Athabaska working to revive former-producing Carolin mine

The prospect of reviving a past-producing gold mine has lured Athabaska Gold Resources (TSE) to Ladner Creek in the Cascade Mountains, about 14 miles northeast of Hope, B.C.

The company is in the midst of underground diamond drilling to test the down-plunge projection of previously mined zones at the former producer.

Athabaska bought an option on the property last year with the objective of outlining sufficient reserves to restart the existing 1,500-ton-per-day, flotation-cyanidation mill.

The company can acquire the property by issuing 4 million common shares. The vendors also hold warrants to buy 1 million shares at 70 cents each; the warrants expire June 30, 1997.

Ladner Creek, formerly known as the Carolin mine, operated from January 1982 to September 1984, during which time 881,000 tons grading 0.094 oz. gold per tonwere mined.

However, recovery problems plagued the mill, resulting in a total gold output of only 43,533 oz. Overall recovery was about 53%.

Prior to startup, grade and recovery for the Carolin mine were projected at 0.13 oz. gold and 83%, respectively.

Recovery problems were not the project’s only failing. The mine was beset with operational and management-related difficulties, including excessive mine dilution and a highly publicized cyanide spill into Ladner Creek (which flows into the Coquihalla River, a tributary of the Fraser River). The spill reportedly killed several fingerling fish, which were being stocked into the Coquihalla at the time.

Athabaska regards the spill as “completely avoidable,” and says it occurred at a time when the pumps that move the tailings from the mill to the pond were out of service.

Jo Shearer, one of the vendors in the property deal and

a geological consultant to Athabaska, believes the mine failed as a result of being poorly managed. He says management focused on promotion at a time when it should have been addressing recovery problems in the mill. And he points to management’s decision to mine low-grade material (on either side of the main ore zones) as a partial cause of the lower-than-expected head grades.

Dilution problems were compounded by sloughing of waste from the hangingwall above the stopes, Shearer adds.

Regarding the operation’s historic metallurgical problems, Athabaska is confident that recoveries in the 80%-90% range can be achieved by recovering the gold by means of a bulk sulphide flotation concentrate and cyanide leaching. Other options include using a “whole-ore” cyanidation circuit, or selling a bulk flotation concentrate directly to the smelter.

Athabaska says metallurgical testing prior to the mill design for the Carolin operation was inadequate, and the company is proceeding with further tests.

Re-milling tailings

Mineralogical examination of the tailings and assaying for gold content in the tailings reveal that most of the pyrrhotite and half of the gold were not recovered in previous operations.

Athabaska is studying the feasibility of re-milling the 880,000 tons of tailings, which are estimated to grade in the order of 0.05 oz. gold per ton.

The existing tailings pond, situated in a valley above the mill, is reported to be in good shape with 1-2 years of capacity remaining. An engineering study aimed at increasing the capacity for a 5-year mine life is in place, and Athabaska has staked additional ground downstream from the mill to cover another potential tailings disposal area.

Preliminary studies estimate that, of the remaining resource, 990,000 tons grading 0.13 oz. gold are accessible from existing workings. Athabaska has yet to study the feasibility of mining this material, which includes remnant pillars.

The gold mineralization is disseminated and associated with metallic sulphides, albite, quartz and carbonate. It is also both lithologically and structurally controlled.

During the previous operation, three separate deposits were mined from sedimentary beds along the thickened, hinge region of an antiformal fold.

The zones of mineralization are stacked and saddle-shaped, plunging northward at 20! sub-parallel to the antiformal axis, and their large size allowed Carolin to use bulk-tonnage, underground mining methods in its operations.

Long-hole stoping

The mine employed long-hole, sub-level stoping, taking 5-ft. panels longitudinally. The open stopes measure up to 100 ft. wide, 200 ft. high and 200 ft. long.

During a tour of the underground workings, The Northern Miner observed that ground conditions were excellent, considering that operations have been suspended for more than a decade.

Since acquiring the project and commencing its underground program, Athabaska has driven 900 ft. to the north on the 875 level in order to drill-test the down-plunge projection of the known deposits.

Underground drilling from the 800 level tested extensions to Zone 3, returning a mixture of results. Some of the better intersections include: a 41.3-ft. intersection grading 0.13 oz. gold; a 60.7-ft. intersection grading 0.12 oz. gold; and a 75.5-ft. intersection grading 0.18 oz. gold.

The drilling also included some lesser values over narrower intervals, including a 3.3-ft. intersection grading 0.11 oz. gold and a 6.6-ft. interval grading 0.08 oz. gold.

Athabaska estimates the resource block being tested in the 800 level drilling now measures more than 200,000 tons grading 0.11 oz. gold — almost double the previous estimate for the block.

Recent results from drilling on the 875 level include a 29.5-ft. intersection grading 0.33 oz. gold, representing a new discovery 165 ft. below and 260 ft. north of the 800 level drift. The structure is hosted in volcanic rocks, as opposed to the sedimentary package normally associated with deposits at Ladner Creek.

New gold zone

Drilling is continuing on the new zone in an effort to assess its potential and evaluate its relationship with the known, sediment-hosted gold structures.

And last year, surface drilling a few thousand feet north of the mine area returned gold values from another new zone, the McMaster. Results include: 7.5 ft. grading 0.062 oz. gold plus 10.8 ft. grading 0.084 oz. gold in hole 14; 9.9 ft. grading 0.1 oz. gold in hole 15; 11.7 ft. grading 0.11 oz. gold in hole 17; 11.4 ft. grading 0.075 oz. gold in hole 18; and 42.4 ft. grading 0.15 oz. gold in hole 19.

Drill-testing of the McMaster zone will continue in the spring.

Athabaska is confident that a threshold resource of 200,000 recoverable ounces of gold would allow it to proceed with production at Ladner Creek.

Although a cursory walk through the mill gives the impression of a rusting hulk, a study has determined that the oxidation is only surficial.

The cost of recommissioning the mill and reactivating the mine is estimated at $6-7 million, including $2 million for exploration and metallurgical work.

The operating cost is estimated at $30 per ton, based on a 0.125 oz. gold grade and an 85% recovery. The cash cost of production is projected at US$206 per oz.

Historically, cash operating costs ranged from $23 to more than $105 per ton, averaging about $38 per ton.

Athabaska is well-funded for the near-term, with roughly $2 million in working capital and 23.9 million shares outstanding.

It also holds 630,000 shares of Consolidated Ramrod Gold (TSE) as a result of the sale of its interest in the Damoti Lake property to that company last year.