Goldstake raises funds for Homestake tailings

At current gold prices tailings deposits near the Homestake mine in South Dakota are beginning to look very attractive to Goldstake Explorations, a coats listing in Toronto.

Apparently a lot of international investors agree because it recently secured a $750,000 overseas financing to explore and develop leases in the area. Exercise of the warrants could generate another $1.25 million for the project.

Most of the leases are located on Whitewood Creek about 10 miles below the town of Whitewood. But one of Goldstake’s properties, the Stowell, is a hardrock situation which adjoins the historic Homestake mine. This initially was the focus of Goldstake’s attention but the deep-seated nature of the potential ore zone proved to be less attractive than the tailings.

Additional leases are being acquired while Goldstake evaluates reserves on existing holdings, says Richard Redfern, project geologist. He confirms that four of the leases have been drilled and sampled with values ranging from 0.05 oz gold per ton at lower end of property to 0 .065 oz on the middle or upstream portion. Their new leases exhibit even higher grades because they are further up the creek or nearer the source of dumping, he adds.

Redfern says that “nuggets” up to 2 mm in size have been found in the tailings, most of which were deposited between 1878 and 1915 by Homestake and other operators. Using stamp mills and crude amalgamation to extract the gold, recoveries were estimated to be 65-75% from a plus-0.4-oz head grade. “Local values in tailings have reached in excess of 0.15 oz,” he points out.

Work has almost been completed on the four leases and they are currently upgrading reserve classifications into proven categories. The tailings are right at surface and range from 3-12 ft in thickness. In general, gold deposition is fairly uniform locally but it drops off downstream.

To give some idea of how much tailings are available, Redfern estimates that Homestake was dumping about 2,700-3,000 tons per day into the creek before cyanidation became commonplace; other mills were dumping up to half that again. So there was a continuous flow of tailings into the creek and concentration in specific areas. Redfern notes that Denver-based sampling consultants Pitcard and Gy Sampling once described the tailings as one of the most uniform gold grade deposits they had ever encountered. Some toxic elements

Some toxic elements exist in the tailings including about 0.25% arsenic which in its present state is relatively insoluble, he confirms. The tailings will be stripped, processed and pumped to a permanent tailings site located on an impermeable shale bed. The company proposes to treat about five million tons of tailings in the first stage of the project or about 4,000 tons per day. A portion of the gold is amenable to gravity concentration and recoveries from leaching are expected to average 83%.

The leases are part of an epa (Environmental Protection Agency) Superfund site and Goldstake anticipates that permitting will go through smoothly. Redfern explains that the law requires that permitting be granted to the proposal providing the most restoration for the site. The epa is mandated by law to do this, he says.

Goldstake recently sold one million shares at 75 cents including a similar amount of warrants exercisable at $1.25. President Robert Cleaver tells The Northern Miner that Goldstake will apply for a Toronto listing “when we are large enough.” That listing could take place later this year, he predicts.

There is some hardrock potential on the Stowell property which is part of the Homestake mine system where orebodies are pencil- shaped and up to 2-3 miles in plunge length. Studies indicate that folding could bring one of the Homestake orebodies onto the Stowell property which would be expensive to mine because of the depth. With this possible upfold, it is estimated that Homestake’s 15 ledge system would be found at the 6,000-8,000-ft horizon on the Stowell. Homestake processes about 7,000 tons per day through a single mill which yields 350,000 oz per year, the largest single gold producer in North America.