Eskay Creek feasibility completed

A feasibility study has confirmed that the Eskay Creek project in British Columbia is economically viable and on target to begin producing gold and other metals by late 1995 or early 1996.

Details of the study were released by Homestake Mining (NYSE) which has a 54% interest in the project through equity interests in Prime Resources Group (TSE) and Stikine Resources. The partners have already started permitting and expect a mine development certificate could be granted early next year. Discovered in 1988, the deposit contains 1.2 million tons grading 1.9 oz. gold and about 86 oz. silver per ton, plus 5.6% zinc and 0.77% copper. This newly upgraded resource translates into proven and probable reserves containing 2.3 million oz. gold and 102 million oz. silver.

Eskay Creek is north of Stewart, B.C., and will be accessible by a road, which is under construction. The study anticipates production of about 400 tons per day from a small underground mine. Ore would be trucked to and treated at a site near Houston, B.C., about 350 miles by road from the mine site.

The feasibility study indicates optimal annual production rates would be 240,000 oz. gold and about 10.5 million oz. silver. Zinc and copper byproducts would be produced at the rate of 6,000 and 900 tons respectively. The project would employ conventional mining and grinding and a pressure oxidation (autoclave) circuit to recover precious metals.

Capital costs would be about $294 million, including allowances for contingencies and working capital items. Cash operating costs would be US$282 per ton (or about $108 per oz. gold equivalent), net of credits for base metals byproducts.

Homestake reports, however, that it has been approached by smelting companies interested in obtaining feed material. This has led to a decision to assess the possibility of shipping Eskay Creek ore directly to a smelter. The evaluation is expected to be completed by the end of this year. Homestake estimates this approach could reduce the capital cost by about $150-200 million, although operating costs would increase.