The 5,617 hectare (13,879 acre) Mineral Ridge property is located ~6 km northwest of the town of Silver Peak and 56 km southwest of Tonopah in Esmeralda County, Nevada. Scorpio Gold holds a 70% interest in the project with joint venture partner Elevon, LLC (30%).
Prior to Scorpio Gold's acquisition in March 2010, Mineral Ridge historically produced ~575,000 ounces of gold, including ~170,000 ounces from open pit and ~405,000 ounces from underground mining operations. Upon acquiring its interest, the Company commenced major site rehabilitation to bring the project to a fully operational status. Pre-production mining commenced in the Drinkwater pit on May 31, 2011 and the Company achieved commercial production status effective January 1, 2012.
Mineral Ridge is a conventional open pit heap leaching operation. Gold and silver bearing solution from the leach pad is collected in the pregnant pond and processed through carbon columns in the ADR plant for recovery of the precious metals from leachate on carbon. Loaded carbon is shipped to Metals Research in Kimberley, Idaho for processing into doré. The doré bars are then delivered to Johnson Matthey's refinery in Salt Lake City for further refining of the precious metals into separate 99.9% pure gold and silver bars.
SECOND QUARTER 2017
Production at Mineral Ridge in Q2 of 2017 totalled 4,660 ounces of gold and 2,505 ounces of silver. Total gold production for H1 now stands at 10,401 ounces.
The Company's annual production forecast for 2017 is currently expected to be at the low end of the previous production guidance provided of 20,000 to 25,000 ounces of gold (as reported in the Company's May 30, 2017
news release). Total cash costs are expected to be $1,050 - $1,100 per ounce of gold sold. This increase in costs is due to the projected lower production level in 2017 while fixed costs remain relatively constant. The Custer pit and other areas for which permitting is outstanding, are not included in this production estimate and will be evaluated for economics of associated mining timelines when permits are received.
Based on the Company's updated mine plan, the Company currently anticipates mining of gold at Mineral Ridge through October 2017, after which there will be residual but diminishing gold recoveries from the leach pads. One of the initiatives undertaken by the Company to address the going concern issue is the engagement of three firms to complete a NI 43-101 compliant Bankable Feasibility Study, ("BFS") based on an internal economic assessment and the Mine Technical Services resource confirmation. The BFS, when complete will provide the mill facility design and related economics for processing the leach pad material. It is anticipated that the BFS will also provide the basis for the Company to raise the capital required for the project. It is estimated that the BFS will be complete by mid September 2017.
A summary of the Q2 2017 operating and financial results is presented in the Company's August 8, 2017
and August 29, 2017
news releases with complete details provided in the Q2 2017 Financial Statements
and Management Discussion & Analysis
HIGHLIGHTS FOR THE SECOND QUARTER ("Q2") ENDED JUNE 30, 2017 AND SUBSEQUENT EVENTS
HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2017
- 4,660 ounces of gold were produced at the Mineral Ridge mine during Q2 of 2017, compared to 10,089 ounces during Q2 of 2016.
- Revenue of $6.3 million, compared to $12.4 million during Q2 of 2016.
- Total cash cost per ounce of gold sold(1) of $968 compared to $879 during Q2 of 2016.
- Mine operating earnings of $1.1 million compared to $3.1 million during Q2 of 2016.
- Net loss of $0.3 million ($0.00 basic and diluted per share), compared to net earnings of $1.2 million ($0.01(2) basic and diluted per share) during Q2 of 2016.
- Adjusted net earnings(1) of $0.5 million ($0.00 basic and diluted per share) compared to $2.2 million ($0.01 basic and diluted per share) for Q2 of 2016.
- Adjusted EBITDA(1) of $1.0 million ($0.00 basic and diluted per share) compared to $2.8 million ($0.02 basic and diluted per share) during Q2 of 2016.
- On July 12, the Company reported a measured and indicated mineral resource estimation of 121,700 ounces of gold contained on the heap leach pads at the Mineral Ridge Mine.
- August, the Company announced the initiation of a bankable feasibility study with the objective to support the proposed financing and construction of a mill facility at Mineral Ridge to process the heap leach material and potentially mineralized material mined in the future.
(1)This is a non-IFRS measure; refer to Non-IFRS Measures section of this press release and the Company's Management Discussion & Analysis for Q2 of 2016 for a complete definition and reconciliation to the IFRS results reported in the Company's financial statements for Q2 of 2016.
- 10,401 ounces of gold were produced at the Mineral Ridge mine, compared to 18,597 ounces produced during the six months ended June 30, 2016.
- Revenue of $16.2 million, compared to $21.9 million during the six months ended June 30, 2016.
- Total cash cost per ounce of gold sold(1) of $911, compared to $844 during the six months ended June 30, 2016.
- Mine operating earnings of $3.5 million, compared to $4.9 million during the six months ended June 30, 2016.
- Net loss of $0.2 million ($0.00 basic and diluted per share), compared to net earnings of $2.3 million ($0.01 basic and diluted per share) during the six months ended June 30, 2016.
- Adjusted net earnings(1) of $1.9 million ($0.01 basic and diluted per share), compared to $3.3 million ($0.02 basic and diluted per share) during the six months ended June 30, 2016.
- Adjusted EBITDA(1) of $3.0 million ($0.02 basic and diluted per share), compared to $4.4 million ($0.02 basic and diluted per share) million during the six months ended June 30, 2016.
(2) Please see Equity section of the MD&A.
In 2014, the Company reported an updated Life of Mine Plan ("LOM Plan") for the Mineral Ridge Operation that included the Drinkwater, Mary, Mary LC, and the five satellite deposits, Brodie, Bluelite, Solberry, Wedge and Oromonte (see July 21, 2014
news release and Mineral Reserve & Resource Estimates
). The Company's more recently updated mine plan includes the Mary LC, Bluelite, Solberry, Missouri and the Brodie phase B pits. To date, the Drinkwater, Bluelite, Solberry and Wedge pit resources have been depleted. Scheduled mining continues in the Mary LC, Missouri, Brodie SE and Brodie Phase "B" pits.
Permitted mining at Mineral Ridge remains scheduled to end in mid-2017. The Company is seeking approval from the Nevada Bureau of Land Management for its Environmental Assessment application to open pit mine the Custer and Oromonte deposits, which could extend the mining schedule.
Diamond drilling in 2016 will further evaluate the economics of the NW Drinkwater Highwall and Bunkhouse Hill areas, which if successful could also extend the mining schedule. In addition, an increase in the price of gold is allowing the Company to re-evaluate outlined mineralization sources within its permitted mining boundary that were previously deemed uneconomic.
(PDF 2.9 Mb)
Operations Area Map
(PDF 4.2 Mb)
Operations Area Map with Drill Hole Locations
(PDF 2.6 Mb)
Mary - Mary LC Deposit
The historic Mary deposit is located immediately southeast of the Drinkwater pit. Scorpio Gold commenced production at Mary in 2012. Exploration drilling in 2011 indicated that the gold mineralization extended further southeast from Mary to the adjacent Mary LC zone, encompassing a strike length of 780 meters. Subsequent work determined that the Drinkwater, Mary and Mary LC zones were not isolated deposits but represented one continuous zone of mineralization.
Drilling in 2012-2013 led to the completion of a mineral reserve and resource estimate for the Mary - Mary LC and incorporation of the expanded pit design into the updated LOM Plan. Infill and step-out drilling on the Mary LC post the March 31, 2014 cut-off date of the LOM Plan focused on increasing the total mineral resources, upgrading resource categories, lowering the strip ratio. Commercial production the Mary LC pit was achieved in 2015.
Mary LC Drill Plan
(PDF 2.2 Mb)
Bunkhouse Hill Target Area
The Bunkhouse Hill area extends northeast of the Mary LC pit. Drilling in 2015 intersected significant mineralization extending 250 meters northeast of the Mary LC pit at vertical depths of 50 to 150 meters. Fifteen RC holes were drilled in 2016 to further test and delineate the economics for extending the Mary LC pit into this area.
Geologically, the Bunkhouse Hill target is the immediate down-dip extension of the mineralization present in the Mary LC pit. The mineralization at Bunkhouse dips at 39° NE vs. the more typical 25-30° NE dip of the Mary LC mineralization. This dip change is spatially related to a change in geology, whereby the mineralized zone transitions from being hosted in felsic intrusive rocks to sedimentary rocks of the Wyman formation. Mapping work has shown how important this rheological contrast is in the formation of ore zones. The Bunkhouse target is currently defined over a ~150 x 450 meter area and mineralization remains open down dip to the northeast. Additional drilling is slated for 2017.
Bunkhouse Hill Drill Cross Sections
The satellite Brodie, Bluelite, Solberry, Wedge and Oromonte deposits are situated west and southwest of the Drinkwater pit and lie in close proximity to the leach pad. These deposits are part of a semi-continuous trend of mineralization within a shallow-dipping stratigraphic horizon. They lie on the western flank of an anticlinal fold structure and are considered to be related to mineralization within the Drinkwater-Mary-Mary LC trend, which lies on the eastern flank.
Drilling on the satellite deposits post the LOM Plan cut-off date included infill, development and exploration drilling to expand and upgrade the mineral reserve and resource base and potentially extend life of mine.
Brodie, Bluelite & Missouri Deposits
The Brodie and Bluelite deposits are located 975 meters (3,200 feet) and 1,100 meters (3,600 feet) southwest, respectively, of the Drinkwater pit. The 500 meter (1,640 feet) mineralized corridor that lies between the Bluelite and Brodie deposits is known as the NW Brodie trend. Commercial production in both the Brodie and Bluelite pits was achieved in 2015. The Bluelite pit resources have since been depleted.
The Missouri is a shallowly northeast dipping deposit located west and northwest of the Brodie deposit. It outcrops at surface and has some historical underground workings. The mineralization has been outlined by drilling over a ~200 meter strike length and ~100 meters down dip with true widths ranging from 1.5 to 7.62 meters. Scorpio Gold commenced open pit mining of the Missouri deposit in Q2 2016.
Brodie Drill Plan
(PDF 1.9 Mb)
Bluelite Drill Plan
(PDF 1.0 Mb)
NW Brodie Trend & Missouri Deposit Drill Plan
(PDF 2.0 Mb)
The Solberry deposit lies west of the Drinkwater pit and 600 meters (1,970 feet) northwest of the leach pad. Drilling in 2014-15 successfully upgraded the resource base at Solberry and commercial production was achieved in 2015. The Solberry pit resources have since been depleted.
Solberry Drill Plan
(PDF 1.5 Mb)
The Wedge deposit is located 225 meters (740 feet) southwest of the Drinkwater pit and immediately adjacent to the leach pad. Positive results from the 2014-15 expansion drilling program successfully upgraded the resource base at Wedge and commercial production was achieved in 2015. The Wedge pit resources have since been depleted.
Wedge Drill Plan
(PDF 1.5 Mb)
The Oromonte target occurs over a 300 x 500 meter area situated between the Solberry and Wedge deposits. A small mineral resource estimate for the deposit based on 53 RC drill holes was reported in the 2014 LOM Plan. Follow-up drilling in 2014-2016 intersected significant mineralization at vertical depths ranging from near surface to 150 meters depth across the target area.
The mineralization at Oromonte is interpreted to be a continuation of the mineralized horizon(s) between the Solberry and Wedge deposits that have been offset by normal faulting. The occurrence of a higher-grade zone of mineralization at depth is thought to be related to a rheological contrast between the basement granite and a later intrusion of alaskite (leucogranite). The difference in deformational behaviour of the two rock types under stress may have caused greater structural damage and fluid flow within the mineralizing structures in this area, resulting in a higher-grade zone of mineralization. The Oromonte deposit was subsequently down-dropped by late-stage normal faulting. A generalized geological model of the mineralization is presented in the Oromonte Cross Section.
Although not accessible by open pit mining, the deeper mineralization at Oromonte may be amenable to underground extraction should further results support underground development. Historical underground workings occur in the Wedge deposit area approximately 180 meters to the east.
Oromonte Drill Plan
(PDF 2.2 Mb)
Oromonte Cross Section
(PDF 350 Kb)
Discovered in 2015, the Custer deposit lies along trend of and ~500 meters southeast of the Mary LC deposit. Structurally, Custer is very similar to the Drinkwater deposit, having far less of the post-mineral faulting and folding that was predominant in the Mary and Mary LC deposits. As a result, the mineralization at Custer is quite continuous and predictable. Definition drilling in 2016 followed up on a highly successful first-pass drilling program in 2015. A total of 81 holes have now outlined the Custer mineralized zone over a 150 x 200 meter area at depth (see May 3, 2016
news release). The Custer deposit is in the permitting process for future consideration of open-pit mining.
Operations Area Map with Drill Hole Locations
(PDF 2.6 Mb)
The Defiance target lies along trend of and ~200 meters southeast of the Custer deposit. Extensive road construction at the beginning of the year allowed for crossing the sizeable canyon that lies between the two areas and drilling on the Defiance target for the first time in 2016. Thirty-six holes were drilled on roughly 50 meter centers, defining the initial footprint of the Defiance mineralization over a ~200 x 300 meter area (see May 10, 2016
news release). Compared to Custer, the mineralization encountered thus far lies at greater depths and over narrower widths due to geological differences between the two deposits. Surface mapping is ongoing to enhance understanding of the geology in the Defiance target area.
The Paris target is a previously undrilled area located NNW of the Solberry deposit. It was targeted as one of several possible northwest strike extensions of the Drinkwater mineralization based on rock chip sampling and limited historic underground workings. Significant faulting to the northwest of Drinkwater has offset and obscured the Drinkwater trend. First-pass drilling in 2016 intersected mineralization in 19 of 24 RC holes collared over a 150 x 450 meter area (see May 24, 2016
news release). Based on a review of the geology and assay results, Paris is not considered a continuation of the Drinkwater trend. No further drilling is currently planned in the Paris target area.
State Bank Target
State Bank is a large target area located west-southwest of the Bluelite deposit. Targeting of the area was based on a combination of soil geochemistry, rock chip sampling, geophysical interpretation and aster imagery. Detailed geological and structural mapping determined that elevated gold grades correlate with fold axes, a feature common to several of the gold deposits at Mineral Ridge.
In total, 78 reverse circulation and two diamond core holes tested parts of the target area in 2014-2015. Approximately 42% of the holes intersected mineralization of interest; however, the majority of holes returned sub-gram gold assays. High-grade mineralization was intersected in two holes (MR151899-900) in the southwest corner of the target area (see December 21, 2015
Bluelite North Target
The Bluelite North target lies 300-500 meters northwest of the Bluelite deposit and 100-300 meters west of the Solberry deposit. Scorpio Gold's initial phase of widely-spaced exploration drilling in the area intersected significant mineralization in 50% of the holes drilled with several holes reporting mineralization at shallow depths (see July 7, 2015
The Chieftan target is located 500 meters west-northwest of the Drinkwater pit. First pass drilling returned significant results in 10 of 12 holes drilled (see August 24, 2015
Drinkwater Highwall Target
The Drinkwater Highwall target area is located at the northwest end of the Drinkwater pit. Scorpio Gold's previous drilling had reported significant mineralization left behind in the wall of the pit. A review and modelling of the data from all drilling campaigns and further definition of existing underground mining voids has determined that the mineralization remaining in the Drinkwater Highwall is not economic at current gold prices.
The Physik target is situated approximately 300 meters southwest of the producing Mary LC pit. The area was targeted based a combination of remote sensing, geophysics and structural interpretation. Initial drill testing over a 200 meter strike length intersected significant mineralization in 7 of 9 holes, with drill hole MR141107 returning 31.79 g/t gold over 4.57 meters within 15 meters of surface (see November 3, 2014
news release. Follow-up drilling in 2015 tested within the vicinity of MR141107 but did intersect similar high-grade mineralization.
Geology & Mineralization
The Mineral Ridge gold deposits are located on the northeast flank of the Silver Peak Mountain Range. This range lies in the southern reaches of the Great Basin, within the Walker Lane structural corridor. Walker Lane is a 100-km-wide region of right lateral, wrench-faulting which separates the Sierra Nevada batholith to the west and southwest and the Great Basin to the east and northeast.
Mineral Ridge is an anticlinal dome found on the eastern flank of the Silver Peak Range. It has been interpreted as an uplifted metamorphic core complex where unmetamorphosed and unfolded Cambrian strata are in detachment-fault contact with underlying deformed granitoids and Precambrian metamorphic rocks of the core complex. Auriferous quartz lenses of the central gold-quartz district are concordant with foliation in the metasedimentary host rocks of the Precambrian Wyman Formation. Transitional contacts were observed between quartz and alaskite (commonly pegmatitic), and between alaskite and peraluminous two-mica granite, strongly suggesting that the alaskite, quartz, and ore metals were derived hydrothermally from residual granite melt and aqueous fluids.
The property is located on a typical "Nevada Structural System" which is known to control gold mineralization.
To date, seven well-defined gold bearing structures have been documented on the property as follows:
- The North-Northeast Eagles Nest Fault
- The North-Northeast Coyote Fault
- The Northwest BW Normal Fault
- The North-Northwest Gillian Fault
- The Northeast Mary/Drinkwater Cross Fault
- The North-Northwest Mary/Drinkwater Cross Fault
- The North-Northwest Black Warrior Intersection Fault
The known mineralized zones occur over an area of approximately 4,300 m (14,000 ft) north-south and 4,600 m (15,000 ft) east-west. Individual zones can be as much as 43 m (140 ft) thick, usually consisting of a higher-grade 1.5 to 9.0 m wide halo surrounded by a lower-grade mineralized envelope. Two or more high-grade zones are commonly observed stacked on one another. Gold deposition is structurally controlled, and some of the highest grade material is found in mineralization shoots that are at an oblique angle to the direction of movement of the upper plate slab.
Gold is present as native gold and electrum, and generally occurs as rounded, angular, irregularly shaped and elongated inclusions and intergrowths in quartz, frequently associated with micaceous minerals or carbonates occupying interspatial spaces or fracture filling. Gold is also frequently associated with goethite, sometimes with relict pyrite, and on occasions intergrown with sphalerite, galena, anglesite/cerrusite and pyrite.
Mineral Resource Estimate
On July 12, 2017 the Company reported the Mineral Ridge leach pad resource estimate by Mine Technical Services ("MTS") of Reno, Nevada. The confirmed resource estimate of 7.1 MT at an average grade of 0.017 oz./ton or 121,700 contained ounces of gold in the Measured & Indicated category provided the basis for conducting a feasibility study for milling of the material and additionally confirmed reconciliation of tonnage, grade and contained ounces placed by the Company and its predecessors since operations commenced. Details of the resource estimate are available in the MTS Resource Report
On August 14, 2017 the Company announced its decision to proceed with a NI 43-101 compliant Bankable Feasibility Study ("BFS") and has selected MTS, Novus Engineering and NewFields to complete the study. The BFS will provide the mill facility design and related economics for processing the leach pad material. The estimated completion of the BFS is by mid September 2017.
Mineral Ridge Leach Pad Mineral Resource Statement - June 29, 2017
|Measured & Indicated
- The effective date of the mineral resource estimates is Jun 29, 2017.
- Mineral resources are reported at or above a 0.0002 oz/ton Au cut-off grade.
- Mineral resources are contained within the Mineral Ridge leach pad facility with the following assumptions: A long-term gold price of US$1,216/oz; assumed process costs are US$11.0/ton; metallurgical recovery for gold is 93%.
- Rounding may result in apparent differences between when summing tons, grade and contained metal content.
- Tonnage and grade measurements are in imperial units; grades are reported in oz/ton.
- The resource estimate was prepared with reference to CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) and CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (2003).
- The resource estimate was prepared by qualified persons, Todd Wakefield, MSc, SME, Ian Crundwell, BSc, PGeo and Mike Drozd, PhD, SME of Mine Technical Services Ltd.
- Mineral resources that are not mineral reserves do not have demonstrated economic viability.