Nixon Fork
UPDATED 01/2007. Once shuttered as a result of bankruptcy, the Nixon Fork is a small underground gold mine located approximately 35 miles northeast of McGrath, Alaska. Access is by air from Fairbanks, McGrath or Anchorage; the current airstrip is large enough to accommodate C-130 and DC-6 aircraft. St. Andrew Goldfields, Ltd., a Canadian mining company headquartered in Oakville Ontario, currently leases the property from Mespelt & Almasy Mining, LLC. In 2005, the company, through its wholly-owned subsidiary Mystery Creek Resources, Inc. (MCRI) decided to seek re-authorization of existing state and federal permits and, with minor changes to the original mine operating plan, re-open the mine.
With construction underway in mid-summer of 2006, MCRI sought a target date of late fall for the mine to begin producing gold, but as of January, 2007, construction was still ongoing, although the mill was commissioned (operating, but not at production levels). Current mine life is estimated to be four years, with an annual production rate of 45,000 ounces of gold per year. This small scale mine anticipates hiring 50 to 58 workers. Although MCRI states it has a local hire preference, it has noted in the media the absence of skilled underground mine workers in the McGrath area, and more generally, the shortage in Alaska.
Property History
Lode mining occurred on the Nixon Fork claims intermittently from 1918 through 1964. In 1994, Nevada Goldfields, Inc., a wholly-owned subsidiary of Consolidated Nevada Goldfields Corporation (CNGC), developed the current mine consisting of underground workings, conventional gravity separation and flotation circuits, and a lined tailings facility. Nixon Fork operated from 1995 until June 25, 1999, when Real Del Monte Mining Corporation, the successor to CNGC, filed for bankruptcy. The property and all of its surface facilities and equipment returned to the original owners, Ted Almasy and Margaret Mespelt. Since then, the mine has been mothballed, until, with elevated gold prices, St. Andrew Goldfields made the determination that the project was economically feasible.
Property Description
The Nixon Fork property consists of 95 unpatented federal claims, 15 federal placer claims and 48 state mining claims. Thirty-three of the federal claims are located on land selected by Doyon Ltd. through the Alaska Native Claims Settlement Act. Forty-four of the state claims are "at-risk" claims that overlay the federal claims on BLM land. These will become active only if the federal claims are abandoned and the State of Alaska is conveyed title to the underlying land.
Operating Agreements
On February 4, 2003, Mystery Creek Resources, Inc., a wholly-owned subsidiary of St Andrew Goldfields, Inc. entered into a 10-year renewable lease with Mespelt & Almasy, Inc. There is an advance minimum royalty of $36,000 per year, with the following work commitments: Year 1, $300,000; Year 2, $700,000; Year 3, $1,000,000. Royalties on precious and platinum group metals are subject to the following sliding royalty scale based on the price of gold:
< $300/oz = 2% Net Smelter Royalty (NSR),
$300 - $350/oz = 3% NSR,
$350 - $450/oz = 4% NSR,
> $450/oz = 5% NSR.
Base metals are subject to a flat 4% NSR.
Type of Deposit and Resource
The Nixon Fork deposit consists of at least five identified mineralized zones: the Crystal Garnet, Mystery, J5A, High Grade/Rec and the Southern Cross. Mineralization is vein and skarn type - resulting from the intrusion of quartz monzonite stocks into surrounding Paleozoic sedimentary rocks. Disseminated and vein-hosted gold and copper occur within the stocks as well. Primary sulfides in the deposit include chalcopyrite (copper-iron sulfide), pyrrhotite (iron sulfide), arsenopyrite (iron-arsenic sulfide), minor sphalerite (zinc-iron sulfide) and molybdenite (molybdenum sulfide). Native gold, bismuth, silver and copper oxides are also present.
Current resource estimates are 150,000 to 250,000 ounces of gold. MCRI plans to process approximately 150 tons/day of ore, resulting in 10 to 15 tons/day of a copper-gold-silver concentrate. The company does not report the copper concentrate in its communications since it considers this to be primarily a gold operation - with copper concentrate production a minor economic by-product. The copper concentrate will be flown off-site for processing. MCRI also proposes to reprocess existing tailings to recover a silver-gold doré, estimating that the tailings run to approximately 0.25 ounces/ton of gold, with about 30,000 recoverable ounces. Tailings reprocessing is scheduled to begin in the summer of 2007.
Past Production
Nevada Goldfields processed both oxide and sulfide gold ore. Mining occurred mainly in the Crystal Garnet and Mystery zones, with very minor mining in the Southern Cross and J5A areas. Gold recovery averaged about 83.5% for the oxide ores and 90% recovery for the sulfide ores. Total gold production was 165,150 ounces; the Crystal Garnet produced 128,740 tons grading at 1.27 ounces/ton Au, and the Mystery produced 5,963 tons at 0.28 ounces/ton. Waste rock mined was 134,902 tons of which approximately 35% was backfilled underground. The rest was hauled to the surface and stored.
Proposed Mine Operation
Nixon Fork will be mined using cut and fill techniques. Waste rock, but not tailings, will be used to backfill workings. The existing mill was expanded from its previous capacity of 135 tons/day to 240 tons/day. A carbon-in-leach circuit is being added during the winter of 2007; gravity and flotation circuits are already in place from previous operations. Tailings from the previous operation, which are stored in a conventional tailings impoundment, will be reprocessed to recover residual gold. This will involve slurrying the tailings, pumping them to the mill, dewatering them and adding sodium cyanide. After leaching for 12 hours, the cyanide will be "killed" and the gold and silver in solution recovered through electrowinning and doré production.
Waste rock not returned underground will be stored in existing dumps located southwest of the Crystal decline portal. Reprocessed tailings and new tailings will be filtered, pressed and dry stacked in the 13.5 acre Filtered Tailings Disposal Site (FTDS), located on the old air strip. When the existing tailings impoundment is emptied of old tailings, filtering and the dry stacking of tailings will cease, with new tailings from that point forward stored in the existing tailings impoundment. This is a 10.2 acre impoundment which is artificially lined, with a dam 984 feet above sea level. Impoundment capacity may be expanded by raising the dam an additional 24 feet.
The existing power plant was replaced; MCRI is installing three 832-kilowatt generators - two to operate simultaneously to provide the required power, and one for back-up. Annual power generation will require about 1 million gallons of diesel, all of which will be flown into the site.
Present capital costs for this new phase of the mine are estimated to be $10 million U.S.; with most of the expense going to refurbishing the mill and constructing the new power plant and fuel storage facility.
Current Status of Project
Late in November, 2006 William Burnett, mine manager, announced that the mill had been commissioned, although no gold bars of significant size had yet been produced. New construction and overhaul and replacement of existing mill equipment is ongoing, with a 350 tons-per-day tailings filter press being installed this winter. Underground development work began in August and continues, and a fuel distribution and storage facility with a capacity of 60,000 gallons was completed this past summer. MCRI has not provided any revised estimates for when the mine will move into production.
Local hire is estimated by the company to be at about 50%, but since the mine is in the construction, rather than operating, phase, it is expected that this percentage will decrease as local construction workers are laid off and skilled, underground miners and mill workers are sought for mine operations. There is no word from the company on what measures it has taken to train local workers for underground/mill positions.
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