Both underground and open pit at American Girl Equinox, MK

The American Girl mine in this desert region will have an extended life as deposits on the Oro Cruz portion of the property are brought on-stream by joint-venture partners Equinox Resources (TSE) and MK Gold, a subsidiary of Morrison-Knudsen.

The partners each have a 50% stake in American Girl, a combined open-pit and underground operation which turned out 73,023 oz. gold last year at a cash cost of US$233 per oz. (US$261 including royalties).

The mine is in the Cargo Muchacho Mountains of southeastern California, 20 miles northwest of Yuma, Ariz., and near the Mexican border. This historic district came to the attention of mining groups more than a decade ago, including Newmont Mining, which made multiple discoveries in the American Girl Canyon area.

Equinox President Ross Beaty said those deposits have the same genesis and geology as the Picacho (Glamis Gold) and Mesquite (Gold Fields-Santa Fe Gold) deposits still being mined in the district. The area is intensely faulted with low-angle thrust-detachment faults which are stacked above one another and occasionally cut by high-angle faults.

At American Girl, the open-pit bodies contain quartz veins in the low-angle shear zones with ore disseminated into the Tumco Formation. The underground bodies are deeper-seated with high-grade quartz veins and very little dissemination into the Tumco Formation.

Newmont’s interests were taken over by Eastmaque Gold Mines in the 1980s (the major still has a royalty interest). Eastmaque spent more than US$22 million developing an open-pit, heap-leach operation in the Padre-Madre pit, now being reclaimed. By 1989, Eastmaque had teamed up with MK Gold, which invested another US$19 million and became the operating partner early in 1990. “Our cost of entry was much lower, about US$4 million worth of shares, to acquire the half-interest in American Girl through our amalgamation with Eastmaque late last year,” Beaty said.

Beaty had high praise for partner MK Gold, and the joint-

venture committee which now manages both the open pit (loader-truck) and underground (cut-and-fill) mines at American Girl. Processing is also two-fold, involving heap leaching of low-grade ore, and conventional milling and agitated cyanide leach of high-grade ore.

The project site is neat, compact and well-designed, with safety and environmental compliance having been given high priority. It appears, too, that the weak gold prices of recent years have led to increased efficiencies and a close watch on operating costs.

“We are over-budget for production this year, but that’s largely a function of grade,” General Mine Manager Terry Rogers told The Northern Miner on a recent site visit. “The B-zone, with its grade of 0.3 oz. gold per ton, has carried this operation and continues to carry it.”

The joint venture expects to produce 70,000 oz. this year, two-thirds from underground and one-third from the pit. Surprisingly, underground mining costs were a mere US$26 per ton (including backfill) and the all-in production costs from underground and open-pit sources were roughly the same. The average strip ratio for the mine is about 2-to-1.

“People don’t tend to think of MK Gold as underground miners,” Beaty said. “But they are good partners and the team here has done a superb job chasing the high-grade veins. The underground work is labor-intensive and involves jackleg drills and low mining heights, although we have some jumbos operating as well.”

The work index of the ore at American Girl makes it easy to crush and grind. The processing side is relatively straightforward, with 65% recoveries from heap-leaching and 92-94% from mill processing. Earlier on, however, control of copper was a problem in the carbon adsorption and gold recovery circuits. This was resolved by faster-than-normal carbon advance rates to accelerate gold removal, plus a number of other measures which prevent gold losses to the barren solution.

The mine site does not have a tailings dam. Instead, a semi-dry, cake-like product is agglomerated with heap ore. This serves the dual purpose of disposing of tailings and allowing for slightly higher gold recoveries. The reserve potential of the American Girl deposits is nearing depletion, which is why the joint venture is anxious to move forward with the permitting process to begin mining at Oro Cruz.

At the start of this year, the joint venture’s overall proven, probable and drill-indicated reserves stood at 5.3 million tons grading 0.09 oz. gold per ton. Of this total, Oro Cruz has surface minable reserves of two million tons grading 0.056 oz., plus underground minable reserves of 405,000 tons at 0.257 oz. Oro Cruz reserves are viewed as sufficient to keep the mine operating until 1997 or longer. Under the current agreement, MK has a 56% interest in Oro Cruz. Equinox holds the remainder.

“Oro Cruz will be the future of our operation,” Beaty said. “There is still plenty of exploration potential on this portion of the property, and we intend to continue exploring other parts of our 18-sq.-mile land package as well.”

The joint venture plans to truck ore from Oro Cruz to the processing facilities (mill and heap leach) at American Girl, a distance of just over two miles. It is surprising, therefore, that the joint venture was asked to prepare an environmental impact statement (EIS) for this portion of the project. The process has already taken 18 months and will take another 8-9 months to complete.

The total cost of the EIS combined with permitting is expected to amount to well over US$1 million, a sizable portion of the total US$4-5 million projected cost for startup at Oro Cruz. The remainder will be spent on pre-stripping (US$1 million) and underground development.

Beaty said it is costing the joint venture “a fortune” to permit Oro Cruz, even though the project area is not on the list of critical habitat for the desert tortoise. Nevertheless, considerable sums have been spent on tortoise mitigation, not to mention the US$300,000 for an archaeological study on an area the joint venture isn’t even proposing to touch.

“It is getting more and more expensive and difficult to bring a mine into production in the U.S.,” Beaty said. “That’s partly why we took on an exploration effort in Bolivia. We aren’t looking to avoid reasonable environmental standards, but the regulatory process in North America is getting out of hand.”

Equinox has several projects on the go in the western U.S., including the Rosebud gold project in Nevada where an underground exploration program is under way. This US$5-million program will enable a feasibility study to be completed and will determine the most viable option for development. Reserves were last reported as 1.75 million tons grading 0.32 oz. gold per ton. But Beaty believes the company’s recent agreement with Teck (TSE) to explore gold prospects in Bolivia represents an exciting growth opportunity for the company. The properties are in both the Altiplano and Precambrian regions, and all contain active, small-scale, alluvial or hardrock gold mining operations. Teck is funding exploration and can maintain a 51% interest in any project by funding costs through to a production decision. “The large mineralizing systems on these properties have not been explored with modern techniques,” Beaty said. “We think it’s a good deal for us, and for Teck.”

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