Tuesday 29th September 2020

Resource Clips

Cariboo Gold Rush Revisited

Spanish Mountain Moves Toward Prefeasibility

By Greg Klein

As BC’s 1858 Fraser Valley Gold Rush waned, some prospectors struck it rich in the Cariboo, sparking an even bigger stampede. Once again, the region is thriving with mining activity, from the humblest diggers to producing mines. “We have active placer operations right close by our Spanish Mountain Project,” says Spanish Mountain President/CEO Brian Groves. “It’s interesting to see evidence of the Cariboo Gold Rush and the placer operation still going today, which speaks to the vitality of the industry, I guess—and the price of gold.”

Ah yes, the price of gold. It’s been good news indeed for explorers like Spanish Mountain. As Groves and his team guide the project, located 70 kilometres north-east of Williams Lake, toward a September 2011 prefeasibility study, their projections grow more optimistic.

“Currently we’ve completed all the drilling in the Main Zone, which is the main deposit area of the Spanish Mountain Gold Project, and we’ve just started drilling one of the peripheral targets approximately three kilometres away. It’s a gold-in-soil geochemical anomaly which had not been previously tested by the owners of the piece of property which we acquired in mid-2010. It’s basically contiguous with our Spanish Mountain Project. We have two drills turning on that target at the present time. We need to outline that before we actually move too aggressively into the prefeasibility phase, but at the current time we know that the Main Zone at Spanish Mountain can support quite a nice operation with quite good net present value and payback and so on.”

Spanish Mountain Moves Toward Prefeasibility

Assays released July 28 show 0.65 grams per tonne gold over 321.6 metres (including 1.03 g/t over 50 metres), 0.5 g/t over 284.5 metres (including 1.35 g/t over 66.5 metres), 0.55 g/t over 214.3 metres (including 16.9 g/t over 1.5 metres) and 0.91 g/t over 123 metres (including 106 g/t over 0.75 metres).

June 2 assays include 0.46 g/t over 204.3 metres (including 1.26 g/t over 20.4 metres), 0.64 g/t over 62.5 metres (including 1.14 g/t over 15 metres), 0.51 g/t over 127 metres (including 1.06 g/t over 9.8 metres) and 0.38 g/t over 210 metres (including 0.53 g/t over 58 metres).

Groves comments on the July 28 results, “I think these are some of the longest intercepts we’ve seen on the property, and there are a lot of market watchers who are becoming very, very bullish on the future gold price. Even at the current level around about $1,600, we see a lot of upside on the overall pit design. Our PEA used a fairly conservative $950 US gold price for the pit design.”

Based on that price, the company’s December 2010 PEA included a resource estimate showing 1.37 million ounces measured and indicated, and 611,100 ounces inferred.

Groves explains, “Even without the drilling that we just completed, we know that if we were to design a $1,100 gold pit, we would have probably somewhere in the range of 2.8 million recoverable ounces. Again, that’s before the infill drilling.”

Gold’s increasing value will cut operating costs, he emphasizes. “We won’t be moving as much waste as we had originally planned. That’s because we now see more mineralized material in those areas, and again we think that with a $1,100 gold-price assumption, which some people think is still fairly conservative, we think the cut-off grade will probably fall to about 0.2 grams per tonne or less.”

Groves adds, “I suspect that when we come to update the resource model some time in the fall, once we have all the assay results from the Main Zone drilling, we’ll have achieved our goal of moving a lot of ounces into the M and I categories, as well as potentially expanding the resource.” He expects to have the full feasibility study complete by the end of 2012.

We know that if we were to design a $1,100 gold pit we would have probably somewhere in the range of 2.8 million recoverable ounces. Again, that’s before the infill drilling —Brian Groves

Local infrastructure includes a road, high-voltage power and proximity to a mill capable of “maybe 40,000 to 50,000 tonnes a day,” Groves says. “Infrastructure is a crucial point because we’ve seen all these big projects blow up on the CAPEX side—Barrick and NovaGold especially.”

Earlier this month, Spanish Mountain entered the pre-application phase with the provincial and federal environmental agencies. “We’ve spent a lot of time dealing with communities and First Nations, so we’re quite advanced in our community relations, and that’s a pretty positive aspect, for any project in BC, especially,” Groves says.

The company plans to go into production itself, but Groves admits, “We’re practical guys, and we realize that if someone does come along and wants to partner with us, it’ll be the board that ultimately decides what happens, and we’ll put it to the shareholders.”

Spanish Mountain owns three early stage projects: Prince George and Manson Creek in northwestern BC and Thunder Ridge in the Cariboo. The company is also exploring a gold-and-copper target in the Cedar Creek area of the Spanish Mountain Project.

“At the moment we have that nice balance between a development story and exploration upside, which I think is something that a lot of people might be looking for,” Groves says.

At press time Spanish Mountain had 164.9 million shares outstanding at $0.60 a share for a market cap of 98.9 million. As of July 2011 the company had $20 million cash on hand.

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