OFR-4-74 Mine Systems Analysis - Tertiary Channel Deposits

The mine system analysis and evaluation study presented in this report was part of the U. S. Bureau of Nines' Tertiary channel project conducted under the Heavy Metals program. The Badger Hill pit, located on the west end of the San Juan Ridge area, near Nevada City, California, was the site of the Bureau's field work. The objectives of this study were: (1) Determine potential alternative mining systems for some of the large tertiary channel gold-bearing gravel deposits, and (2) Identify areas of technology where further investigation would be merited because of their potential inclusion in a mining system for such deposits, The study involved the development of a mineralized block inventory, an economic block inventory, determination of optimum ultimate mining limits and a preliminary economic mining system evaluation. Computer programs were developed and utilized for each of the study phases stated above. The sampling program conducted at Badger Hill by the Bureau Delineation Group together with confidential drill hole data provided by the San Juan Gold Co. formed the basic gold values and distribution information from which a deposit model was developed. The deposit was divided into minable block units and net economic values were assigned to each block for various configurations of both open-pit and underground mining methods based on cost and performance data provided by the various Bureau of Mines Research Centers. A number of controllable variables such as: (1) Mining method (open-pit and underground), (2) depth of mining cut, (3) production rate and (4) equipment type and capacity were evaluated. The prime measures of effectiveness on which the mining systems where judged were discounted cash flow rate of return and maximum utilization of natural resources. The analysis showed that underground mining of the Six-Mile Tertiary channel gold-bearing gravel deposit under consideration was uneconomical and did not permit maximum recovery of the resources within the channel. It was also apparent that mining the Six-Mile Deposit for gold alone is uneconomical or at best marginal at a gold price less than $80 per ounce. The analysis showed that the potential for an economic mining operation within the Six-Mile Deposit exists when the gravel resources of the channel are considered together with the gold. It was determined that the highest rate of return would be realized with a 20-year open-pit mining operation yielding 745,000 ounces of -gold and 55 million cubic yards of usable gravel.