Galactic at work on new mines as Summitville output goes up

With production expected to begin at two new U.S. gold mines, 1988 will be a busy year for Vancouver-based Galactic Resources (TSE). As the company attempts to establish itself as a major gold producer, Galactic will spend about $41 million this year on its key projects.

Gold production from Galactic’s Summitville mine in southern Colorado increased to 88,200 oz in 1987 from about 55,000 oz last year. Potentially the world’s biggest heap leach mine, Summitville’s reserves stand at almost 18 million tons grading 0.038 oz gold per ton.

But problems posed by the operation’s 10,000-ft elevation and metallurgy recently prevented the company from maintaining planned levels of ore removal.

In a bid to solve its Summitville production problems, Galactic spent $50,000(US) to expand the capacity of the recovery facility by 40% — from 3,200 to approximately 4,600 gal per minute.

At year-end, approximately 72,000 oz gold remained in inventory in solution and on the pad for removal and processing during 1988 and beyond, the company said.

According to Chairman Bob Friedland, the area surrounding Summitville may contain a second, similar sized gold deposit. “Exploration drilling to a depth of 1,000 ft is planned in 1988 to test for gold mineralization beneath the paleo- hot spring fields containing anomalous values of gold, mercury and arsenic,” Friedland said. Ivanhoe venture

Since Galactic’s Ivanhoe joint venture property is located on the Carlin gold trend where American Barrick Resources (TSE) and Newmont Gold have astonished the mining world with their deep drilling successes, Ivanhoe is Galactic’s best known exploration project.

A 50/50 joint venture with Cornucopia Resources (VSE) of Vancouver, the 136-sq-mile property is expected to produce between 50,000 and 100,000 oz gold annually when production begins either later this year or in early 1989.

Near surface reserves in the huge Hollister deposit are estimated at 56.8 million tons of oxide material averaging 0.032 oz gold and 30.7 million tons of sulphides averaging 0.038 oz for a total of 83.5 million tons averaging 0.034 oz.

But Galactic will also test for high grade deposits in paleozoic sediments beneath the Ivanhoe land holdings.

If the first phase of the feasibility study determines that the project is commercially viable, the initial phase heap leach operation could process about two million tons annually. A larger second phase mine could be designed to process about 4-5 million tons per year. Ridgeway gold

At the Ridgeway gold mine about 25 miles northeast of Columbia, S.C., Galactic and partner BP Gold are attempting to bring the project to production mode late this year.

With a feasibility study and environmental permits now concluded, Galactic will bear 48% of the $76 million capital costs to earn 49% of gold output.

Galactic will finance its share of development costs through a $56- million gold loan, guaranteed by letters of credit totalling $125 million from a consortium of five financial institutions.

After confirming that ore reserves in the north and south pits at 56.2 million tons grading 0.032 oz respectively, the partners opted to build a 15,000-ton-per-day mine and mill facility.

It should be capable of producing 158,000 oz annually for the first four years (gearing down to 133,000 oz afterwards) of the operation’s 11-year mine life. The program is about 50% completed, Galactic said.

Cash costs including royalty and refining expenses are expected to be less than $200(US) per oz in the first five production years.

As reported (N.M., May 9/88), a production decision has been delayed at Galactic’s Crone Hill property in south central Oregon where the company is joint venturing with Quartz Mountain Gold (VSE). Reason for delay

“Ambiguous metallurgical results on the heap leachability of some of the oxide ore types” was given as the reason for the delay by Galactic which is earning a 50% working interest from Quartz Mountain by bringing the mine to commercial production.

In a move to diversify its interest into other precious and industrial metals, Galactic has acquired through 68%-owned subsidiary All- North Resources (VSE) a 100% interest in the Wellgreen nickel-platinum-palladium property in southwestern Yukon.

Located in the Yukon’s Kluane district 204 miles north of Whitehorse, the Wellgreen mine is a former underground nickel producer which Galactic believes could contain a large ore reserve.

Having spent over $2 million on the project, Galactic has budgeted $4.25 million this year for a 50,000-ft drill program designed to test the potential for lower grade open- pittable material. During 1987, Galactic completed about 5,000 m of diamond drilling. It also rehabilitated the 4,250 level to permit underground access for underground drilling this year.

According to Galactic, the current reserve estimate at Wellgreen’s east zone is 10.7 million tonnes grading 0.82% copper, 0.42% nickel, 0.030 oz per ton platinum and 0.016 oz palladium. West zone reserves stand at 9.7 million tonnes grading 0.51% copper, 0.30% nickel, 0.021% platinum and 0.012% palladium.

On Dec 31, Galactic’s long-term debt position decreased to $17.2 million from $27.8 million at the same time last year. The company’s cash position dropped to $2.07 million in 1987 compared to $3.9 million in 1986.