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Spanish Mountain Gold (TSXV: SPA) has secured the support of the Xatśūll First Nation (XFN) for its gold project near Likely, British Columbia. The two parties signed an engagement protocol agreement on October 14, following a project presentation by the company.
The agreement acknowledges FXN’s rights in its traditional territory, which includes the Spanish Mountain project. The two agreed to work together in a spirit of co-operation and mutual respect to establish a long-term relationship beneficial to both.
The next step is to create a relationship agreement between the company and XFN. This will ensure the participation of XFN in the project beginning with environmental assessment and permitting and later through construction, operation, and closure of the mine.
Spanish Mountain is the 100% owner of the Spanish Mountain gold project. The company is advancing the project with two goals in mind – fast tracking production and resource expansion.
The first goal will be met by mining near-surface, high-grade reserves in the Main zone as a standalone operation. The initial capital requirement will be reduced to $607 million as the mill would be only 20,000 t/d. This approach also compresses timelines set out in the 2021 pre-feasibility study and shortens the payback period. Fast-tracking the Main zone would not require upgrading of the inferred resource.
Spanish Mountain is working towards its second goal, to expand the resource along strike and depth, with an aggressive drill program. All four areas that have been tested have returned intercepts as long as 69 metres above the economic cut-off grade. Drilling returned 1.04 g/t gold over 13.7 metres, including 2.1 g/t over 3.1 metres; 0.54 g/t over 21.3 metres, including 0.82 g/t gold over 10.7 metres; and 0.41 g/t gold over 50.3 metres, including 3.68 g/t gold over 1.5 metres.
The area on the north edge of the pit outline looks particularly promising with its 1-km strike length. Eight of the nine holes drilled in the area returned intercepts long than 10 metres, and one was 32 metres. The northern pit boundary appears to be open both along strike and at depth.
The company also discovered what it calls the Phoenix zone about 1,000 metres west of the pit outline. Reconnaissance drilling was done in 2018, and early metallurgical testing indicated that the mineralization is amenable to the same gold recovery process as has been developed for the Main zone. The company has not yet completed a resource estimate for the Phoenix zone.
With a larger mineral resource, Spanish Mountain could increase the mining rate and expand the mill.
The company has been optimizing the Spanish Mountain gold project. Pilot tests have done on a Woodgrove direct flotation reactor that would simplify the mill flowsheet by removing the scavenger gravity circuit. Gold recovery could be improved with a finer primary grind. These changes would reduce both capital and operating costs.
Optimizing the water management strategy and choosing an alternate route over easier terrain and shorter distance would both cut the initial capex and permitting risks.
The Spanish Mountain proven and probable reserves contain 2.3 million oz. of gold and 2.2 million oz. of silver in 95.9 million tonnes grading 0.76 g/t gold and 0.71 g/t silver.
Reserves are included in resources, which have 294 million measured and indicated tonnes grading 0.5 g/t gold and 0.72 g/t silver plus 18 million inferred tonnes grading 0.64 g/t gold and 0.76 g/t silver.
(This article first appeared in the Canadian Mining Journal)
