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Mount Hamilton Project


Location Map
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The Mt. Hamilton property is a 5,455 acre property located at the southern end of the Battle Mountain Trend. The property is located in the western flank of the White Pine Mountains, about 40 miles west of Ely, Nevada. Significant mineralization is located throughout the property that occurs within a gently folded sequence of Cambrian Age sedimentary rocks. Mineralization at Mt. Hamilton consist of skarn-hosted gold, silver, tungsten, molybdenum, and local copper occurrences.

Precious metal mineralization is concentrated in two near-surface, contiguous deposits, Seligman and Centennial. The Seligman deposit was developed and mined by Rea Gold 1995-1997. Production was halted prematurely in June of 1997 due to operational problems and low metal prices. Ely Gold began work on the property in 2008 by drilling 5 holes at Centennial to verify historical data. In May 2009 Ely Gold published a Preliminary Economic Assessment by SRK Consulting (U.S.) Inc. ("SRK") in compliance with NI-43-101 requirements. In December 2010, Ely Gold and Solitario Exploration & Royalty Corp. (NYSE Amex: XPL, TSX: SLR) formed the Mt. Hamilton LLC ("MH-LLC"), a limited liability company which now holds 100% of the Mt. Hamilton project assets under an Operating Agreement. Solitario can earn up to an 80% interest in the MH-LLC by completing a feasibility study, making future property payments, advanced royalty/royalty reduction payments, making cash and stock payments to DHI-US, and arranging project financing. Solitario also will fund all bonding obligations to place the Mt. Hamilton project into commercial production. MH-LLC drilled a total of 60 holes in 2011-2012 at both Centennial and Seligman.  This drilling totaled 25,138 feet, including 7 metallurgical and 8 exploration/resource confirmation holes at Centennial and 45 resource confirmation, geotechnical, and metallurgical holes at Seligman

In June 2012, Sandstorm Gold purchased a 2.4% net smelter returns royalty ("NSR") on the Mt. Hamilton gold project for US$10.0 million. As part of the agreement, MH-LLC will have the option, for a period of 30 months, to repurchase up to 100% of the NSR for US$12 million, provided that MH-LLC enters into a gold stream agreement with Sandstorm that has an upfront deposit of no less than US$30 million. In addition, MH-LLC has provided Sandstorm with a right of first refusal on any future royalty or gold stream financing for the Mt. Hamilton project. The proceeds from Sandstorm was used to fund the 2012 drill program, other project development, and all permitting for mine construction.

Feasibility Studies

The current focus on the Mt. Hamilton property by Ely and Solitario has been gold-silver mineralization at Centennial along with the remaining mineralization at Seligman.  The pre-existing Mt. Hamilton database consists of 857 drill holes. This data has been verified/validated by SRK in compliance with NI-43-101 requirements.A NI 43-101 compliant Bankable Feasibility Study (BFS) of project economics was completed by SRK in Feb 2012, which was superseded by a subsequent Feasibility Study (FS) completed by SRK in October 2014, adding mineral reserves from the Seligman Deposit to the original mineral reserves from the nearby Centennial Deposit.  Based on recent cost and commodity pricing, the updated FS demonstrates robust economics with excellent potential for developing additional resources.

With the completion of the 2012 Feasibility Study, Solitario holds an 80% interest in Mt. Hamilton LLC subject to certain "continuing payment obligations", including making unpaid payments to the Underlying Royalty Holder (US$5,900,000), and provide funding for all bonding requirements to achieve commercial production.   Should Solitario default, Ely Gold's interest in Mt. Hamilton LLC will revert to 51% and Ely Gold will become the operator of the project.

Click here to download Feasibility Study (PDF)

Project Economics
All currency figures in U.S. $'s; Economic base case in bold; M=millions
Item Pre-Tax After Tax
(Federal=35%, State=5%)
Gold US$/oz. $1,200 $1,300 $1,400 $1,200 $1,300 $1,400
Silver US$/oz. 18.5 20 21.5 18.5 20 21.5
Cash Flow (US$M) 141.9 184.8 227.6 89.4 115.9 142.3
NPV @ 8% (US$M) 76.6 107 137.3 41.8 60.8 79.9
NPV @ 5% (US$M) 97.6 131.8 166.2 57 78.5 99.9
IRR 28.4 34.5 42.1 20.6 26 31.1
Payback (Years) 3 2.7 2.5 3.1 2.9 2.7

Life-of-mine cash operating costs on a gold equivalent basis (at a 65:1 silver to gold ratio) are estimated at $558 per gold-equivalent ounce recovered, well below world-average industry cash costs. The economic base case assumes a $1,300 life-of-mine gold price and a $20.00 silver price, generating approximately $185 million in cash flow (operating margin -- EBITDA) on a pre-tax basis over the mine's currently anticipated seven-year mine-life.

The Mt. Hamilton gold project will be an open pit mining operation with heap leach processing and projected gold recoveries of 76%. The reserves are contained within two well-defined ore bodies displaying excellent continuity of mineralization that will be mined within a single open pit. Processing is straight-forward with two-stage crushing to minus -inch, no agglomeration and rapid gold leach rates, followed by conventional ADR (adsorption-desorption-recovery) metal extraction. The project also incorporates several innovative design concepts to minimize surface disturbance and environmental impacts, such as a vertical ore pass and underground conveying system to reduce surface disturbance and improve air quality. In addition, there are mineral resources adjacent to the reserves reported in the Feasibility Study that have the potential to significantly extend the mine life.

2014 Mt Hamilton Feasibility Study Base Case (Gold: $1,300; Silver: $20.00):

  • Production Rate/Mine Life: 10,000 tons ore per day (350 days/yr.) / 7 years
  • Average Gold Recovery: 76.2% (70% of recoverable gold in first 30 days of processing)
  • Average Silver Recovery: 39%
  • Life of mine stripping ratio: 2.47:1.0 (waste:ore (includes stockpiled ore))
  • Initial Capital Cost: $91.7 M (includes $9.0 M contingency)
  • Sustaining Capital: $29.8 M (includes $2.4 M contingency and $10.1 M end-of-mine closure costs)
  • Working Capital: $8.4 M
  • Underlying NSR-Royalty: 3.4%
  • Cash Costs per Gold-Equivalent ("AuEq") Ounce* Recovered: $558
  • Avg. Annual AuEq Production: 73,000 oz (during 6.1 year active mining period)
  • Avg. Annual Gold Production: 68,600 ounces
  • Avg. Annual Silver Production: 279,400 oz.
    *Gold equivalent (AuEq) was based on recovered payable metal with an effective ratio of 65:1 Ag:Au.

Additional Highlights:

  • Average annual production for the first four years is approximately 81,000 AuEq oz. compared to approximately 51,600 oz. forecast in the 2012 FS, an increase of 57%.
  • Life-of-mine total cash costs of $558 per AuEq oz. (includes all royalties and Nevada Net Profits Tax and does not use silver as a credit). Low operating costs are mainly due to the high reserve gold grade, strong gold recoveries and short haulage distances.
  • All-in sustaining costs of $833 per AuEq oz.
  • Proven & Probable Reserves contain 545,400 oz. of gold and 4,459,600 ounces of silver.
  • Outstanding potential to upgrade a significant portion of Indicated and Inferred Resources that are currently constrained by the capacity of the permitted heap leach pad.
  • At $1,300/oz. gold and $20.00 silver prices, the IRR is 26% (after tax) and 35.4% (pre-tax) with a 2.9 year payback of the projected $91.7 million initial capex.

High reserve grade is the primary driver for Mt. Hamilton's low total cash cost of $558 per ounce of gold-equivalent produced. The low cash cost has been achieved in the 2014 FS using an improved mine plan offset by more conservative assumptions for metal prices, costs and operating inputs compared to the 2012 FS.

Mineral Reserves Statement, Centennial Gold-Silver Deposit,
White Pine County, Nevada, SRK Consulting (Inc.)
Reserve Category Tons
Gold Grade

Silver Grade*

Gold (oz)
Silver (oz)
Oz/Ton g/Tonne Oz/Ton g/Tonne
Proven 1,240 0.029 0.994 0.198 6.78 36.6 245.8
Probable 21,260 0.024 0.72 0.198 6.78 508.8 4,213.8
Prov.+Probable 22,500 0.024 0.75 0.198 6.79 545.4 4,459.6

*Reported silver grade is cyanide soluble.

Mineral reserves were estimated from an optimized pit design based on $840/oz. gold and $12.68/oz. silver prices. The cutoff grade used to estimate reserves was 0.006 oz/t gold equivalent (0.20 grams/tonne) and is the internal cutoff grade. Multiple pit scenarios were evaluated using these criteria under a range of gold prices to determine the most favorable pit design for both optimal resource extraction and cash flow.

Mineral Resource Statement Centennial Gold-Silver Deposit,
White Pine County, Nevada, SRK Consulting (Inc.)
Resource Category Tons
Gold Grade
Gold (oz)
Silver Grade
Silver (oz)*
Measured 1,427 0.030 42,000 0.209 299,000
Indicated 32,283 0.021 685,000 0.194 6,271,000
Measured and Indicated 33,710 0.022 727,000 0.195 6,569,000
Inferred 6,721 0.018 119,000 0.171 136,000
  • Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves estimate;
  • Resources stated as contained within a potentially economically minable open pit above a 0.006 oz/t AuEq CoG;
  • Pit optimization is based on assumed gold and silver prices of US$1,300/oz and US$19.60/oz, respectively, effective heap leach recoveries of 76% and 39% for gold and silver, respectively, a mining, processing and G&A cost of US$6.70/t; Net Smelter Return 3.4% and pit slopes of 45-50.
  • Reported Au ounces are contained metal subject to process recovery which will result in a reduced number of payable ounces;
  • * Reported Ag ounces have already received a recovery discount during resource modeling; therefore, there will be minimal further reduction of payable Ag ounces after processing; and
  • Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.

Seligman Area, NES-5 Pit, showing un-mined ore
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Centennial Drill Plan
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Centennial Drill Section A
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Centennial Drill Section B
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Mineral Resource Sensitivity

A price sensitivity analysis shown in Figure 12.14.1 was developed with the multiple runs of the Lerch-Grossman (LG) pit optimization algorithm at incremental gold sales prices ranging from US$50.00 to US$2,000 at US$50 increments.  Silver prices were factored to match the change in gold price for each LG run.  Values below US$400 per ounce were omitted from the graph as they yielded less than 10,000 gold-equivalent ounces.  Measured, Indicated, and Inferred material was considered ore for this resource sensitivity. Mining and processing costs from the detailed engineering costing work done for the 2014 Feasibility Study were used for calculating block values for each mining area.

The results of this sensitivity analysis indicate the majority of the potential Measured and Indicated ounces of gold are captured by the US$1,250 per ounce gold sales price pit and that there is a significant amount of Inferred material that, if upgraded, could have a positive impact on economics for pits designed above US$1,000 per ounce gold.

Permitting Status

The US Forest Service approved the Environmental Assessment and the Plan of Operations for mining operations at Mt. Hamilton in Q4 2014. The Bureau of Land Management has granted a Right of Way for access to the private properties where offices, maintenance facilities, process plant and leach pads will be located. Three major state permits have been issued by the Nevada Department of Environmental Protection (NDEP), the Water Pollution Control Permit in July 2014 and two Reclamation Permits in January 2015. The only remaining key permit is the Air Quality Permit which has been submitted to NDEP and approval is expected in Q1 2015. Local building permits for offices and maintenance facilities will be submitted when the plans are finalized.

Wheeler Ridge Target

The Wheeler Ridge area is located immediately south of the Centennial ore deposit and represents a significant gold exploration target.  Rea Gold Corp. first explored this target as they were developing the Seligman mine which they produced from between 1995-1997.  Rea Gold collected approximately 2,000 soil samples over much of the existing land package at Mt. Hamilton. The 100 ppb gold and trace element soil anomaly outlines an area that is roughly four times larger in area than the Centennial deposit.   The rock formations and associated rock alteration underlying the soil anomaly are similar to the underlying rock formations and alteration observed at the Centennial and Seligman deposits.

Rea Gold drilled 40 shallow holes at Wheeler Ridge in 1995, encountering mineralization along two flat lying faults similar to Centennial with intercepts up to 40 feet.  Outcrops in this area have returned values up to 2.06 grams per tonne gold.  Near the northern end of the Wheeler Ridge target, nearest the Centennial deposit, an 800 ppb gold in soil anomaly remains entirely untested, largely because there were no existing drill roads there.

Based on the previous work done at Wheeler Ridge, an Environmental Assessment and Plan of Operations for an exploration program at Wheeler Ridge was approved by U.S. Forest Service in May of 2013 to allow for drill testing the Wheeler Ridge zone.