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Rio Grande Silver continues exploration

Posted: Friday, Jan 11th, 2013

Rio Grande Silver intends to use the existing pipeline path to extract water for underground exploration. Courtesy photo

Courier staff writer

DEL NORTE — Rio Grande Silver (RGS) continues to see the shine at the end of the mining tunnel, but can’t yet say if the ongoing mineral exploration project will develop into a production operation.

On Tuesday, Rio Grande Silver General Manager Randy McClure updated the Upper Rio Grande Economic Development Council (URGEDC) at its annual meeting in Del Norte on the Hecla-owned company’s progress evaluating the economic value of the old Creede mines.

“Our goal is to continue,” McClure said. “To date, everything we have done is positive.”

He said he and his team have evidence that shows about 37 million ounces of silver remain in the area, which comes with little surprise since the Homestake Mining Company (HMC) closed in 1985 because of prices, not lack of supply. The district has produced 86 million ounces of silver, 170,000 tons of lead, 54,000 tons of zinc, 160,000 ounces of gold and 3,400 ounces of copper in its history. When RGS came to Creede in 2008, it picked up where its predecessors left off.

The project also carries a 70-member workforce with half of the employees coming from the Valley, he said. That number would increase considerably if RGS moves forward with a production operation aiming to mine 1000 tons of minerals a day.

“If the project goes like we hope it will we could have 180 to 250 people full time on the project,” McClure said.

He added that with RGS’s $20 million 2013 budget, he hopes to see many of the project’s elements align and bring the possible 30-year economic opportunity to the Valley.

“We have to determine if it’s all doable,” McClure said. “We are very committed to make this work.”

Metal prices, however, are as crucial of a factor as the minerals themselves.

“We are really tied to the prices,” McClure said. “The state of the economy affects what we do.”

On Thursday night, silver prices were hovering around $30 an ounce and gold $1,673 an ounce compared to 1985 when the cumulative average for silver was $6.13 an ounce, according to a Kitco Metals report.

“Times are good right now,” McClure said. “We would love to be producing right now.”

Over the past four years, McClure said the exploration project has focused on surface exploration and drilling. In 2010, the Forest Service approved RGS’s five-year drilling program. The program’s promising results prompted a plan for re-entry into the closed Bulldog and Equity underground mines for further exploration drilling.

“How busy we have been in the past four years,” McClure said. “We were really able to ramp it up in 2010.”

In 2011, RGS continued its surface exploration drilling, began work at the Bulldog and Equity underground mines and took over 100 percent of the operation investment.

Last year, surface exploration drilling and underground drilling and mapping at the Equity site were completed, new support facilities were installed at the Bulldog site along with a driving 2,800 foot decline to access what lies inside the Earth. RGS also reevaluated the Bulldog underground exploration program, determined the need to enter the submerged mine zone and prepared and submitted a plan of operation to the Forest Service to approve the underground development work that includes a water treatment management plan through the Environmental Assessment (EA) process. The Forest Service is scheduled to make its decision sometime this spring.

If the EA determines an Environmental Impact Statement is not necessary, RGS will begin underground exploration and development work in September.

McClure said in order to evaluate the potential for future mining and milling, RGS must conduct exploration and development activities in the Bulldog Mine that lie below the existing water table. The water must be pumped out of the mine to gain the needed access and treated to comply with the limits of a Colorado water discharge permit. The purpose of entering the lower workings it to conduct geologic mapping and drilling; geotechnical analyses; geochemical sampling; test mining; and sample collection for metallurgical and mill testing. The result of the action will include additional valueless rock removal and the creation of a mine water treatment management plan and generate information for a mining and milling feasibility study.

The water treatment management plan, he said, would follow the infrastructure the HMC laid down years ago.

“We are working to reconstruct things that are already there,” McClure said. “We won’t be disturbing much at all. The footprint of the project is very small.”

The estimated project disturbance is 30.4 acres, he said. Activity will take place on 10.2 previously disturbed and 1.8 acres of undisturbed Forest Lands for a total of 12 acres, and 18.4 acres of private land on 5.8 acres of previously disturbed land and 12.6 acres of undisturbed. The water treatment pipeline consists of two holding ponds would run along HMC’s established route to West Willow Creek where it would be discharged.

If the underground exploration and development bear no fruit, RGS would stop underground work and initiate reclamation activities.

If the project moves forward, RGS will update its reclamation bond for the Creede District-wide exploration program. In 2008, RGS posted a $269,318 reclamation bond for its present activity.

Last year, the Colorado Mined Land Reclamation Board awarded the company for its reclamation efforts in southwest Colorado. The state found that all of the company’s drilling activities went “above and beyond the requirements set by the Division of Reclamation, Mining and Safety and the U.S. Forest Service to minimize impacts in a fragile environment,” according to a Colorado Division of Mining and Safety press release.

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