Golden Eagle Agrees to Operate Jerritt Canyon Mill

Golden Eagle International, Salt Lake City, Utah, said it has entered into an agreement with the owner of the Jerritt Canyon gold mine to operate the mine’s 4,000 t/d CIL mill located 50 miles north of Elko, Nevada. The 27-year-old mine and mill, owned by Vancouver, B.C., Canada-based Yukon-Nevada Gold Corp., was suddenly shut down in early August 2008 with no clear explanation for the closure provided by company executives (See E&MJ, September 2008, “Jerritt Canyon Shutdown Catches Industry by Surprise.”) The mill also had been shut down earlier in 2008 for modifications following issuance of a stop-work order by Nevada’s environmental regulatory agency, but mine and mill operations had restarted prior to the sudden August closure.

Yukon-Nevada acquired Queenstake Resources Ltd. in 2007 to take over Jerritt Canyon operations. Queenstake USA is the name of the subsidiary operating Jerritt Canyon.

The agreement, according to Golden Eagle, had actually been arranged before October 2008 but was publicly disclosed only recently.

According to Golden Eagle, the agreement contains two conditions that must be met before mill operations can begin: Queenstake USA must raise at least a net $17.5 million for operations, and must receive permission from all relevant state and federal agencies to re-start operations at the Jerritt Canyon mill. Golden Eagle, believing that these conditions would be met within a relatively short time, said it has had personnel on-site since mid- September 2008 to maintain the mill, but at least one of the two conditions stipulated has not yet been satisfied. As E&MJ went to press in January, a representative of the Nevada Department of Environmental Protection said the mine’s owner was working with the agency to resolve existing mercury emissions problems at the plant, but approval to restart operations had not been given.

Under the agreement, if and when Queenstake USA meets all conditions and the Jerritt Canyon mill comes into full operation, Golden Eagle will be the mill operator for a term of five years, which is renewable at the option of Queenstake USA for an additional five-year term. The company will be entitled to a fee of 8% of all operator costs, as well as a percentage fee or profit share of 20% of the net profits from operations.

As featured in Womp 09 Vol 01 - www.womp-int.com