Better gold prices are making it more likely Scorpio Gold Corp. can mine again at Mineral Ridge in Esmeralda County, and the company now has an agreement involving its Goldwedge mill in the historic town of Manhattan for new opportunities there.
“It’s an exciting point for the property with where we are with the gold price,” said Scorpio President Chris Zerga. “I think we have a good story to tell. We would love to start mining. We just need the dollars to do it.”
The gold price was in the range if $1,800 an ounce when Scorpio looked at Mineral Ridge in 2011 and began falling after peaking at $1,895 an ounce Sept. 5 and 6, 2011. The gold price averaged $1,250.74 an ounce in 2016, for example, and hit a high in 2019 of $1,546.10 an ounce on Sept. 4, 2019, according to Kitco data. The gold price was $1,600 per ounce during Feb. 18, 2020, trading.
Scorpio stopped gold mining at Mineral Ridge in November 2017 but is still processing ore from the leach pad, while planning to mine again.
Vancouver-based Scorpio had a feasibility study done in 2018 that looked at the Mineral Ridge resource at a gold price of $1,250 an ounce.
“We’re going to build a milling facility that would be 4,000 tons a day,” Zerga said, estimating construction would take a year and a half.
Leaching alone provides only 67% gold recovery “so we have resource left in the leach pad,” he said. The estimate is 100,000 recoverable ounces that could be run through a mill, and there is another 150,000 ounces around existing pits that would mean pit expansions.
“The mill allows mining deeper and higher recovery,” Zerga said.
Mining would expand the Drinkwater and Mary pits and would include the new Bunkhouse Hill, Custer, NW Brodie and Oromonte pits, and the study showed a mine life of 8.5 years, with another year for construction. The study also predicted $313.7 million in revenue and a cash cost of $778 per ounce.
New look at miningAn internal study done more recently looks at a $1,500 gold price and an alternative of mining the existing leach pad, which is over a deposit, which would extend the NW Brodie open pit. If the leach pad is taken out it would be replaced with a dry stack tailings pad at the mill, Zerga said.
The cash cost would be roughly $863 per ounce with the alternative plan.
At $1,500 gold, the mine life would be 10 years with the smaller NW Brodie Pit and 11 years with the larger Brodie open pit over what is now the leach pad. The larger pit expansion would include 365,000 ounces of contained gold and 335,000 ounces recoverable gold.
Additionally, the internal study based on gold at $1,500 an ounce “improved the metrics by 30 to 35%,” Zerga said.
Scorpio would need to raise $34.5 million in capital with a small NW Brodie Pit, but more capital would be required for a larger NW Brodie Pit “due to having to relocate the existing tails storage facility as the Brodie large pit takes out the large portion of the existing tailings storage facility,” Zerga said.
“We’re out chasing financing and gold stream loans. Both options are being investigated, and we’ve got some interest,” he said. “All the permitting is in place.”
Cash cost would be $823 per ounce with the alternative of mining through the leach pad.
Plans call for leasing mining equipment when Mineral Ridge mining resumes, rather than using a contractor, which was what the company did previously. With the capital needed and estimated leasing costs, Scorpio puts the project’s cost at $67.5 million at $1,250 gold.
Zerga said Mineral Ridge has no acid-drainage from waste dumps because of limestone soil, so the site is “net neutral.”
Goldwedge site As the company awaits financing for Mineral Ridge, it is starting a new project at its Goldwedge site in Nye County. Scorpio Gold and Lode-Star Mining Inc. reached an agreement for Scorpio to toll mill gold ore from Lode-Star’s mining properties at the Goldwedge mill in the historic town of Manhattan.
Lode-Star’s ore will come from its Goldfield Bonanza project in Esmeralda County.
Scorpio’s Goldwedge property is 1,795 acres on three claim blocks north-northwest of Tonopah, and the mill that can process 400 tons per day and underground workings are part of the site.
The agreement with Reno-based Lode-Star will allow Scorpio Gold to modify and expand the mill to include a flotation system. The mill is currently a gravity recovery circuit. Lode-Star will provide funding for the design engineering, permitting and mill modifications.
Modifications to the mill also will include adding supporting reagent tanks or silos, secondary lining of process containment ponds, leak detection and monitoring wells for fluid containment.
In return for advancing funding, Lode-Star will see a reduction in toll-milling rates until all the advanced money has been repaid. Scorpio will then have a mill ready to do additional toll milling and processing ore from its Goldwedge deposit.
Lode-Star’s president, Mark Walmesley, stated that the agreement with Scorpio “couldn’t be more timely. After considerable work between Lode-Star and Scorpio Gold’s management, both parties agree each company will greatly benefit from this agreement.”
Goldwedge’s mill is near the Goldfield Bonanza site, which Lode-Star stated should minimize hauling costs.
Zerga said Scorpio has already put $1 million into rehabilitation of the mills, and the addition of the flotation circuit would benefit Scorpio, if the company begins production at the Goldwedge underground mine.
“I would say by the fourth quarter permitting will be in hand, and we can begin production over there,” Zerga said.
“Within the next month, we will be drilling at Goldwedge for mineable gold blocks. We’re already permitted to mine,” Zerga said in late January.
Scorpio has 22 employees in the United States, but “will staff up accordingly as milling commences. Goldwedge company employees with many years of experience will be operating the milling facility,” he said.
Property histories Both Mineral Ridge and Goldwedge are historic mining properties.
Zerga said gold mining started at Mineral Ridge in 1864 and was all underground until 1942, when mining ceased because of World War II. More than 400,000 gold ounces were mined underground, and a mill was built on the ridgeline in 1935.
“There are 51 miles of underground workings,” he said.
In the early years, wagons brought transported the ore, and a tram system was later built to move ore from the mine portal to the old town of Blair five miles away.
“Blair is gone, but it is just outside Silver Peak,” Zerga said.
Open pit mining started in 1989, after Mineral Ridge sat idle from the time of World War II. There were several operators that produced 168,000 ounces of gold from surface mining before Scorpio formed a 70-30% joint venture with Golden Phoenix in 2010.
“We were the operating partner,” Zerga said.
Mineral Ridge went into full commercial production in 2012, after starting pre-commercial mining at the Drinkwater Pit in 2011.
Scorpio acquired 100% of Mineral Ridge from Waterton in March 2019.
There were 230,000 ounces of gold produced at Mineral Ridge after Scorpio became the operator in 2012, Zerga said.
The company stopped mining in 2017 because of lower gold prices, a higher strip ratio and the company’s $6 million debt to Waterton that needed to be repaid, Zerga said.
Mineral Ridge includes 13,879 acres, and “we’ve only explored 5% of the land holdings, so there is upside there,” Zerga said. “There has been hardly any blue-sky drilling.” Instead, exploration drilling has been near mining sites.
Mineral Ridge is roughly 50 miles southwest of Tonopah against the California border.