VANCOUVER —Vancouver-based Fiore Gold (TSXV: F; US-OTC: FFRRF), a new company backed by financier Frank Giustra, is off to a strong start at its revamped Pan gold mine, 28 km southeast of Eureka, Nev., having hit record ore and gold production in September.
The company reached its targeted ramp-up of 12,700 tonnes per day two months ahead of schedule, resulting in production of 1,602 oz. gold in September, a 160% increase from August.
The heap-leach mine was formerly operated by now-insolvent miner Midway Gold. It saw its first gold pour in March 2015 but was shuttered three months later, due to falling recoveries.
Tim Warman, CEO of Fiore, tells The Northern Miner during a phone interview that his company “isn’t seeing any of the issues that plagued the previous operators,” and expects gold production “will continue to climb for a month or two afterwards due to the time required for leaching on the pad, but the heap-leach pad is performing really well.”
He says Midway did not properly take into account the clay content of the ore.
“They were only mining from one part of the deposit — the South Pit — because that area tends to have faster and higher recoveries. But it also had a lot more clay than they anticipated,” Warman says. “By the time they started to irrigate the leach pad it had so much clay in it that the cyanide solution couldn’t infiltrate, and they had ponding and breakouts. They couldn’t get the recoveries, which is essentially what killed them.”
He reckons that Midway couldn’t get through these start-up problems because the company “ran out of time,” having defaulted on its debt repayments.
Blasthole drilling and sampling at the North Pit, Pan Mine, Nevada. Credit: Fiore Gold.
To address those recovery issues, GRP Minerals — a private company that picked up Midway’s assets in a bankruptcy sale for US$5.5 million early this year — spent US$18 million re-characterizing the deposit, including drilling 15,400 metres and tabling a revised feasibility study by SRK Consulting that unveiled new geological and reserve models.
GRP reopened the operation in March, and began blending ore from the South Pit — including reprocessed material from the existing leach pad — with rocky and silica-rich ore from the North Pit.
“It’s exactly like clay soil in your garden, if you add sand to it you’ll get better drainage,” Warman says. “They really addressed the confidence in the project, and introduced operational changes for things that needed to be done — it wasn’t rocket science. Since the rehab and restart, there hasn’t been any recurrence of ponding or filtration issues, and the pads are performing to design.”
Fiore became interested in Pan after shifting focus from exploration towards becoming a 150,000 oz. gold per year producer. The company — formerly known as Fiore Exploration — merged with GRP in July.
A haul truck placing ore on the leach pad at Fiore Gold’s Pan gold mine in Nevada. Credit: Fiore Gold.
“We all recognized that trying to stay alive, as a pure exploration company is a tough business. The last time a company went from pure exploration to a $1-billion market cap was Aurelian Resources, 10 years ago. I was Aurelian’s vice-president of corporate development at the time so I certainly enjoyed that, but it’s tough to repeat that kind of success. So we knew we had to build in some more advanced staged assets, or even some smaller producing assets,” Warman says.
The company expects Pan will produce up to 40,000 oz. over the next year, and build up to 50,000 oz. gold in fiscal 2019. Warman says the company’s permitted Gold Rock deposit, 13 km southeast of the Pan mine, also shows promise in becoming a 50,000 to 70,000 oz. gold per year stand-alone producer.
Gold Rock has a historical resource of 343,000 oz. gold in 18.1 million measured and indicated tonnes of 0.58 gram gold per tonne and another 409,000 oz. gold in 30.5 million inferred tonnes of 0.41 gram gold. (For comparison, the Pan mine has 434,000 oz. gold in 27.3 million measured and indicated tonnes of 0.48 gram gold, and 72,000 oz. gold in 5.1 million inferred tonnes of 0.45 gram gold.)
“The mineralization we see at Gold Rock in the open pit runs for 10 km from one end of the property to the other. And that same geology and structure continues north to Kinross Gold’s Bald Mountain mine, which has 2.2 million oz. gold in reserves. So we believe Gold Rock is very prospective,” he says.
Warman adds that Fiore intends to get “fairly aggressive” with project consolidation in Nevada and nearby states.
Fiore Gold’s vice-president of U.S. exploration, Eric LeLacheur, at the South Pit, Pan gold mine, Nevada. Credit: Fiore Gold.
“There are a lot of deposits out there that have the potential to produce 50,000 oz. gold per year,” he says. “They’re not attractive on their own, but they make a lot more sense when you can roll three or four of them into a single company. The market has a lot more appetite for companies that produce 150,000 oz. gold per year. So that’s really our strategy: build on our current asset, get Gold Rock into production and acquire additional properties.”
Shares of Fiore have traded in a 52-week range of 20¢ to $1.10, and closed at 72¢ at press time. The company has 94.3 million shares outstanding for a $67-million market capitalization.
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