Placing the Nevada-based Atlanta Gold Mine Back Into Production.
Meadow Bay’s principal asset is the recently acquired Atlanta Gold Mine in Nevada, a former producer of 113,000 oz of gold and 800,000 oz of silver over 10 years (1975 – 1985). The company is focused on placing this property back into production.
- Company sees ability to place property back into production near term at low capital cost ($3 million).
- Valuable equipment and infrastructure still in place at the property.
- Mine development plan includes substantial pit expansion and refurbishment of mining equipment.
- A total of 141,038 feet (43,000m) of drilling has been completed at the Atlanta project between 1975 and 2001.
- Resource estimate completed by Kinross Gold in 1998 after a review of earlier data and their drilling program.
- Recently oversubscribed private placement for gross proceeds of US$11.3 million to execute program.
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Atlanta Gold Mine
The Atlanta Gold Mine has a long history. The Atlanta mineralization was probably discovered in the 1860’s, but the first significant work done was a 400 foot exploration shaft dug in 1905. There was no recorded production. In 1954 22,000 tons of ore were mined from shallow pits and shipped to the McGill smelter.
In the 1960’s another 27,000 tons were milled by A & B Gold Silver Mines. Bobcat Properties acquired the property in 1970 and formed a joint venture with Standard Slag. The mill was upgraded and over a 10 year period (1975 – 1985) they produced approximately 1.5 million tons of ore grading 0.09 oz Au and 1.25 oz Ag per ton. Total production was 113,000 ounces of gold and 800,000 ounces of silver, based on records through 1985.
The property was optioned by Goldfields in 1990 to 1991. They carried out mapping, sampling, geophysics and a 56,735 foot (17,297m) drilling program. In 1997-98 Kinross Gold explored the property. They compiled all the previous data and drilled a total of 54,285 feet (16,550m). In 2001 Cordex Exploration drilled 2735 feet (1136m) during an option period.
A total of 141,038 feet (43,000m) of drilling has been completed at the Atlanta project between 1975 and 2001. The bulk of this was done by Goldfields in 1990 – 92 and by Kinross Gold in 1997-98. Of this total, over 90% was reverse circulation drilling. Less than 10% was core drilling – 9286 feet (2831m) – done by Goldfields.
Resource Definition – Current Status
There are no NI 43-101 compliant gold-silver resources or reserves at the Atlanta Project. Several resource estimates have been reported by previous property owners but are not 43-101 compliant, in part because the statute did not exist at the time the reserve calculations were completed. Most of the previous resource estimates were based on limited geologic data and the quality of sampling, assaying, and engineering methods are not fully known. The most recent of these was done by Kinross Gold in 1998 after a review of earlier data and their drilling program. Their estimate was as follows:
Readers are cautioned that the historical estimates are not NI 43-101 compliant and should not be relied upon. A Qualified Person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. Consequently, their reliability and relevance should be regarded as suspect. The issuer is not treating the historical estimate as current mineral resources or mineral reserves as defined by NI 43-101.
Authors of the recently completed 43-101 Tech Report consider that the data provided by Meadow Bay provides an accurate representation of work completed on the Atlanta project. The geology and controls of mineralization in the immediate area of the early open pit are reasonably well known as a result of mapping and drilling. The limits of mineralization are reasonably well defined in the immediate pit area, but remain ill-defined along strike to the north and south along strike on the Atlanta fault and along the east-west cross fault. Mineralization intersected in the hanging wall volcanic rocks is also not well defined.
Although it is not NI 43-101 compliant and needs additional work to become so, the resource calculated by Kinross Gold in 1998 appears to provide a good representation of what may have been defined by existing drilling. It also seems likely that, given the current metal prices relative to 1998, additional work might be reasonably expected to increase that resource.
Plan to Put Mine Back Into Production
The Company intends to reinstate production at the Atlanta Mine. The mine development plan will include substantial pit expansion and capital expenditures to refurbish the mining equipment and near term production potential. Parameters are given on the Meadow Bay website. As a feasibility study has not been completed there is no certainty the proposed operation will be economically viable.
All equipment is in place including crusher, ball mills, solution tanks, maps, drill chip trays, core, power all on and operable, water operating and there is a spare parts inventory. The water well was not visited. A qualified operator will be required to assess the value of the components and the refurbishing or replacement costs. Past operators are scheduled to visit the site for cost estimates and start-up. Discussion between the company and Todd Process, permit specialist at the Nevada Department of Environmental Protection puts the likely start-up of a similar size operation to be early-mid 2012 and less likely in 2011. Additional details regarding current status is give on the company’s website, www.meadowbaygold.com/html/atlanta_gold.html.
Potential mine parameters are also given on the company’s website (www.meadowbaygold.com/html/desert_hawk_gold_-_atlanta_gol1.html), and are reproduced below.
In addition to the excellent near-term development aspect of the project, the Company considers the Atlanta Mine to offer excellent exploration and development upside by drilling extensions to the known mineralization and larger scale production than previous mining through both pit-extension and possibly underground mining.
The recently completed $11.3 (oversubscribed) private placement provides clear evidence that the market view this project as having merit. This former mine was in production at a time when gold prices were much lower. The company anticipates placing this property back into production at very low capital costs, while anticipating high returns at 20,000 gold ounces per year production rate.