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Growing up with a gold mine – SRK’s multi-level project support at Hycroft

Allied Nevada Gold Corp. was formed in 2006 after purchasing a portfolio of over 100 precious metal prospects in Nevada (NV). Their flagship property, Hycroft, located 60 miles west of Winnemucca, NV, was reactivated after a 10-year dormancy period to establish cash flow to fund on-site exploration and to develop advanced projects in other parts of the State. Since 2006, as the price of gold has risen from US$700 to US$1,100 per ounce, interest in historic Nevada mines has been rekindled and some sites are coming back on line with new development strategies. Though the Carlin Trend is Nevada’s “headliner” mining district, the state’s “supporting cast” of gold producers over the last two decades have been shallow, open-pit oxide operations receptive to bulk mining and low-cost heap leaching. The underlying sulfide zones of these deposits that are not heap-leachable have been largely ignored and often undrilled.

In 2007, Allied, who subcontracts most of their technical work, selected SRK for due diligence of a Hycroft restart that would involve production of both oxide and sulfide ores. Following a favorable outcome, they approached SRK to prepare permitting documents and engineering designs to expand the historic leach pad. In less than 18 months the company was mining and leaching oxide ore and pouring gold offsite. The company, however, had set its sights on a much larger sulfide resource beneath the mined-out oxide pits.

During the production ramp-up period, SRK teamed with Allied and independent specialists to build the geologic base from which a 2.0Moz gold equivalent mineral resource was generated. Initial work included digitising and verifying data from nearly 4,000 historic drill holes. SRK then took responsibility for storing and managing the drill database. Geologic support involved probabilistic modelling of lithology, alteration and merging interpretations of logged oxide and cyanide soluble gold to produce a “leachable ore” horizon. The scale of the property would have made the cost/time investment prohibitive, for this type of modelling, using a conventional sectional approach. Next, the team produced a comprehensive structural framework to serve as domain boundaries for the ensuing round of resource estimation. In parallel, Allied/SRK prepared an intensive infill-drilling program that, once completed, added 6.1Moz gold equivalent to the company’s resource base, upgraded many of these resources to reserves, and more than doubled Allied’s share price. Geologic modelling is currently being refined, and as new drilling data arrives, SRK is shifting from probabilistic to deterministic modelling using an extensive 3D toolkit.

SRK has leveraged the relationship at Hycroft to support Allied in promoting its other properties. SRK’s capability for rapid assessment and 3D manipulation of exploration data has allowed it to host project demonstrations, gaining valuable exposure to prospective new clients and showcasing SRK software and talent, while advancing Allied’s marketing objectives.

Jay Pennington:

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