresa area and probe the Real Viejo prospect. “We expect to have more than a million ounces,” Kyriakou said of the company’s hopes to prove up new reserves.

Kyriakou said Walhalla is willing to take on a joint-venture partner for exploration of other areas of the Amelia property.

A mine production schedule of 1,000 tonnes per day is planned, 600 tonnes for the west pit and 400 tonnes for the east pit. The stripping ratio will be 4.37-to-1 for the west pit and 8.46-to-1 for the east pit.

Ore from the open-pit operation will be processed using cyanide heap leaching and Merrill-Crowe zinc dust precipitation to recover the precious metals. (Among the equipment Roca Roja inherited are an ore-crushing facility and a metal recovery plant.) The company generates its own electricity using a diesel generator.

Roca Roja has a small heap-leach pad in place. Eventually, it plans to adopt a “valley leach” approach and utilize the natural contours of the surrounding terrain for the heap leaching of its ore reserves.