San Gold’s Success At Bissett

Tucked away at Bissett near the eastern border of Manitoba is a very successful mining operation owned by San Gold Corporation. Perhaps it is third time lucky for the Rice Lake mine, known formerly as the Bissett and San Antonio. Revived in 2006, the project has put San Gold on the road to success. Add to that the exceedingly high-grade Hinge zone, and the company is looking forward to a profitable future.

CEO Dale Ginn told CMJ that San Gold is “on the cusp” of making money. By the third quarter he expects the company will be solidly profitable as the Hinge mine reaches commercial production. He said that San Gold is on target to produce 50,000 oz in 2009 and to double that to 100,000 oz next year and reach 250,000 oz by 2012.

This success was made possible when San Gold geologists revised their geological model two years ago, and that change led not only to the Hinge discovery but to several others. The old model relied heavily on rock types for the prediction of gold occurrences. The new model incorporates structural geology, and geologists have identified pathways along northeast-southwest trending fold axes that crosscut the Rice Lake mining unit. These pathways occur in steps, and it was drilling along the first step to the east of the Rice Lake mine that discovered the high-grade Hinge mineralization.

Drilling at the next step to the east intersected the high-grade Cohiba zone between the Hinge and San Gold No. 1 mines. Core from this zone has assayed as high as 25.4 g/t over 2.1 metres, and the mineralization is identical to that in the Hinge deposit. Drills are also turning at two more steps along the model.

Core from the Hinge zone returned spectacular grades including 207.1 g/t Au over 2.3 metres. During test mining, close to 6,000 oz of gold was recovered from the 10,700-tonne bulk sample. The numbers represent stoping grades of 12.7 g/t and development grades of 16.9 g/t. In the main Hinge lens No. 1, the grade was even better -26.3 g/t Au. The total direct bulk sample operating cost was on US$158 per ounce.

The Rice Lake project

The Rice Lake mine is a shrinkage operation, developed to a total depth of 1,612 metres. The A shaft is 1,280 metres deep, and a 1,525-metre railed haulage crosscut connects it to the 365-metre-deep D shaft. Below the D shaft is a spiral ramp that goes down to 32 level. Ore from the lowest portions of the mine is mucked with load-haul-dumpers and hoisted up the D shaft and transported by rail to the A shaft where it joins ore from the 26 to 30 levels and is hoisted to the surface.

The Hinge mine, which lies about 1,300 metres east of the Rice Lake mill, has been developed using a decline for a mechanical cut and fill method. The first cut will be filled with a cement plug to eliminate dilution as subsequent cuts come up underneath it. In that way, ore recovery will be 100%.

“We chose the method to take advantage of the high grades,” said Ginn. “We will leave nothing behind in benches or other places.”

The Hinge mining rate will be about 300 tonnes/day, although it may change because flexibility is built into the mine plan.

Next on the development timetable is the Cartwright zone 1,000 metres west of the mill. The Hinge decline was collared in a location that will facilitate mining both zones. A ramp is already being advanced to the west and is expected to reach the Cartwright mineralization in 2010. The ramp will pass above the old Rice Lake mine workings in the vicinity of the former Gabrielle gold mine.

Located 3kmeastofthemill, theSan Gold No. 1 mine (SG#1) is developed for shrinkage and longhole mining. Mining ceased in late 2008. The mine will be reactivated in the future, but its suspension freed up crews and equipment to concentrate on the high-grade Hinge zone.

The company also has resource numbers for the SG#2 and SG#3 deposits, east of the SG#1 mine.

With so many potential producers on its claims, where does San Gold not find gold? “In our tailings,” said Ginn, citing a 96% mill recovery from the Hinge bulk test “We have way more targets than drills.”

The company is in the process of finishing up a comprehensive 43-101-compliant resource calculation that will incorporate exploration results in the Rice Lake mine and in the high-grade hanging wall volcanic rocks, including the Hinge and Cohiba zones. The previous resource estimate was completed in December 2006. It included approximately 1.2 million oz of gold contained in all categories at a grade of roughly 8.0 to 8.9 g/t Au.

The Rice Lake mill

The Rice Lake mill has the capacity to treat 1,135 tonnes/day, although that could be boosted to 1,635 t/d with the addition of more crushing capacity in 2011. A jaw and short head cone crusher operate in closed circuit to reduce run-of-mine ore to 16 mm ahead of the fine ore bin. The bin feeds a ball mill that operates in closed circuit with hydrocyclones to produce a product size that is 80% passing 150 microns.

Part of the cycloned slurry is piped to two gravity concentrators (one Falcon and one Knelson), and the gravity concentrate is passed over a shaking table. Table concentrate, containing about 50% of the recoverable gold, goes directly to the smelting furnace. Gravity rejects are returned to the grinding circuit.

The rest of the cycloned slurry reports to a flotation circuit composed of primary conditioners and a bank of rougher cells. Rougher concentrate is reground, dewatered and pumped to the leach circuit. Rougher tails are reconditioned and pumped to a bank of scavenger cells. Scavenger concentrate returns to the primary grinding circuit.

Cyanide is added to the flotation concentrate in two mechanically agitated tanks, and then the pulp flows into a six-stage carbon-in-leach (CIL) circuit followed by an Inco cyanide destruction system. Gold is pressure stripped and the pregnant solution overflows to an electrowinning (EW) cell. The EW sludge and gravity concentrate are smelted in an electric induction furnace to produce dor bars.

Tailings from the flotation circuit and CIL circuit are combined and pumped 2.5 km to the tailings management area north of the mill.

What lies ahead

San Gold has a promising future ahead of it. Over an 8.0-km stretch from west to each, San Gold is testing the Cartwright deposit, mining the Rice Lake deposit, delineating high grade zones deep in the mine, test mining the Hinge zone, examining the Cohiba zone, has the SG#1 mine on care-and-maintenance, and is drilling the SG#2 and SG#3 deposits.

San Gold has accomplished all that in just five years. The next five should be equally as productive.