The Greenwood Gold Project is composed of the fully permitted underground Lexington gold-copper mine, Golden Crown high grade gold-copper deposit and a modern fully permitted 200 tonne per day gravity-flotation mill and tailings facility near the towns of Greenwood and Grand Fork, BC. The Lexington-Grenoble mine and mill are separated by 17km of gravel road. The mineral properties hosting the Lexington and Golden Crown deposits are 100% owned by Huakan with underlying royalties. The Project is supported by excellent infrastructure – transportation, power, and natural gas – and a local skilled work force.
The project was fast tracked to construction and trial mining between September 2007 and May 2008 through a bulk sample permit. On May 8, 2008, the project received mine and mill operating permits from Province of BC to operate at 72,000 tonnes per year for the Lexington-Grenoble mineralization which still remain in effect today and held in the Company’s name. In addition, the Company signed a landmark Impacts and Benefits Agreement with First Nations-Osoyoos Indian Band-May 8, 2008.
The Lexington-Grenoble Mine and mill operated for 8 months before they were suspended in late 2008 when gold prices were at $US750/oz. During this period, the Company learned and adjusted operations to better mine and mill the deposit. Significant capital and operating improvements were made before suspension to lower operating costs which were at about $US850/oz. The Lexington Mine has about 2 years of mine life remaining at a grade between 4-6 g/t Au and 0.8 and 1% Cu.
The project is currently on care-and-maintenance. The Company is evaluating its various options; to re-open the operations, delay re-opening until additional mill feed has been secured, operate as a toll mill, or re-sell the operations.
Below the Company displays the Lexington-Grenoble resource calculation completed in 2006 by P&E Mining Consultants Inc. for historic record only. The Company cautions readers that the Lexington-Grenoble resource estimate is no longer current as there has been mining performed on the deposit of 54,000 tonnes grading 4.13 g/t Au and 0.84 % Cu and subsequent re-interpretations made to the deposit. Heavy dilution was a significant cause of lower grade to the mill, which was later reduced through mining adjustments.
On October 3, 2006 the Company announced the completion of updated resource estimates on the Lexington-Grenoble and the Golden Crown deposits, which were prepared by P&E Mining Consultants Inc. The technical reports are available on Sedar. The Lexington-Grenoble deposit resources in 2006 based on a 6.0 gram/tonne (g/t) gold equivalent grade cut-off are tabled as follows (not current):
The Golden Crown deposit resource (which does remain current today) is presented below at a 6.0 g/t gold equivalent grade cut-off value:
- Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal title, taxation, socio-political, marketing, or other relevant issues.
- The quantity and grade of reported inferred resources in this estimation are conceptual in nature.
- The mineral resources in this estimate were calculated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005.
- Gold equivalent grade (AuEq) for the Lexington-Grenoble and Golden Crown was calculated using a gold price of US$494/oz and copper price of US$2.04/lb., based on the 24 month (at August 31, 2006) trailing average of gold and copper prices (gold price = $494/oz or $15.8822/gram, copper price = $2.04/lb. or $0.004497/gram, therefore, 1% Cu = 1 x 10,000/($15.8822/$0.004497) = 2.832 to obtain a conversion factor of % copper x 2.832 + gold g/t = AuEq g/t. Metallurgical recoveries and smelting/refining costs were not factored into the gold equivalent calculation.
- Gold equivalent grade (Au Eq) for the Lone Star was calculated using a gold price of US$593/oz and copper price of US$2.84/lb., based on the 24 month (at July 31, 2007) trailing average of gold and copper prices, to obtain a conversion factor of % copper x 3.284 + gold g/t = Au Eq g/t. Metallurgical recoveries and smelting/refining costs were not factored into the gold equivalent calculation.
- The Cu equivalent cut-off value of 1.5% was calculated and rounded utilizing the following: Cu price US$2.84/lb, $US exchange rate $0.88, process recovery $95%, smelter payable 95%, smelting and refining charges C$7/tonne mined, mining cost C$62/tonne mined, process cost $C28/tonne processed, G&A cost $7.50/tonne processed.
The Lexington-Grenoble and Golden Crown deposits remain open at their edges with the opportunity to expand their resources by further exploration drilling.