Rye Patch mines old ground for new gold
July 17, 2017
When Rye Patch Gold Corp. purchased several mines along the Oreana Trend in north central Nevada, the benefits included a track record of successful gold production, exploration records, and equipment.
"You can still use gold as a pathfinder to gold," William (Bill) Howald, president and CEO of Rye Patch, said.
Between 1986 and the end of 2015, about 201.7 million tons of ore had been mined from the Florida Canyon mine, yielding about 3.35 million ounces of gold
The disadvantages included uncertain potential, even with advanced exploration and research tools. On top of that, much of the equipment that came with the mines was in need of repair and replacement. In other words, they bought "fixer-uppers."
"We expected to have nine trucks available at all times," John Porterfield, interim mine manager at the Florida Canyon mine, said in May. "We've only been able to get seven or eight. We've had more problems with equipment than we originally thought we would. We're working through it though."
Florida Canyon has 30 years of mining history, Howald told a group of analysts and investors during a May tour of Rye Patch holdings in the area: Florida Canyon, Standard Gold, Gold Ridge, Lincoln Hill and Wilco mines. Florida Canyon is the only one in production, but Rye Patch plans to reopen each in turn.
"When we started Rye Patch, our plan was to find mines to buy, de-risk them, and sell," Howald said.
"When we came to Florida Canyon, our mission changed. We want to be the next mid-tier mining company."
Taking the chance is starting to pay off.
"We're getting the recoveries we thought we were going to get," Howald told the tour participants.
Rye Patch, which formed in 2006 and is based in Toronto, purchased the Florida Canyon Mine between Lovelock and Winnemucca across Interstate 80 from Rye Patch Reservoir, from Japanese conglomerate Jipangu.The sale closed July 28, 2016.
Previous owners, including Pegasus Gold, Apollo Gold — even CitiBank owned the mine for a time — had been mining the area since 1986.
After Rye Patch purchased Florida Canyon, it took months of rehab, repair, looking afresh at the records of previous research as well as conducting new explorations, before production began in September. The record winter of 2016-17 also slowed production down.
On April 25, 2017, Rye Patch poured its first bricks of gold doré, a partially refined mixture of gold and silver. A total of 485 ounces of gold was poured. Plus, residual leaching from the old Florida Canyon and Standard Gold mines produced 602 ounces.
"This is a significant milestone for Rye Patch Gold," Howald said at the time. "The Florida Canyon team has done a phenomenal job on the restart of the mine and we are excited to be Nevada's newest gold producer."
As of July 10, a total of 12,678 ounces of gold and silver doré have been poured.
Fleet availability improved dramatically over the second quarter.
At the end of June, eleven 785 CAT haul trucks were operational. Loaders had a 94 percent availability and the haul trucks improved to 79 percent available, according to a report on the Rye Patch website.
Harry Miller, of Vanity Capital, an investor in Rye Patch and a long time friend of Howald, got his first in-depth look at Florida Canyon during the May tour.
Miller began investing in mines about 10 years ago, "after the last time I retired," he said during a recent phone interview with NNBW. During most of his career he managed administrative aspects in the health and medical industries. Friends convinced him to begin investing in mines.
Miller said he prefers mining investments that are past the early stages. He noted that stocks for new mining companies go up when they have a solid mineral discovery, but drop as they race toward production, due to the need for financing.
That's where Florida Mine is now, he said.
"They've been operating only three months, ramping up to full production," Miller said, and stocks have gone down. He expects steady production will cause the stocks to pick up by fall.
"I'm confident that (investors will) be rewarded, but it may be fall."
For now, Florida Canyon is a new mine with all the growing pains that go with it. those pains aren't expected to last.
The goal is to produce 100,000 ounces of gold per year by 2018.
"That will be a marked change for the company to be on record as a producer, albeit small, but a producer," Miller said. "That will change the dynamics of the company a lot more."
And then there are the other mines.
Rye Patch plans to put Lincoln Hill in production in 2019.