Nevada gold producer Scorpio Gold has added more time to the life of its Mineral Ridge mine.
Nevada-based gold producer Scorpio Gold (TSXV:SGN) has announced an updated life of mine plan for its 70-percent-owned Mineral Ridge gold mine, including the Drinkwater, Mary/LC, Brodie, Bluelite, Solberry, Wedge and Oromonte deposits.
Scorpio has also updated its mineral resource estimate for Mineral Ridge, extending the project’s mine life into the third quarter of 2016. As a result, the company has increased its average ore production for the time frame to 73,700 tons per month; that’s based on a probable mineral reserve estimate of 2.1 million tons grading of 0.061 ounces per ton within an indicated mineral resource of 2.7 million tons grading 0.059 ounces per ton. The company is still working on expansion and infill drilling at satellite deposits, and that is expected to add to the resource base for Mineral Ridge.
Since acquiring the past-producing mine in March 2010 and reaching commercial production from the heap leach operation on 2012, Scorpio has been working on increasing the mine’s life. As CEO Peter Hawley commented in today’s release, the updated life or mine study “places the Mineral Ridge operation in a very similar position to where it was as of April 30, 2012, the date of the previous LOM study.”
Indeed, over two years the company has mined 1.7 million tons of ore from Mineral Ridge, which, as Hawley states, “has been more than replaced by ongoing exploration, resulting in the 2.1 Mt of ore outlined as of March 31, 2014.” Furthermore, given the additional positive results, Hawley is confident that further exploration will increase the mine’s life.
Following a 2012 production figure of 32,066 ounces of gold and 13,871 ounces of silver, Scorpio has focused on increasing its efficiency and on achieving higher production levels and higher head grades, which in 2013 led cash costs per ounce of gold sold to fall to US$734. With the recent study under its belt, the company expects an average cash cost per ounce of gold sold of $1,074 per ounce. Given the company’s previous success with lowering the cash costs, the recent cash cost of $1,074 per ounce of gold sold over the current life of mine is likely to fall with the conversion of resources to reserves.
While the company does warn of some key risk factors, including the possibility that a shortfall in production will occur if current estimated reserves are not realized, the flip side to that coin is that the estimates may be exceeded, resulting in increased gold production. The company also sees the potential to identify additional mineralization from drill-defined extensions to the known deposits, which could also support the resource estimates at Mineral Ridge.
Given the latest economic study, Hawley believes that Mineral Ridge has the potential to produce for years to come.
For 2014, Scorpio has a gold production target of 40,000 to 45,000 ounces of gold. As of the company’s mid-July press release, second-quarter production results for gold were 9,034 ounces, bringing the half-year figure to 19,328 ounces. So far in 2014, the company has increased its production by 6.3 percent over the same period in 2013.
The company is expecting the second half of 2014 to be stronger than the first, with head grades returning to average levels.
Scorpio Gold closed today at $0.225.
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Scorpio Gold is a client of the Investing News Network. This article is not paid-for content.