Strong drill results at Haile

Romarco Minerals (R-T) is continuing to see high-grade results from its Haile gold property in South Carolina as part of an ongoing drill program.

On July 25, the company released the fourth-best hole ever seen on the 184-year-old property. 

The hole hit 23 metres grading 45.8 grams gold per tonne, including a 6-metre zone at 111.5 grams gold. The intercept came from the Horseshoe zone at 144 metres depth. 

Romarco says the zone continues to return most of the property’s high-grade mineralization.

However, a few days earlier, hole 87 cut 117 metres of 5.5 grams gold in the new Mustang zone, which was discovered in July. The intersection included a 12-metre zone of 29.1 grams gold, containing a 1-metre intercept of 266.3 grams gold. 

“Eighty-seven at Mustang is the most significant drill hole [we have had since] the Horseshoe discovery hole,” Diane Garrett, Romarco’s president and CEO, said in a press release. 

Last March, that hole intersected 63 metres at 9.6 grams gold at Horseshoe and indicated an underground potential at Haile. Romarco plans to complete a preliminary economic assessment this year to study the mine’s potential.

The company has completed more than 280,000 metres of exploration drilling since acquiring Haile in late 2007. Garrett says the system continues to expand as a “world-class” orebody, and remains open in all directions and at depth.

 Mustang sits 180 metres below the US$950-per-oz. reserve pit, between the Ledbetter and South pits. The zone indicates that the grade and continuity between the pits continue to grow, and may lead to the two merging. 

Mustang is an open-pit target, but an extension of the zone plunges to the northeast and is recognized as an underground target. The company says that portion could be added to the underground plan examining the Ledbetter, Snake and Horseshoe pits.

The company is working through a 172,000-metre drill program, with 11 rigs turning on the property. The objectives of this year’s exploration program include: defining the shape and extent of the Haile mineralized system; upgrading inferred resources into the measured and indicated categories; and pinpointing areas for production-related facilities. 

As outlined in a February 2011 feasibility study by M3 Engineering & Technology, reserves at Haile stand at 30.5 million tonnes, grading 2.06 grams gold per tonne for 2 million oz. gold. 

The study did not include Horseshoe, Snake Deep, West Ledbetter, and portions of the Mill zone, Small and Champion deposits. Despite this, it showed robust economics. At a gold price of US$950 per oz. and a 5% discount rate, the pre-tax net present value came in at $279 million, with a 19.6% internal rate of return. 

The cost to build the mine is $275 million. Haile has a minimum open-pit life of 13 years at a milling rate of 7,000 tons per day. 

Romarco originally expected to start construction at Haile in 2012 and production in 2013, but delayed its timeline by a year after the U.S. Army Corps of Engineers asked the company to complete an environmental impact statement (EIS) in July, to assess the impact mining would have on the nearby wetlands and streams. 

“Completing an EIS removes uncertainty about any future potential challenges to an environmental assessment,” Garrett states. “The EIS will only address the wetlands aspect of the mining operation.” 

The 404 wetlands permit is the only federal permit the company needs, although it requires a few other permits before it can revive the past-producing mine. 

Haile is situated within the Carolina slate belt, which stretches from Georgia to Virginia. The belt is famous for hosting several gold deposits, such as the past-producing Brewer and Ridgeway mines. Haile began production in 1827 and produced periodically until the 1990s. Romarco estimates a historic production of 250,000 oz. gold at Haile. 

In late 2010, the company applied for a state mine operating permit and a federal 404 wetlands permit, where it proposed to conduct an environmental assessment (EA) instead of a detailed EIS. 

“We thought the chances were that it would be an EA,” the company’s chief operating officer, Jim Arnold, says. “We knew there was a chance of either or. In talking to the core of engineers, they thought it would probably come down to an EA. But it turns out it didn’t.”

With the EIS, the company is setting aside $2 million, adding 12 months to its timeline and delaying about 700 jobs. 

The company anticipated hiring 500 contractors during the construction phase, and another 200 employees once in production. 

Romarco has spent more than $4 million on environmental studies for Haile. Now it is selecting a contractor for the new study.

On the latest drill news, the stock gained 11¢ to close at $1.82. Romarco has a 52-week trading range of $1.30-$2.88.