Mine visit
report: Silver Eagle (T.SEG)
I flew down to
The project
was assembled by gaining control of many small properties, and then additional
staking enlarged the area to go pretty much from horizon to horizon. There are
several productive veins that are very rich in silver with associated base
metals, but past development only extended to very shallow depths because the
vein structures act as a natural acquifer, and any
extension of the workings below the water table resulted in heavy flooding
beyond the capacity of pumping technology.
I
witnessed this groundwater issue for myself at the lower levels of the
workings, where drill holes driven into the vein behaved like pipes, allowing a
strong flow of water to jet out. Mine workings typcially
encounter water inflow, but to see water gushing out in such high volumes definately underscored the challenge to keep the workings
dry enough to allow for mining activity. The company has high powered pumps
working non-stop to divert the water out of the workings, and it is used for
agriculture at the surface. There are no environmental concerns or toxins in
this water.
The vein
structures are typically narrow, ranging from a few inches to several feet
across, but of very high grade. Mineralization is localized in steeply dipping
quartz veins, bearing sulphides rich in silver minerals like galena. Wider
zones of breccia surrounded many of the veins, with
higher grade ore extending across a wider interval. Along the fault planes,
rock had been ground down to a fine clay and enriched
with leached silver that has assayed in the kilograms per tonne range. You
could feel how heavy the clay was from these enriched layers.
I walked
every inch of the developed workings along a decline ramp that has been driven
to reach several of the veins outlined so far. Economic grade material has been
excavated as they developed the workings and a stockpile of perhaps 5,000
tonnes is on surface awaiting the completion of the mill. The workings are very
efficiently advanced with just enough room to allow for scoop trams and trucks
to navigate carefully with minimal clearance.
The mill
has been rebuilt and refurbished from the ground up, and it is the jewel of the
operation. I noticed that every piece of equipment was in superb condition,
custom rigged for a modern operation. A dedicated high voltage line separate
from the town electrical grid is in place and brand new electrical equipment
serves the mill.
The
plant has been designed to allow for an increase in production as the scope of
the mine grows. Proven and reliable equipment is in place, with no difficulty
to source parts, bearings, and general maintenance. The crushing circuit is
capable of 300 tpd at current capacity. Grinding is
limited by the bottleneck of a ball mill rated to only 100 tpd,
and to expand beyond that level will require a larger ball mill to be
installed.
A
standard floatation cell recovery method is in place, with 2 banks of cells
dedicated for the production of a lead concentrate, and 2 for a zinc
concentrate. Management hopes to achieve about an 80% overall recovery
efficiency from the operation, after the standard learning curve for a new mill
during which time they will tune the operation and experiment with different
settings to generate the optimum results.
A
tailings pond was under construction during my visit with an engineer right on
site to ensure safety and durability. Since the pond is located along a slight
rise, any failure of the dam would flood nearby agricultural land with tailings
so care and attention during the construction process is of utmost importance.
The pond design call for a secondary settling pond to be dug that will allow
discharge water to be recycled and pumped back up to the mill. The capacity of
this pond is for 90,000 cubic meters, enough to last for about 1 million tonnes
of tailings, and nearly 10 years of production.
There
is a possibility that the recovery operations may eventually expand to allow
for a heap leach circuit, where old tailings plus the tailings from modern
operations could be treated and recover additional silver, bringing the overall
recovery efficiency above 90%. To do so would require an environmental permit
application to handle cyanide, and this is an option that will be on the table
in the years ahead. If silver breaks out to levels above $20, then it would
become extremely attractive to process the tailings at low cost with such a
method and generate additional strong revenues.
As it
stands now, the mine is pretty much ready to go and production could commence
as early as next month. They plan to run some lower grade material through the
mill to test it out, and train mill staff. The mill is designed to run
efficiently with 2 twelve hour shifts, employing just 6 people during the day
when the crushing circuit is in operation, and 4 people on the night shift.
Other
facilities were under construction during my visit, including a modern assay
lab, a mechanical shop, as well as administration and service buildings.
The
entire project has the look of a brand new, modern operation, and this stands
in sharp contrast to many of the other older projects that I have been to see.
The mine has tremendous potential for additional resources to be discovered and
put into production, and the mill is going to operate at the highest of
efficiency with the potential for additional capacity expansion during the life
of the project.
Management
strengths lie with the production side of the business, so I do not anticipate
they will be unable to resolve the challenges that typically occur with a mine startup. The town and the State are fully supporting the
project, and the company works with the attitude that everyone needs to be a
beneficiary of their success for the company to move forward.
The
company still has about $5 million in the treasury, and positive cash flow
generation should commence shortly to help underwrite the aggressive
development and exploration schedule. I am confident that they will be able to
advance the project, yet will maintain a growth curve that does not over extend
the financial resources. I am also encouraged that the company has a very quiet
confidence in their objectives, and they specifically urged me to be
conservative in my report and to allow them to deliver results without excess
hype and promotion. What a refreshing change.
cheers!
COACH247