From a mining and engineering perspective, Rye Patch Gold’s (V.RPM) recommissioning of its newly acquired Florida Canyon Nevada mine and leach pad has gone fantastically well. But Bill Howald, Rye Patch President and CEO, can be forgiven for complaining about the weather.
“We have had a 100 year weather event. In three hours in October we had all the rain we’d expect in three months,” said Howald. The weather slowed construction of the new leach pad a bit but everything is now back on schedule.
Rye Patch acquired the Florida Canyon mine and processing facility in a transaction with a Japanese bank which was initiated in 2015 and closed in the second quarter of 2016. “The Japanese bank finances things like golf courses, and a Nevada gold mine was not really where they wanted to be. We were in the right place at the right time, and we were able to buy the mine and the facilities,” said Howald.
“We did a lot of analysis. We reviewed the project very carefully. Gold had touched $1050 an ounce, and we wanted to confirm that Florida Canyon could work in sub $1000 an ounce markets.” said Howald. “When we were sure it would, we used cash from our Rochester Mine royalty to make the down payment.”
“We looked around at funding partners. Eventually, we did a debt deal with Macquarie Bank and an equity deal with a syndicate lead by Macquarie Capital and CanaccordGenuity. The bank completed an additional round of due diligence.” said Howald. “In Q2 we entered into a definitive agreement to acquire the property. In May we had the funding agreement, and we hit the market just perfectly. In two weeks we were able to raise $50 million in equity. We closed the deal on the 28th of July 2016.”
“Florida Canyon complements Rye Patch’s other projects. It is within 30 kilometers of our Wilco, Lincoln Hill and Gold Ridge projects.” said Howald, looking to the future even as Rye Patch acquired the mine.
The big issue at the Florida Canyon mine and facility was that the original leach pad was full. So when Rye Patch took possession of the property in late July, the first order of business was to build a new leach pad. “The new pad was permitted but not bonded.” explained Howald. “The bond was approved in August 2016, and we started building the pad in September.”
Along with building the pad, Rye Patch was determined to move the crusher from the Standard Mine to the new facility. And Rye Patch wanted to increase the crusher’s capacity from 5 million tonnes to 7.2 million tons.
“Historically, Florida Canyon crushed some of the rock for the pad and as well as placed “run of the mine” (uncrushed) rock on the pad. You get a higher gold recovery from all crushed material.” said Howald. The mining and leaching process itself is well understood. “You mine, crush and truck the rock to the leach pad. Then you pour a water and cyanide solution over the crushed rock. The gold is attracted to the cyanide. Now you have gold in solution which you run through activated carbon (nothing but charred coconut shells!). The gold jumps from the cyanide solution to the carbon. Then you run that carbon and gold through an acid wash which strips the gold from the carbon, and then you run that solution through steel wool. The gold plates onto the steel wool. Then, the steel wool is put in a furnace and heated to approximately 2,000 degrees Fahrenheit where the gold is separated from the slag and poured into dore bars. It’s chemisty !! (not rocket science).”
At this point, even with the rains, Rye Patch is loading the first cell of its new pad, which is in the process of being inspected by the state regulators and bonded. When inspections and bonding are complete, the cyanide solution is added to the pad using a system rather like the drip sprinklers in backyard watering applications. “There is not a lot of wait time.” said Howald.
Howald is looking forward to the first gold pour in early Q2 2017. “We’re already mining, crushing and putting rock on the pad. We’re aiming for 75,000 ounces per year.” said Howald. “Subsequently we are aiming for 100,000 ounces per year in the near future.”
The first of those ounces are already coming. The old, full, leach pad is still producing between 800 and 1000 ounces a month. This allowed Rye Patch to feed 3400 ounces into its gold hedge in January. (Press release here.)
“We take an old style approach.” said Howald. It seems to be an approach which works.
At time of writing, Rye Patch was trading at $0.34 with 387.3 million shares outstanding for a market cap of 118.13 million dollars.