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Premier Gold Mines Ltd. expects to begin underground development at its Cove deposit south of Battle Mountain yet this year, and the company has expanded exploration opportunities on the McCoy/Cove land package in an agreement with Barrick Gold Corp.

The Canadian company that has an office in Reno also plans with Barrick to develop an underground mine at the South Arturo Mine near Barrick’s Goldstrike Mine north of Carlin along with new open pit development there.

Premier additionally has an agreement with Kinross Gold Corp. for exploration at Premier’s Goldbanks property in Pershing County, and agreement with Barrick for its Rye Vein adjacent to Goldbanks.

“We see Nevada as a great place to be, and we are proud of the partnerships created,” said Charlie Ronkos, executive vice president of project development for the Americas for Premier.

Current gold prices that have been in the range of $3,211 to $1,354 an ounce since the beginning of 2018 also are appealing to Premier, he said.

Premier is an exploration and production company, with gold production from its 60-40 joint venture with Barrick at South Arturo, as well as operation of the Mercedes Mine in Mexico.

At the Cove deposit at the McCoy/Cove Mine that was shut down years ago, Premier plans to revive mining with the underground operation at or near the old Cove Pit.

Brent Kristof, senior vice president of operations for Premier, said the company is working through contracts, and “we intend in the second quarter to start development of the underground mine.”

He said the company expects to hire a contractor to start the portal and do the development work.

The current permit is for up to 120,000 tons of ore during test mining, Kristof said.

Premier wouldn’t be processing the ore, however. The ore is Carlin-style that will require roasting or an autoclave off-site.

Premier reported in January that Barrick will process up to 120,000 tons of bulk-sampling refractory ore at a prearranged price as part of an agreement with Toronto-based Barrick.

The processing agreement will provide certainty for the company to proceed with the underground development that will include construction of a ramp for definition drilling and potential test mining before a full feasibility study is completed, the company stated.

“Premier is also evaluating life-of-mine processing opportunities with appropriate companies in the area should a new underground mine be built at Cove,” Kristof said.

Ronkos said the permit for the underground project is for the portal to be in the pit, but the company is hoping to change the site of the portal to just outside the pit.

Premier is completing dewatering wells for the site and constructed a rapid infiltration basin for water.

Premier is the 100 percent owner of the site for the underground mine at Cove and will be the exploration operator for the area of McCoy/Cove that is covered in an agreement with Barrick. The Cove open pit is roughly 10 miles south of Newmont Mining Corp.’s Phoenix copper and gold mine.

“We drew blocks around Cove where we have current resources,” Ronkos said.

Under the exploration agreement, Barrick has the option to earn a 60 percent interest in the property by spending $22.5 million in exploration over a five-year period. The arrangement calls for Barrick to spend $6 million of that in exploration prior to June 30, 2019, with Premier as operator.

Barrick would become the operator after spending the additional $16.5 million by June 30, 2022.

Premier stated that exploration on the joint venture property was expected to begin early this year, including surface mapping and sampling followed by drilling. The property in the agreement covers roughly 50 square miles.

Barrick is the operator and 60 percent owner, however, of South Arturo, which is producing gold only from stockpiles until work can begin on the El Niño underground and the next phase of the open pit. Ore is processed at Goldstrike.

Premier reported its 40 percent share of gold production totaled 57,124 ounces in 2017, with only 4,472 ounces produced in the fourth quarter of the year.

Mining ended on phase II of the South Arturo Pit, and the portals for the underground mine will be in the mined-out Phase II area. Barrick is “evaluating the best approach” to the underground mining, whether to hire a contractor or use its own crews, Kristof said.

Delineation drilling and setup of facilities at the portals will be done later this year, he said.

“Phase II just finished being backfilled to the elevation where the portals will go,” Kristof said.

Surface mining will be in Phase I of the South Arturo Pit, and this is in the current life-of-mine plan, while Phase III is under evaluation, he said. Stripping of waste material for Phase I will start about mid-year, but there will be little mining of gold ore until 2019.

Exploration drilling continues at South Arturo as well, according to Premier.

Premier acquired the 40 percent share of South Arturo in 2014 from Goldcorp Inc. South Arturo is “just an extension of the Dee Mine” that was in operation earlier, Ronkos said.

Premier and Barrick also have an exploration agreement for the Rye Vein, which is Barrick property. The site “wasn’t high on their priority list so we talked to them and worked out a deal so we can explore there,” Ronkos said.

Premier will have the option to acquire 100 percent interest in the Rye Vein site by spending $3 million in exploration before Dec. 31, 2019. Barrick will retain a 1 percent net smelter return royalty on Rye, where there is no existing royalty. Barrick also will have a back-in right to purchase 51 percent interest in Rye, canceling the royalty.

At Goldbanks, there is an existing open-pit resource, but “it was never good enough to get over the hurdle,” Ronkos said, adding that now there are more targets that “may get us over the hurdle.”

Goldbanks and Rye Vein are in the same area, so Premier “consolidated a big part of the district,” Ronkos said. The site 35 miles south of Winnemucca covers 18,184 acres.

The consolidation included agreements and acquisitions with Barrick, Kinross Gold, Nevada Sunrise and Kurt Schendel, according to Premier. The company has an option to acquire a 50 percent interest in Goldbanks from Kinross.

Premier reported full-year 2017 gold production of 139,658 ounces and production of 357,901 ounces of silver from South Arturo and Mercedes combined, and the forecast for 2018 is gold production of 85,000 to 95,000 ounces of gold and 300,000-325,000 ounces of silver.

The company, with headquarters at Thunder Bay, Ontario, produced 82,534 ounces of gold at Mercedes in Sonora, Mexico, in 2017. Kristof said the mine has roughly 440 employees, and there are a similar number of part-time and full-time contractors.

Headquarters has about 15 employees, as does the Reno office, Kristof said.

Premier also is involved with the Greenstone Gold joint venture in Ontario with Centerra Gold and is drilling on the Hasaga Property in Ontario.

The company has a $38.8 million budget this year for exploration and development, and Barrick will spend the additional $6 million of its money at the McCoy-Cove joint venture exploration site.

The company’s chief executive officer and president, Ewan Downie, stated in the company’s release on production and projects that the development projects will be financed entirely from the company’s treasury and cash flow.

“We see Nevada as a great place to be, and we are proud of the partnerships created.” — Charlie Ronkos, executive vice president of project development for the Americas, Premier Gold Mines Ltd.

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