Akiko working to revive Utah’s Tintic mining camp

The numerous old headframes and mine dumps scattered throughout the Eureka area stand as monuments to the rich history of the Tintic mining districts, 70 miles south of Salt Lake City, Utah.

Through to 1987, the district’s output totaled more than 19 million tons containing roughly 2.8 million oz. gold, 270 million oz. silver, 1.1 million tons of lead, 225,000 tons of zinc and 127,000 tons of copper. Today, Akiko Gold Resources (VSE) and Chief Consolidated Mining (NASDAQ) are working to breath new life into the area with the development of their Burgin joint venture in the East Tintic district.

The companies are investigating the feasibility of bringing the New Burgin deposit into production. The deposit, which represents the downdip extension of the Main Burgin orebody which Kennecott mined in the 1960s and 1970s, is described as a structurally complex massive sulphide replacement of deformed and brecciated limestones and quartzites.

Host units of deposits in the East Tintic consist of Cambrian to Mississippian carbonate and clastic sedimentary rocks. The district is capped by a thick accumulation of Tertiary volcanic rocks which buried the pre-volcanic erosion surface, hiding many of the structural features and much of the host formations.

The New Burgin lies above, and immediately adjacent to, the East Tintic thrust fault. Hangingwall rocks are predominantly Tintic quartzite, with moderately thick beds of sericitic shale. Footwall rocks are composed of younger Cambrian-through-Ordovician limestones and dolomites. Limestone beds in the vicinity of the ore, and close to faults, have been dolomitized and commonly have a sanded and cavernous constitution, a factor which complicated past mining operations when development was in the footwall. Kennecott started limited production at the Burgin in 1964, and by 1965 was operating at a design capacity of 500 tons per day with ore shippped directly to various smelters. The company approved the construction of a 500-ton-per-day flotation mill in 1967, and the mine continued operations with generally poor results until 1978 when Kennecott shut it down in response to high costs.

Operating problems at the Burgin included excessive water inflows and bad ground conditions. The temperature of the water inflows compounded the problems, typically pushing mine temperature to 100 F.

Akiko and Chief Consolidated contend that the problems were the result of little or no mine planning combined with development and dewatering ahead of production areas. The companies point out that the Burgin made money in 1967 when mining areas were developed and dewatered ahead of production. After a 9-month-long strike ended in 1968, no area of the Burgin reached that level of dewatering and development. Instead, mine production was pushed to a rate of 800 tons per day (300 tons of which was to be sold to smelters). Through 1975, the mine produced 1.4 million tons grading 10 oz. silver per ton, plus 11% lead and 10% zinc, from stopes above and below the water table. Mill recoveries were in the 81% range for lead and silver, and about 65% for zinc.

Akiko director Roland Ridler is confident the project’s high grade, combined with a good mining plan, will easily compensate for costly operating problems which haunted the mine in the past. He adds that the mixed oxide-sulphide nature of previous production, together with the finer-grained nature of the ore, hurt Kennecott’s recoveries.

The drill-indicated resource for the New Burgin has been estimated at 1.28 million tons grading 19.5% lead, 5.5% zinc and 22.6 oz. silver. These figures were arrived at by Sunshine Mining in a 1988 feasibility study. Sunshine planned to proceed with the project, but a drop in silver prices and a change in corporate policy, combined with a lawsuit against the company launched by Chief Consolidated, ultimately resulted in Sunshine returning the property to Chief in 1992.

Last year, Akiko signed an agreement with Chief, giving it an option to earn a 50% interest in the Tintic property by spending US$10 million. The first US$4 million will take the form of payments to Chief in return for shares at US$4 each, with all the funds to be used for work on the property under Chief’s direction.

Akiko now owns 285,000 shares of Chief and must make a further payment of US$1 million by May 1, 1995, plus US$2 million on Feb. 1, 1996. Ridler admits that poor junior market conditions will make it difficult to raise the next US$1 million payment, but he is confident it can be done. Initial drill results from the project have been positive, with the first hole returning 114 ft. grading 18.2 oz. silver, 27.5% lead and 3.8% zinc. The hole also returned two higher-up (but lower-grade) intervals, including 36 ft. grading 6.3 oz. silver, 11.3% lead and 0.14% zinc, and 21.6 ft. grading 4.2 oz. silver, 11.2% lead and 3.8% zinc.

The second underground hole returned a 76.1-ft. intersection grading 7.8 oz. silver, 27.9% lead and 8.9% zinc, including 55 ft. grading 10 oz. silver, 32% lead and 11% zinc.

Underground drilling is continuing from the 1050 level in an effort to expand the deposit down-plunge to the northwest, as well as along strike. The drilling is also designed to confirm previous work and provide infill information.

The deposit is amoeba-shaped and measures roughly 400 ft. along strike and 600 ft. downdip. The attitude of the deposit varies, but averages about 30-40 in dip, with some areas flat-lying.

The width of the New Burgin is also variable, measuring from 30 ft. up to what Ridler described as “locally fantastic” widths of more than 100 ft. Recent resource estimates by consulting firm Pincock Allen & Holt put the deposit’s diluted minable resource at 1.1 million tons grading 19 oz. silver, 22% lead and 7.5% zinc.

Raymond Irwin, vice-president exploration for Akiko, believes that figure is conservative, especially given the results of the first drill hole. Previous drilling in the area experienced poor core recovery and, as a result, the zone was inferred to be thinner and less continuous than what is now believed. In addition to drilling work, hydrological studies will soon be undertaken. Based on historic water flows, about 12,000 gallons per minute of hot saline groundwater will have to be pumped from the formation in order to dewater the deposit prior to, and during, mining.

Kennecott discharged its mine water to a dispersion pond east of the mine, and the joint venture is now reviewing its options for disposal of the mine water.

Irwin hopes to be at the feasibility stage in the first quarter of 1996. In 1993, an order-of-magnitude study updated Sunshine Mining’s feasibility study, estimating the project could be brought into production at a capital cost of US$33.5 million.

The estimate includes the cost of constructing a production shaft on the hanging wall side of the deposit, and of refurbishing the existing mill for a daily capacity of 1,200 tons. Based on a mining and milling cash cost of US$77 per ton of ore, metal prices of US$5.12 for silver, US32 cents for lead and US46 cents for zinc, the study estimates the discounted cash flow rate of return at 30%.