BP, Galactic open Ridgeway in South Carolina

Indeed, the largest gold mining operation in South Carolina, the Ridgeway project of BP Minerals America (52%) and Vancouver- based Galactic Resources (TSE) (48%), was officially opened on Jan 31. It’s an impressive project, one of the lowest grade conventional milling operations in the world and somewhat analogous to the Kidston mine (Placer Dome) in Australia. Investment in the project to date has amounted to about $60 million(US) out of a projected total investment of $95 million.

In his address at the opening ceremonies BP Minerals president, Frank Joklik said his company was proud that its joint venture with Galactic “will help to revive South Carolina’s heritage as a gold mining state.” Joklik pointed out that the discovery of Carolina gold in 1799 “sparked the first American gold rush, a full 50 years before the more famous California gold rush.”

Over the next 10-15 years, Ridgeway is expected to produce about 1.4 million oz of gold; 3,000 oz of dore bullion (85% gold) was poured at the official opening and guests viewed the event at their luncheon tables by closed circuit television. At one point, Galactic president, Robert Friedland seriously considered transmitting the event live via satellite back to Vancouver for local viewing. (Now that’s promotion.)

A number of his contemporaries commented at the opening that Ridgeway is going to be the “acid test” for Friedland who is still smarting from what many consider to be a major failure at Galactic’s Summitville mine in Colorado. (This year’s gold output will be just over half of what was originally forecast).

But he’s latched onto a good partner at Ridgeway in the form of BP Minerals which should alleviate concerns about Galactic’s mine operating abilities, at least at Ridgeway. Also, the company has been adding to its in-house operating expertise by bringing in new people. Incidentally, BP Minerals will soon be sold to Rio Tinto Zinc. Joklik informed The Northern Miner that if everything falls into place the deal should be closed by the end of March. Rio Tinto is a seasoned mining company with considerable depth, a wealth of operating expertise, and a desire to increase its asset base, possibly even at Ridgeway.

The next few weeks will be a critical period for Galactic which is trying to place $50 million(US) in gold indexed senior subordinated notes through junk bond dealer Drexel Burnham Lambert. And the downturn in the gold market won’t help. New York City was the next stop on the company’s road show when The Northern Miner talked with one insider who was familiar with the financing scheme.

He said that “New York will tell the story” and he described the scheme as “a 10-year call option on the price of gold with an 8-9% coupon which could be trading at a premium because of gold prices.” Galactic will re-purchase 15% of the issue after 1993 and every year thereafter. Under its syndicated gold loan agreement, Galactic will need this money to meet future capital expenditures and gold loan repayment requirements.

Compared to Summitville, Ridgeway is off to a good start and Friedland noted in his address that “the early days of this mine have exceeded planned performance in all respects,” something that was borne out during a tour of the property.

Mining is under way in the South pit which is now about 90 ft deep. At present, mill feed is heavily weathered material which has a low work index and grades about 0.036 oz gold per ton. About 800,000 tons of this material has been stockpiled and a separate stockpile exists for low grade material averaging 0.02 oz which will be processed in about 10 years. Hardly any pre-production stripping was required, however, about 1.8 million tons had to be removed to construct the tailings dam.

By gold mining industry standards the 30-ft long benches (excluding sub-grade) seem excessive but Fred Leonard, mine engineer, said they get higher production with longer benches; BP saw no advantage going to a split bench and he confirmed that geostatistical studies have indicated no reduction in grade with the deeper benches. Should that actually be the case though they would change it. (In any event, it doesn’t take long to drill off a bench in weathered material, about three minutes per hole).

Mill throughput is 15,000 tons per day, its rated capacity, and recoveries have been higher than expected, Leonard said. The plant, which is almost entirely in the open, uses what mill manager Richard Heig describes as a “hybrid carbon- in-leach process” to extract the gold. The 10 agitated leach tanks, the largest outside of Australia, are 52 ft in diameter, 56 ft high, and each holds about one million gallons of solution. There is an approximate 24-hr retention time in the tanks and 35-40 hours from the minehead.

Ore is broken down in a gyrator crusher and reduced further by a SAG (semi-autogenous grinding) mill followed by a ball mill. A second ball mill will be added later when they begin processing sulphide material which has a higher work index, lower recoveries, and increased reagent (cyanide) consumption. Cyanide costs 70 cents per lb or about 35 cents per ton of ore processed. This could double when the sulphide material is reached. Cash costs are expected to be $174(US) this year, rising to $200 by 1991. This doesn’t include depreciation and amortization, royalties and financing costs. Galactic’s 48% share of production this year will be 76,800 oz.

Composite samples from reverse circulation and diamond drilling were used to determine metallurgical recoveries, one of the key economic risks in the project along with the throughput rate. Reverse circulation provides a large sample and is widely used in the United States mining industry, generally for projects with open pit potential.

For a conventional mining operation Ridgeway grades are among the lowest in the world, ranging from 0.03 to 0.04 oz gold per ton. Some microscopic gold has been reported from “higher grade” intercepts (a relative term in this case) but in most instances it’s not even visible under a microscope. Gold- bearing quartz veins are thought to be responsible for the higher values, BP said.

The near-surface orebody is heavily weathered to about 40 ft and 6% of Ridgeway’s reserves are contained within this area. Little blasting is required for this material, resulting in low mining costs. Beneath it is an oxide zone hosting approximately 19% of mine reserves followed by a sulphide horizon where 75% of the reserves are located.

Gold values are mainly associated with pyrite and quartz veining in the weathered zones. Arsenopyrite, which tends to be refractory or recovery-inhibiting, is the primary mineral and reaches as high as 0.06% in the North zone. Some molybdenite has been noted.

The Ridgeway North and South deposits occur within extensive linear east-west trending alteration zones. These are characterized by widespread sericitization, multiple silicification, quartz-veining events, and pyrite development.

In the South deposit, economic mineralization is confined to a structurally favorable area approximately 1,900 ft long and up to 750 ft wide within the main alteration zone. A structurally similar area in the North zone covers a strike length of 2,000 ft and a width of 1,000 ft. Total mineable reserves are 56.2 million tons grading 0.032 oz gold at a 0.74:1 strip ratio.

Because sulphide material constitutes the largest portion of the reserve base, developing Ridgeway strictly as a heap leach producer wasn’t practical. So the joint venture opted for conventional agitation leaching and a flow sheet that was applicable to all ore types; it also yielded metallurgical recoveries ranging from 75% to 90% depending on ore type.

It’s probably worth noting that consideration was given to developing a small heap leach operation (5,000 tons per day) for oxide reserves in conjunction with convention
al milling; but its $7 million projected cost was prohibitive, said BP.

There were a number of technical considerations for not going this route, namely that oxide material at Ridgeway is extremely friable (it crumbles easily) and would have required agglomeration and conveyor stacking (a big ticket item) to ensure adequate percolation of cyanide solution through leach piles.

Although it wouldn’t be described as a “tax haven,” South Carolina offers a 5-year partial exemption on property taxes. Mining companies only pay taxes for schools, libraries, and fire protection during that period. It’s a nice area for a mining operation although during the Civil War General Sherman wasn’t too enamored by the region.

He destroyed the nearby Haile mine which helped fund the Confederate war effort and used the South Carolina legislature building as a range finder for his artillery pieces. (Mind you he saved his best for Atlanta). In any event, the Confederate flag still flies proudly above the State legislature in Columbia, albeit beneath the Stars and Stripes.

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