Starvation Canyon work may begin soon By ADELLA HARDING Mining Quarterly Editor
ELKO — Yukon-Nevada Gold Corp. plans to begin its Starvation Canyon underground project in Elko County this spring as part of expansion at Jerritt Canyon. “We would like to start development in April, depending on contractor availability, to do the portal and decline,” said Yukon-Nevada’s chief operating officer, Randy Reichert. Starvation Canyon will be quick to go into production, with the current estimate for gold production in September. The ore is easy to reach. “We only need to go 700 feet, and we’re already at ore, and at 1,500 feet, we will be in full production,” Reichert said. The underground Starvation Canyon Mine will need a secondary access before it can be in full production, however, he said. Starvation Canyon will be a new mine at Jerritt Canyon, where mining has been under way since the 1980s. Current gold production is coming from the SSX-Steer underground mine that Yukon-Nevada put back into production late last year, and the Smith Mine that Small Mine Development has been operating for a couple of years. “SMD is doing quite well, increasing production to 1,200 tons per day in another month or two months,” Reichert said.
Yukon-Nevada is still awaiting delivery of new haul trucks for SSX-Steer before the mine can reach full production, but Reichert said the company expected Sandvik to deliver one 30-ton truck in February, another in March and three more in April or May. All the ore going through the Jerritt Canyon mill is now from production and stockpiles on site, Reichert said. Jerritt Canyon isn’t milling any ore from Newmont Mining Corp. operations at this point but was doing so last year. The mill is back in full operation after a shutdown on Jan. 6 to complete refurbishment that included a new location for the dryer and a new dryer for more efficient winter operations, and a bag room and new scrubber. “Then, we reconfigured the conveyors in the fine crushing between the secondary and tertiary crushers,” Reichert said in a February phone interview. The mill was fully operational on Feb. 3. “We’re optimistic at this point we will be able to really run hard, now,” he said. The company reported the March mill production is expected to average 3,900 tons per day with gold production of approximately 12,500 ounces. This would translate to roughly 150,000 ounces of gold production in a year’s time. With the growth, Yukon-Nevada has been actively recruiting for underground miners, engineers and “across-the-board, but underground miners are the primary target,” Reichert said.
Yukon-Nevada also is looking into housing because of the shortage in Elko, and he said there is potential for a small camp for the underground miners. The company also continues exploration, with results from West Mahala drilling showing good grades and showing potential for access from SSX. “It’s really firing up to be a very sizable deposit,” Reichert said. Results from one hole showed an intersection of over 150 feet at just under 0.2 ounces per ton of gold, and another showed 100 feet of 0.19 opt. Yukon-Nevada has spent roughly $220 million to $240 million on Jerritt Canyon, Reichert said. Yukon-Nevada recently announced a forward gold purchase agreement with Deutsche Bank AG, London branch, that includes a $20 million prepayment that can be used toward Jerritt Canyon projects. The agreement is a forward contract structured to deliver 27,950 ounces of gold over a 43-month term in the amount of 650 ounces per month starting March 31. Shaun Heinrichs, chief financial officer, said there still will be additional funds coming into the company from gold sales under the agreement. The prepayment is for roughly $716 per ounce of gold, and the remainder of the purchase price will be paid upon completion of monthly gold deliveries and will be equal to the amount that the gold price exceeds $850 up to a maximum gold price of $1,750.
SPRING 2012 ELKO DAILY FREE PRESS, Elko, Nevada 55