Less royalty boosts Brewery Creek viability

Golden Predator Mining Corp. April 30 announced an agreement with Franco Nevada Corp. to eliminate the net smelter royalty on the gold recovered from a future mine at Golden Predator's Brewery Creek mine project about 55 kilometers (34 miles) east of Dawson City.

Brewery Creek is the site of a former mine where Viceroy Resource Corp. produced 280,000 ounces of gold from 1996 to 2002. This operation used a heap leaping – a method of gold recovery that involves staking ore in a lined facility and using cyanide to separate the gold from the rock – to recover gold mined from seven near-surface deposits on the property.

With gold prices averaging around US$310/oz in 2002, Viceroy opted to wind down operations and put Brewery Creek on care and maintenance.

Golden Predator, which acquired full ownership of Brewery Creek, has been carrying out exploration and studies aimed at resuming operations at the past producing mine.

A 2014 preliminary economic assessment outlined plans for a heap-leach operation that would produce an estimated 372,000 oz of gold over nine years. This includes mining 10.2 million metric tons of open-pit material from eight deposits averaging 1.35 g/t gold and reprocessing material located on the former heap leach pad.

Under this scenario, mining and crushing would occur for 230 days per year.

Last year, the company began assessing the viability of using continuous vat leaching as the gold recovery system when operations are resumed at Brewery Creek.

Continuous vat leaching utilizes large volume containers, described as vats, located in an enclosed temperature-controlled building, as opposed to heap leach technology, which involves stacking ore on pads in the open environment.

This method of gold recovery would allow for year-round operations and a number of other potential advantages that include the potential recovery of some of the sulfide mineralization; improved gold recoveries from the oxide resource; shorter processing times; and improved environmental considerations.

Eliminating the Franco Nevada royalty on the gold is expected to improve the economics for Brewery Creek as Golden Predator evaluates the various scenarios for resuming operations there.

"Reducing the royalty burden on the Brewery Creek project is a strategic move to enhance the long-term economic viability of the project. It was important to retire this royalty as a first step as the payment of the royalty was due entirely in the first year of production," said Golden Predator Mining CEO Janet Lee-Sheriff. "Golden Predator continues to advance the Brewery Creek project towards production and a restart of the original mine plan under its current and valid quartz mining license and water license."

Golden Predator will issue Franco Nevada 600,000 class A common shares in exchange for the royalty, which is capped at roughly US$1.2 million.

–SHANE LASLEY