Mining placer riches
Partners recover 4,400 ounces of gold during 35-day run at Chandalar
Last updated 10/4/2015 at Noon
Goldrich NyacAU Placer LLC ramped up late-season production at Chandalar, a northern Alaska project that is shaping up to be one of the largest placer gold operations in North America.
Goldrich Mining Co., which owns 50 percent of the partnership to mine the rich placer deposits at Chandalar, said the startup operation produced 4,400 ounces of alluvial gold over 35 days of production that began in August.
"The beginning of mine production is a significant milestone for the company," Goldrich President and CEO William Schara said.
The nuggets, flakes and dust recovered from Chandalar this year will yield roughly 3,500 oz of refined gold, or about 103 oz per day.
Goldrich hopes the cash generated from mining the rich gold deposits will help carry the company through ongoing rough markets for the mining sector and potentially provide revenue to explore historical lode gold mines and other hardrock targets across the 22,000-acre (8,903 hectares) property.
"This is a culmination of our strategy to generate non-dilutive funds from our placer assets and to advance our properties even in the midst of a market decline," said Schara.
Reaching full capacity
The Chandalar placer mine is being operated by Goldrich NyacAU Placer LLC - a 50-50 joint venture formed by Goldrich and NyacAU LLC in 2012.
Goldrich's contribution to the partnership is nearly 250,000 oz of placer gold in a 10.5 million-cubic-yard alluvial deposit on Little Squaw Creek with an average grade of about 0.0243 oz of gold per yard.
NyacAU is a private mining company owned by Anchorage-based physician and fourth-generation Alaskan Dr. J. Michael James. It brings a quarter of a century of placer mining experience to the partnership and the financial wherewithal to establish a world-class placer mine at Chandalar.
James is known for his systematic approach to mining and reclamation. In 2013, the U.S. Bureau of Land Management awarded to Nyac Mining Co., a venture also owned by James, the "BLM Hardrock Mineral Small Operator Award," in recognition of the high standards it executed at its placer mine in Southwest Alaska. This commitment to doing things right continues at Chandalar, according to the partners.
So far, NyacAU has invested US$23 million in getting the placer operation up and running, funds that are expected to be paid back in the early years of the operation.
This investment has underwritten the staging of the equipment and readying the placer deposit to feed a recovery plant built specifically to get the most out of the short placer mining season at Chandalar.
"Commercial production at Chandalar in 2015 is the culmination of three years of work by GNP (Goldrich NyacAU Placer)," explained Schara. "GNP completed initial construction and a successful test plant in 2012, acquired a significant mining permit for expanded operations in 2013, and relocated and expanded facilities in 2014. All this was accomplished during one of the most difficult periods in the industry over the last 30 years."
This year, crews finished removing the overburden from a large swath of the placer deposit along with other development work needed to begin gold recovery. The partners had hoped to begin operations by July, but construction of ponds and completion of a wash plant took longer than expected.
At full capacity, the recovery plant at Chandalar is expected to process 600 cubic yards of placer material per hour, which will be realized as gravel screens and gold recovery tables are added in stages through 2016.
The Goldrich NyacAU partners calculate that the plant could recover at least 20,000 oz of refined gold during a roughly 100-day mining window at Chandalar each year. At current prices, the projected output would total more than US$22 million worth of gold annually.
According to projections published by Goldrich in March, production costs are expected to average US$623 per oz on 23,100 oz of gold production in 2016. If the placer operation does reach this level of production and at projected costs, its pre-tax net profit would exceed US$11 million for the year at the current gold price.
At this rate of production, the Little Squaw Creek placer deposit would provide enough pay-dirt to feed the large capacity placer operation for at least 10 years. This would provide ample time to drill off the rest of the lower section of the creek and the other alluvial deposits that have eroded from the gold-rich lodes at Chandalar.