Mr. Richard Goodwin reports
FIRE RIVER GOLD CORP. UPDATE ON THE PROGRESS OF THE NIXON FORK GOLD MINE
Fire River Gold Corp. and Mystery Creek Resources Inc. are providing this update on the progress of the mining and
milling activities at the Nixon Fork mine.
The company has been developing the Nixon Fork mine since June, 2011.
Mill processing started ramping up on July 4, 2011, using gravity and
flotation circuits to produce the two products: dore and gold-rich
copper concentrate. In addition, mechanical completion of the
carbon-in-leach circuit was accomplished on March 20, 2012. The
CIL circuit was designed with a capacity of 250 tonnes per day, which
is 100 tonnes per day higher than the gravity/flotation mill. The
purpose of the CIL circuit is to increase gold recovery from continuing mined ore and to recover residual gold from the existing gold-rich
historic tailings, which run between seven and eight grams per tonne of gold.
Accomplishments
The operation has achieved several milestones over the past few months,
including:
-
Mill start-up with gravity and flotation processes began July 4, 2011; a
total of 34,400 tonnes of ore has been processed to date;
-
Started commissioning the CIL circuit in the mill;
-
Converted tailings disposal from wet tailings impoundment to dry stack
placement;
-
Successfully implemented long-hole open stoping in the mine in two
locations (208 to 220 metres above sea level and 240 to 270 metres above sea level of the 3300 zone);
-
Developed access to six new mining zones;
-
Re-established all operating permits and updated the bonding;
-
Established a broken ore inventory of approximately 14,000 tonnes at an
estimated grade of 22 grams of gold per tonne (as of May 9, 2012).
Production
The ramp-up to full production targets continues, albeit at a slower
pace than the company originally had anticipated. From July 4, 2011, to the end
of March, 2012, the mine produced 25,875 tonnes of ore grading
approximately 15.5 grams of gold per tonne, so a total of 12,875 ounces
of gold were mined. From this feed, 175 tonnes of copper concentrate
have been sold to Glencore Ltd. containing 5,994 ounces of gold. The
dore production over the same period totalled 1,180 ounces of gold.
Processing
The mill started up on July 4, 2011, using gravitational separation and
flotation as its two recovery methods. The construction of the CIL
circuit was completed in March, 2012, adding leaching as a third gold
recovery process, which will allow the company to produce dore on site. The
construction project's longer timeline became necessary due to several
reasons: retrofits to the existing plant were required in order to
incorporate the new process, and several modifications to the original
CIL design were necessary for process optimization. The addition of the
CIL circuit should not only increase overall gold recovery for mined
ore but also provide us a process by which the company may recover residual
gold from the high-grade historic tailings pond, which runs between seven and eight grams per tonne of gold. Going forward, approximately 20 per cent of the
gold production will be in the form of dore, and 80 per cent will be added to
the copper concentrate.
From start-up until mid-January, 2012, the mill ran at an average process
rate of 130 metric tonnes per day (mtpd), depositing the final tailings
into a dammed subaqueous tailings pond. The tailings disposal system
was changed in January, 2012, from wet tailings impoundment in a lined
dam to placement of filtered tailings on a dry stack. The addition of
leaching as the third recovery process in April, 2012, also imposed a
conversion of the mill to a zero-discharge facility. These process
changes resulted in numerous commissioning issues and downtime from
various sources, including the mechanical reliability of the final
tailings filter, maintaining clear water overflow from the tailings
thickener and upgrading key transfer pumps resulting in an average
process rate of 92 mtpd so far in 2012. Each issue is being dealt with
so that the company may achieve steady incremental improvement at the mill,
increasing operating times and throughput. It is projected that the
mill will achieve its full target of 150 mtpd over the next four weeks.
Mining operations
The mine was muck bound for much of the first quarter due to the
commissioning delays in the mill. This allowed the mine operators to
focus on developing six new mining zones for future extraction and to
create a large inventory of broken and drilled-off ore stored in the
long-hole stopes. At present, the broken inventory is estimated to be
14,000 tonnes of ore grading 22 grams of gold per tonne. One of the
most recent stopes, near the 160 mASL level of the 3300 zone, has just
returned a muck pile sample grade of 81 grams of gold per tonne.
Long-hole open stoping has been successfully employed in two stopes
located in the 3300 zone, one between 208 mASL and 220 mASL, and one
between 240 mASL and 270 mASL. This mining method will continue to be
used to provide most of the mill feed, with supplemental feed coming
from selectively mined cut and fill stopes.
The mine has been very successful at mining outside of the known
resources. To date approximately half of the mill feed and half of the
current broken inventory were extracted from sources not identified in
the current resources. As experience was gained over the past six
months, mine management changed its approach to ore definition and
thereby improved the selectivity of mining methods used. In general
terms, diamond drilling is effective at identifying mineralized zones
and the contact location, but it is not useful for defining stopes
prior to mine design. After diamond drilling, which defines the zone
location, an ore drift is developed through the zone, and a smaller
bazooka-type drill is used to drill 15- to 25-metre holes that help to
define the higher-grade pods of mineralization. The company owns and
operates both the bazooka and Hagby drills.
Financing
On April 4, 2012, the outstanding $7.5-million Sprott Resource Lending
Partnership loan was paid in full using the proceeds from a loan of
$12.75-million (U.S.) provided by Waterton Global Value LP. The
purpose of the Waterton loan was to provide the property with
additional working capital and to defer the first loan repayments while
the property overcomes its start-up issues.
Outlook
Commissioning the mill and ramping up the operation to full production
expectations are in progress. The 2012 production target is 29,000 ounces of
gold mined, with targets of 40,000 ounces in 2013 and 50,000 ounces in
2014. It is anticipated that a declaration of full commercial
production, defined by 30 days of consecutive operations at 100 metric
tonnes per day of throughput (two-thirds of the company's budgeted throughput) with
over 90-per-cent gold recovery, is projected to be made within the next three
months.
Despite the few delays, the company's operating costs have conformed fairly
closely to its 2012 budget of $29.6-million for the calendar year.
Accordingly, meeting the company's production target should result in a near-term
operating cost of approximately $950 per ounce, and a projected
improvement to $750 per ounce in 2013 and $600 per ounce in 2014. The company's ability to discover additional resources outside of its current
estimate supports its assertion that once the project has realized its
full economic potential, it will be possible to sustain operations well
beyond the limits of the current mineral inventory.
Fire River Gold would like to thank its shareholders for their
continued support through the project development period.
We seek Safe Harbor.
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