Friday, August 04, 2006

To the Friends of the Panamints

Canyon Resources

The recent gold price run-up is no secret. It’s been bouncing around between $720 and $560 in the past few months. A year ago it was a little above $400, up from $260 at one point while the Briggs mine was still operating.

And it’s no surprise that the high price encourages gold miners. The Briggs Mine is no exception.

Canyon Resources, the owner of the Briggs mine, have laid their plans and has been doing exploration drilling. They have two areas of interest, Briggs and Cecil-R. The following summarizes recent press releases:

Top of Page

The Briggs Mine

They are in the planning and exploration stage. ‘Phase I’ of exploration is complete. Apparently the results have given enough confidence to continue planning and mine design. Briggs claims this is a continuation of the previous mining operation, and so is already permitted (implying the mine is grandfathered with respect to California’s open-pit backfill requirements.) The July 12 Ridgecrest newspaper quoted Ken Mann, the mine manager, that a decision will be made in two months.

Gold price is not the only deciding factor. Cost of fuel, machinery and labor, depth and quality of the ore, and the crystal ball prediction of the gold price during mine operation are all factors. Their July 13 press release describes ore that is about the same quality as previously mined (.023 ounces gold per ton of ore). This is not considered high quality ore. Ore tonnage mentioned in the press release multiplied by the gold concentration indicates about the same amount of gold in the ground as was produced by the Briggs mine during its life – 550,000 ounces. That the mine infrastructure, left over from the previous operation is in place, makes things easier.

The same press release mentions the possibility of underground mining, in addition to open-pit. Usually, underground mining can only be supported by higher grade ore. This possibility is reserved for their Phase II exploration, planned for later in 2006.

Top of Page

Cecil-R Site

It took a while, but Canyon Resources did their exploratory drilling at the Cecil-R site. They mention ‘encouraging results, and ‘significant quantity of mineralized material’. The concentration they measured is down in the .025 ounce per ton range, which would indicate an open-pit operation. Their press release says this ore quality is consistent with previous exploratory drilling at Cecil-R.

It’s hard to tell what they have in mind. It’s not rich ore, hence the speculation that it must be an open-pit operation. The estimated 120,000 ounces does not sound like enough to support building a cyanide heap-leach facility at Cecil-R. If that’s right, then they face the expense of hauling the ore to the Briggs facility, four miles away. And, a pit at Cecil-R would qualify as a new pit that must be filled after the ore is extracted, in accordance with the recent California back-fill regulations. But, I certainly am not a mining engineer, and can only use the data in Canyon’s press releases.

Top of Page

Canyon Resources Finances

Canyon Resources is a public company, symbol CAU. It currently has no operating mines or other source of operating income. Their last producer was the Briggs mine, which has not had significant production since 2004. During the ten year life of the Briggs it was essentially Canyon’s only producer, and during those ten years the company reported total losses of $101 million (on sales of $280 million).

How can this be? How can a small company stay alive with such continuing losses?

They appear to be expert at raising capital. Around 2001 the company had 12 million shares out. Now it has 45 million, with another 10 million warrants and 2 million options. In a quick (not exhaustive) look at Canyon’s annual reports I found disclosure of $68 million of securities sales—stocks, warrants, convertible debentures, debt conversion… Now, approaching a cash crunch, in June they sold another $5 million worth of shares and stock warrants. That’s what they are operating on now.

‘Institutional investors’ put up the money. The share price has ranged from 25 cents to five dollars. The $5 was when they thought they were going to be able to operate their Montana property, twenty times the size of Briggs. But two state-wide referendums kicked them out, the US Supreme Court refused to hear their case, they are back to hoping Briggs will save the day, and the stock is now hovering at $1. It should be noted that Briggs is not their only hope. They bought an old mine (Reward) near Beatty, are playing with uranium in Wyoming, and have taken their Montana defeat to the Ninth Circuit Court of Appeals.

It looks like the investors are hoping for a ‘hit’, similar to the Montana hopes before the referendums shot them down, that will surge the stock price so they can get out ahead. The press release announcing the recent $5.1 million investment said: “We appreciate the confidence this seasoned group of investors has shown…” Detached from the destruction of their corner of the Panamint mountains, the story is fascinating. Almost as good as the glory days of Nevada mining stocks starting in the late 1800s.

Canyon Resources has an informative website;
http://www.canyonresources.com/. It has descriptions of their properties, press releases going back several years, sales pitches to investors, annual reports, etc. They recently put up a technical report (over 100 pages) about the Briggs mine. Aside from technical data it has historic information about the site, maps, permit issues, and lots else that’s interesting.

Top of Page

Surprise Canyon Situation (Still) Slowly Maturing

Preparation of an Environmental Impact Statement, triggered by extreme OHV vehicle activity in Surprise Canyon, is still in process by the BLM. The last Friends of the Panamints email reported “Surprise Canyon Situation Slowly Maturing”. Same now.

Meantime, the canyon continues to attract hikers, and continues its own natural restoration, with a little help from its friends.

Top of Page

Tamarisk in Surprise

The ‘help from its friends’ comes in the form of tamarisk removal.

Tamarisk is that destructive desert tree-weed, native of Africa, that can form dense stands in moist places and crowd out native vegetation. It’s a water hog, sucking and transpiring huge amounts of water, stealing from the native plants. The infestation in Surprise was not as nearly as bad as some western places. But it has taken some concerted effort to control. The big-water winter of 2004-2005 flushed a lot of seed to the stream sides below Chris Wicht Camp, where little seedlings formed patches of green carpet. The BLM organized several very pleasant winter and spring plant-pulling events. Volunteer groups sat by the burbling stream, hand pulling thousands of the seedlings and gossiping about everything.

Larger plants that defied bare-hand pulling were pulled with weed wrenches. That’s a strong pole with a gripping mechanism on the bottom to grab the base of the plant. As you lever back on the pole the gripper grips harder, and the plant and root very satisfyingly pull out.

Plants too big for the weed wrenches were cut and the stumps treated with herbicide. This is a more serious technique, requiring the applicator be BLM certified for the operation and dress in protective clothing to avoid skin and eye contact with the chemical. We found the best is a three-person crew – a cutter to cut the tree, leaving stumps – a swamper to remove the cut trees, and the applicator dressed in the protective zoot suit to apply the poison.

The herbicide used is Aquamaster, specifically designed and approved for riparian areas. Although is has a moderately long life it adheres tightly to soil particles –unintentional spillage does not migrate beyond the very immediate area. Although it can be applied wholesale to plant leaves (called foliar spraying), this technique was not and will not be used in Surprise. The Aquamaster is dyed a blue/green, so the applicator can see where it’s going. The picture shows stumps with Aquamaster applied.

The herbicide is not totally effective. Recent monitoring show about half the treated stumps have no re-growth. The other half show some re-growth, usually stunted or deformed. Monitoring and re-treatment will be necessary.

Almost all tamarisk up to the BLM/Park Service boundary, the vicinity of Brewery Spring, has been removed. A few plant clumps remain, and volunteer work parties are scheduled for later in the year when the weather cools.

If you would like to participate, call the BLM—Marty Dickes, the Wilderness Manager, in the Ridgecrest office at 760-384-5444.

Plans are hatching for the last big ‘tree’ – the Mother Of All Tamarisks. This is a several hundred stem beast on the north side of Chris Wicht camp. It will take some effort and the exact technique has not yet been designed.

The picture shows tamarisk stumps immediately after treatment with the dyed Aquamaster herbicide.

Congratulations to the BLM are in order.

Top of Page

Pleasant Canyon

Pleasant is the canyon directly behind Ballarat. You can drive to the crest of the Panamints on it. As you ascend it goes through a riparian area, a mile or so out of Ballarat, then goes up past the old World Beater site at Clair Camp.

Almost since the beginning there has been mining interest at the World Beater. The latest was several years ago when an outfit then called MBA Gold took an option from the previous interested miner and did some exploration drilling. After doing their drilling MBA lost interest and went away.

MBA had put up a performance bond, promising not to unduly damage the road with their heavy equipment, which they promptly did. The BLM took them to task, and the situation has finally resolved itself to the BLM’s satisfaction. But putting the road back into reasonable driving condition also destroyed a lot of riparian, pushing lots of uprooted plant growth to the sides of the road. It made a mess. To be fair, it’s near impossible to have a rugged road in a narrow riparian canyon with an active stream. Harmony is impossible and something must suffer – either the road or the riparian or both.

The BLM has proposed a solution to the road-riparian conflict. An old, illegal, dozed road is on the north ridge of Pleasant, a few hundred feet above the canyon bottom. You can look down into the riparian from the ridge route. This road stops on the ridge just about where the riparian stops in the canyon. The proposal is to cut a short section down the canyon wall from where the ridge road stops, to just above riparian section. This route would then become the Pleasant Canyon route, and the road through the riparian would be deactivated. It can’t happen fast enough.

An EA to describe this action is being prepared, and should be distributed before the end of 2006. To get on the list when the EA is distributed, write or call Linn Gum at the BLM Ridgecrest field office, 300 S Richmond Road, Ridgecrest, CA 93555, 760-384-5400.

Top of Page