Santa Fe approves flotation circuit at Lone Tree

With construction of the Mule Canyon mine about to begin, Santa Fe Pacific Gold (NYSE) is planning to install a flotation circuit at its nearby Lone Tree mine that will benefit both Nevada gold projects.

Situated 14 miles east of Battle Mountain, Mule Canyon contains 10 million tons grading 0.108 oz. gold per ton. The mine is expected to add 1.1 million oz. to the company’s minable reserves.

Capital costs are estimated at US$120 million, and the operation is targeted to produce in the range of 110,000 to 150,000 oz. per year at an average cash cost of US$229 per oz. over an 8-year life.

A 2,500-ton-per-day autoclave will handle both oxide and sulphide ores, while a small leach-pad will process the non-mill grade ores. Gold recoveries for the autoclave should be 90% for oxide ore and 96% for sulphide ore, while heap-leach recovery is expected to be 45%.

The Lone Tree flotation project, to be developed in conjunction with Mule Canyon, is expected to enhance the economic extraction of gold from current reserves containing 1.2 million oz.

Santa Fe says the combined effect of developing both projects will be an increase in recovery from low-grade sulphide ore at Lone Tree, and a decrease in cash operating costs at Mule Canyon.

The 4,500-ton-per-day Lone Tree flotation circuit will process low-grade sulphide ores from both the Lone Tree and Mule Canyon operations. The new proprietary circuit, which will upgrade the ore to about 0.5 oz. gold per ton, will result in a 30% increase in recovery of contained ounces, compared with conventional flotation practices.

The overall recovery rate for the low-grade sulphide ore is expected to be 87%. Production from the circuit will result in 85,000 to 90,000 incremental oz. per year, or an additional 500,000 oz. over the life of the Lone Tree mine.

Capital costs for the project will be about US$64 million, including US$18 million to expand Mule Canyon facilities for the processing of Lone Tree’s low-grade sulphide ore.

Activities at Mule Canyon would be co-ordinated through the existing Lone Tree operation, situated only 40 miles away. The projects are close enough that the company envisions hauling Mule Canyon ore to the flotation circuit at Lone Tree, and Lone Tree ores to the autoclave at Mule Canyon.

Santa Fe earned US$11.2 million (or 9 cents per share) in the second quarter of 1995, compared with US$14.3 million (or 12 cents per share) for the same quarter in 1994. Revenue dipped to US$85.4 million from US$93.5 million.

The company produced 214,435 oz. gold in the second quarter, a small decrease from a year earlier. It expects to produce 830,000 to 850,000 oz. in 1995, at a cash operating cost of US$195 to US$205 per oz.