C ^,J;A\ 5-6 a study of non-ferrous metal refining opportunities in the four corners states COLORADO U. S. DEPARTMENT OF COMMERCE John T. Connor, Secretary AREA REDEVELOPMENT ADMINISTRATION William L. Batt, Jr., Administrator ARIZONA Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://archive.org/details/studyofnonferrouOOfbtu A STUDY OF NON-FERROUS METAL REFINING OPPORTUNITIES IN THE FOUR CORNERS STATES Prepared for ARA by F.B. Turck & Co . , Inc., under a technical assistance contract January 1965 U.S. DEPARTMENT OF COMMERCE John T. Connor, Secretary Area Redevelopment Administration William L. Batt, Jr., Administrator For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D. C, 20402 - Price $ 1.2£ FOREWORD Most of the base-metal smelters constructed or planned throughout the world in recent years utilize the recently developed imperial Smelting Process, which has shown flexibility and economy in treating complex ores containing lead, zinc, and minor proportions of copper, cadmium, gold, silver, and other associated metals. ARA 1 s preliminary investigation led to the conclusion that this process would improve the possibilities of sustaining production and employment by enabling industry to make better use of the lean ores available in domestic areas. Consequently, technical assistance was provided for a project to test the application of the process to base-metal ores in Colorado, Utah, New Mexico, and Arizona with the thought that other mining areas might find data in the study that would be useful to them. The study was conducted by F. B. Turck and Company, consulting engineers, under contract to ARA. Findings and conclusions of the study are theirs. ARA is making the results available in its program to help revitalize areas of economic distress. William L. Batt, Jr., Administrator Area Redevelopment Administration IN DEX Summary and Conclusions 1 Introduction 9 Non-Ferrous Metal Production in Colorado 13 Selecting the Metallurgical Processes 1.6 Development of the Zinc Blast 20 Furnace The Operation of the Imperial 21 Smelting Process Blast Furnace Historical. Development of 28 Impe r i a 1 Sme i t ing P roce s s Assessment of the I„S.P. Process 30 Ammenability of Colorado Produced Ores and 35 Concentrates tc the I„S ,P, Furnace Developing a Metal Refining Complex 39 Capital Costs of the Metal Refining Complex 42 Operating Costs of the Metal Refining Complex 49 Product Recoveries from the Metal Refining 6 3 Complex Marketing the Products of the Metal 68 Refining Complex INDEX ( c ontinued) Page The Marketing Organization 72 A Review of the Market Status of Each Product 73 to be Produced Profitability of the Metal Refining Complex 97 Selecting the Site for the Metal 110 Refining Complex Developing the Miner's Position Relative 120 to the Metal Refining Complex Metal Reserves in The Four Corners 129 States Regional (Mining) Activity and Outlook 138 APPENDIX Report on Current Activities and Geological 141 Prospects in the Colorado Mining Districts LIST OF ILLUSTRATIONS Page Table 1 - Mine Production During 1963 of 12 Metals Contained in Ores in the Four Corners States including Arizona, Utah, Colorado and New Mexico Table 2 - Assays of Zinc, Lead, Copper 15 Concentrates as Currently Produced by Operating Mills in Colorado Pictorial Illustration of Zinc-Lead (ISP) 25 Blast Furnace Schematic of Charge Preparation System 26-2 7 Table 3 - Annual Performances of Imperial 36-37-38 Smelting Processes Furnace Table 4 - Allocation of Capital Costs by 48 Refinery Units Table 5 - Annual Operating Costs for Metal 50 Refining Complex Based on Cost Factors as Developed for Pueblo, Colorado Table 6 - Allocation of Operating Costs by 51 Refinery Units Table 7 - Allocations of Operating Costs by 5 3 Types of Concentrates Table 8 - Personnel Requirements for Metal 56-62 Refining Complex Table 9 - Summary of Over-All Recoveries 67 of Metal Refining Complex LIST OF ILLUSTRATIONS (continued) Page Table 10 - Products to be Produced and 69 Marketed by the Metal Refining Complex Table 11 - Summary of Gross Marketing 70 Income from Sale of Refined Products Table 12 - Prices and Sources of Price 71 Information Used in Report Table 13 - Sulphuric Acid Consumption 90 Table 14 - Operating and Capital Costs 94 Required to Produce Diammon-Phosphate Fertilizer Table 15 - Primary Fertilizer Consumption 96 for 1963 Table 16 - CASE I - Colorado Metal Refining 99 Complex Projection of Cash Flow Table 17 - CASE II - Colorado Metal Refining 100 Complex Projection of Cash Flow Table 18 - CASE III - Colorado Metal Refining 101 Complex Projection of Cash Flow Table 19 - CASE IV - Colorado Metal Refining 102 Complex Projection of Cash Flow Table 20 - Metal Refining Complex Summary 103 of Projected Cash Flows Table 21 - Profit Expectations of Various 108 Combinations of Refining Units LIST OF ILLUSTRATIONS (c o ntinu ed) P age Table 22 - Showing Savings Possible on 113 Shipments to Various Smelter Sites in Colorado Table 23 - Allocations of Operating Costs 115 for Each Smelter Site Table 24 - Estimated Gross Dollars Produced 124 by Each Mill in Colorado Table 25 - Breakdown of Materials Input and 126-127 Production of Refined Metal by Each Mill in Colorado Table 26 - Showing the Recovery of Metals 128 in ISP Furnace for Each Concentrate Table 27 - Metal Reserve Estimates for the 130 Four Corners States Table 28 - Definition of Ore Reserves 132 Table 29 - Annual Production of Lead/Zinc 134 A STUDY OF NON-FERROUS METAL REFINING OPPORTUNITIES IN THE FOUR CORNERS STATES SUMMARY AND CONCLUSIONS The Four Corners Area of the United States, in- cluding the states of Colorado, Utah, Arizona and New Mexico, produce 78 percent of the copper, 26 per- cent of the zinc and 2 7 percent of the lead mined in the United States. These States also produce 35 per- cent of the gold and 2 7 percent of the silver mostly as by-products of the basic lead/zinc and copper mining activities. Copper mining in these four States is set up quite differently from the lead/zinc operations. Copper is mined by large integrated mining-ref ining- marketing companies. Lead/zinc and ores on the other hand, are mined mostly by independent miners. Very large copper refining facilities operate in Arizona and Utah but there is only one lead, and no zinc re- fineries, in the four States. This study is sponsored by the Area Redevelop- ment Administration with the purpose of determining whether metal strategically located refining facili- ties would stimulate additional mining activities and provide employment opportunities in the low-em- ployment areas of the several States. It was decided to select Colorado, the most favorably located state with respect to transporta- tion and markets for a detailed study. It can be assumed that the results of the Colorado Study would be applicable to the other States. In 1963 Colorado's projected production was 167,017 tons of lead, zinc and copper concentrates having a net return value to the mills of $13,254,000, These concentrates were shipped to out-of-state smelters at a freight cost of more than $2,000,000. -1- Colorado concentrates are made from complex sulphide ores which contain a variety of mineral values including, but not limited to, lead, zinc, copper, gold, silver, iron, cadmium, sulphur, ar- senic, bismuth, antimony, manganese, germanium and tin. Obviously several of these minerals are of low concentration and of no commercial value in to- day's markets, however, it was the objective of this study to develop metallurgical processes for all minerals representing marketable values. Investigations of processes resulted in the selection of the Imperial Smelting Processes blast furnace as the basic refining unit. There are pyro-metallurgical problems of zinc smelting that have for decades defeated attempts to improve meta- llurgical recoveries to keep pace with improvements in processing other metals. The Imperial Smelting Processes, Limited, of Avonmouth, England, after many years of research, developed a blast furnace that overcame many of the metallurgical problems of zinc refining, and since 1960 we have seen furnaces constructed, or licensed for construction, in West Germany, Australia, Africa, France, Poland, Rumania, Canada and Japan — almost everywhere — except in the United States. The I.S.P. furnace and its accessory equipment represents a large capital investment, as in the case of the standard I.S.P. blast furnace constructed in Colorado, the capital cost would be $15,860,000. To counter this high capital cost the I.S.P. furnace is more efficient in its requirements of manpower and, furthermore, is capable of producing a refined bullion in which are recovered copper, lead, gold and silver. The complex sulphide ores of Colorado containing many minerals including zinc, lead, copper, gold and silver are, therefore, very amen- able to refining in the I.S.P. furnace. The I.S.P. blast furnace, because of its ability to accept complex ores without the necessity of making separate concentrates, as is the case to- day with conventional smelters, represents many po- tential advantages to the mine operator. Bulk con- centrates by low-cost gravity methods will be -2- possible, or if the ore is high grade, it can be accepted by the I.S.P. unit without milling or con- centration of any type. Savings up to $2.50 per ton of ore mined would be possible in this latter case. Tests conducted for this study have indicated possible reagent savings alone of 17 to 25 cents per ton of ore mined. Since no separation of concentrates is required all metals can be paid for at the I.S.P. furnace whereas, in conventional smelting, many metals are not paid for, or actually represent penalties. To- day's miners in Colorado are losing over $850,000 each year in zinc values that are contained in copper and lead concentrates for which no payments are made . The flexibility of the I.S.P. furnace will permit it to accept oxide and carbonate type ores that heretofore have not been acceptable for con- ventional milling and smelting procedures. The I.S.P. furnace is capable of producing a Prime Western Grade of zinc, but at this stage in its development can only produce other metals in a semi-refined stage, such as lead bullion, or copper matte. This represents possible problems of market- ing and so it is recommended in this report that additional refining units be included in the plans so that special high grade zinc, refined lead, and high nutrient value fertilizer can be produced. These products would be suitable for marketing directly to users. Provisions for the recovery of cadmium would also be provided. These additional refining units would raise the capital outlay up to a total of $28,570,000, but at the same time they raise the annual gross revenue to $35,124,000. We have named this pro- posed metal refining plant the COLORADO METAL REFINING COMPLEX . The metallurgical recoveries by the Colorado Metal Refining Complex and its tonnage capabilities are extremely good and improving each year. In fact, the quantities of zinc concentrates acceptable -3- by the I.S.P. unit have been increased by 20 percent in the past 12 months representing improved tech- niques in operations. The standard I.S.P. blast furnace is to-day capable of processing over 90 per - cent of the concentrates currently produced in Colorado, and we can expect a fully operational fur - nace will be able to treat all of them within a year, or two . Listed below are the principal metals available in the concentrates currently produced in Colorado and the recoveries projected by the Colorado Metal Refining Complex. Metal Metal Metal in Recovery Product Concentrates (Tons) Grade Zinc 63,800 57,400 Spec . High Grade Lead 25,900 20,336 2,947 Refined Lead In Matte Copper 5,100 4,461 In Matte Cadmium 267 200 Refined Silver 2, 167, 380 oz. 2,059,000 Refined Gold 15,031 oz. 14,500 Refined Sulphur 44,600 82,500 (1) See Note (1) NOTE: (1) Sulphur is recovered as SO2 gas, converted to sulphuric acid and then combined with anhydrous ammonia and phosphate rock to make diammon -phosphate , a high nutrient value fertilizer. The annual operating cost of the Colorado Metal Refining Complex will vary between $5,903,000 and $5,378,000 depending on the location of the refinery. The refining complex will require a staff of 61 and a work force of 316 skilled persons. The annual pay- roll will be $2,345,820. In addition, the refinery will require annually 40 million KWH of power, 525 million gallons of water, and 1.6 billion cubic feet of natural gas. These operating costs represent approxi- mately $35.30 for each ton of concentrate processed. _4. Six locations along the Denver Rio Grande Rail- road have been considered in this study. The ob- jective has been to select the site offering the lowest cost operations to the refinery and, at the same time, represent the most convenient location to the miners. Considering both refinery operat- ing costs and freight costs from the mine to the refinery, these six sites are ranked in order of their standing. 1st - Glenwood Springs 2nd - Gilman 3rd - Ridgeway 4th - Grand Junction 5th - Leadville 6th - Pueblo The total over-all dollar difference including freight costs between Glenwood Springs and Pueblo is $701,924. However, there are many other considera- tions that must be evaluated before a final location is determined. Some of these other considerations may well transcend the dollar savings as calculated. The savings in freight to the miners is a very significant item by the virtue of the refinery being located in Colorado convenient to the miners. These annual savings will vary between $1,252,485 and $857,399, depending on the site selected. This study was authorized with the expectation that it would represent a financial gain to the investors and at the same time generate savings to the producers. It would appear that both of these expectations are obtainable, while profits to the investors are obviously essential, it is equally important to the long range success of this project that the producers increase their net-backs. The suggested buying schedules, the refinery location and the degree of metal refinement have all been planned with this thought uppermost. There are good reasons for this position. First, the Area Rede- velopment Administration has sponsored this study with the expectation that additional employment will be developed. While the construction of the refin- ery unit alone will provide over 300 new jobs, the -5- jreal increase in jobs will be developed at the mines. In order to sustain and encourage mining the miners must be permitted to realize increased profits. This report suggests a "refinery buying schedule" be developed that includes the following basic assumptions: 1. The miner is paid for all minerals contained in his ores that represent market values. 2 . The miner is paid for the minerals contained in his ores at the full quoted market prices. 3. The miner is paid for the minerals contained in his ores at the highest percentages of recovery consistent with the metallurgical capabilities of the refinery units. The annual gross value of the minerals recovered by the Colorado Metal Refining Complex (based on average concentrate assays from each mill) is $35,124,000. A marketing organization is recommended to sell these refined products directly to users. The total reserves of crude ore in all cate- gories in the Four Corners Area is estimated to be in excess of 50,000,000 tons. These reserves would be sufficient to supply the concentrate requirements of a metal refining complex longer than the normal depreciation schedule of 20 years, or 5 percent. However, it is impossible to determine a realistic depreciation schedule until specific mining companies have agreed to commit ore reserves, and a composite ore reserve determination schedule has been made. Such commitments will not be forthcoming until the other technical and economical factors developed in this study are made available to each active mining company and each prospective mining company, and decisions are made relative to the benefits to each. These benefits will vary to a considerable degree depending on the site of the refinery complex. For example, a refinery site at Ridgeway should in- crease the net-back to Telluride by a minimum of 12 percent, based on freight savings alone. The Eagle Mine could expect a refinery site at Gilman to in- crease the net-back by not less than 2 3 percent. -6- While it is not possible to select a firm depre- ciation schedule until after the various mining prop- erties have been committed and specific ore reserves documented, we have made several hypothetical pro- jections of profits based on a flexible plan provid- ing for a "sinking-fund" that would permit, in effect, adjustments in pay-outs to reflect current variations in ore reserves. These hypothetical pro- jections permit us to calculate a "profit" on "invested equity" of $1,937,000 (after taxes) for the complete metal refining complex. (These calcu- lations assume an increase in payment for concen- trates, reflecting a net-back improvement of $1,250,000, over the present situation) . If we consider the cash available from depreciation the "invested equity" could be paid-out in 2.7 years. The cash flow for several combinations of re- finery units will vary from $7,251,738 to $4,126,089, depending on the refinery unit mix. If we assume no increased net-backs to miners the metal refining complex cash flow would vary from $8,500,000 to $5,300,000. It is obvious that even a depreciation schedule of 10 percent plus interest on borrowed funds would return substantial profits to the metal refinery complex. The projections shown above are conservative. The profits of the refinery can be improved sub- stantially as markets for products are developed closer to refinery site. Considering that markets are very distant to-day, $2,278,200 has been allo- cated from revenue for freight expense. The I.S.P. furnace is capable of processing twice the quantity of lead concentrates as calcu- lated in the study, at incrimental costs, with sub- stantial profits to be expected. If commitments for concentrates can be obtained from existing and potential producers it would appear that the proposed refining complex can be- come a reality. It offers many actual and many potentially valuable assets to the miner. It offers to the investor a profitable investment. It offers -7- to the Four Corners Area a firm basis on which its mining industry can he revived and strengthened; it offers additional employment opportunities, and it provides refined metals and chemicals on which manufacturing industries can he developed. -8- A STUDY OF NON-FERROUS METALS REFINING OPPORTUNITIES IN THE FOUR CORNERS STATES INTRODUCTION The Four Corners States of the Western United States are a virtual storehouse of metals of all types. The Four Corners states of Arizona, Utah, New Mexico, and Colorado produce 78 percent of the copper, 26 percent of the zinc, and 27 percent of the lead mined in the United States. In addition, the complex ores of these Rocky Mountain States contain many other minerals of value to the economy of the United States. Over 35 percent of the gold produced in this country comes from these states, and 2 7 percent of the silver. A very large part of these metals are recovered from the complex lead/zinc sul- phide ores. This is not to say that lead, zinc, copper, gold and silver represent the only values in a non-ferrous mineral in- dustry in the Four Corners States. A typical analysis of the material mined in this area is very apt to contain these minerals: zinc iron lead antimony cadmium sulphur arsenic copper gold silver silica manganese germanium tin bismuth chlorine fluorine Under existing smelter and refinery arrangements, inde- pendent miners receive a payment only for zinc, lead, copper, gold and silver. This study has been made with the purpose of finding ways that refining of metals can be made more efficient so that miners will receive a greater percentage of the values contained in these ores, and mining activities will be stimu- lated, and employment in this basic industry will be increased. -9- Refining facilities for copper in the Four Corners States are available close by the producing mines. Copper smelters in Arizona and Utah have an annual capacity for copper ores of 5,705,000 tons. In addition, there is electrolytic refining capacity of 249,000 tons and fire refining capacity of 84,000 tons . There is, by comparison, no refinery facility for zinc in the Four Corners States of Arizona, Utah, New Mexico and Colorado. There is only one lead smelter in the area, being located in Utah. Mines and mills in the Four Corners States must ship lead and zinc concentrates, and ores, to Texas, Oklahoma, and even to points in Montana and Idaho for refining before the prod- ucts of the mines are suitable for marketing. High freight costs and low net-backs result. Many of the lead and zinc mines are owned and operated by independent companies. In contrast, the copper mines are owned or controlled by the refining companies. Since it appears that the copper resources of the Four Corners States are provided with adequate and convenient refining facilities, and that there are no similar convenient facilities for refin- ing lead and zinc ores, and concentrates, this study is direc- ted to that end. We must determine if modern refinery facil- ities, strategically located with respect to mines and markets will improve the profitability of the lead/zinc mines and thereby stimulate exploration and development activity and provide additional employment opportunities in depressed em- ployment areas of Arizona, Utah, New Mexico and Colorado. Budget considerations would not allow a study of each of the four states and, therefore, it was decided to select one of the four and prepare a comprehensive study of that state. The results of such a study could easily be adjusted to fit the circumstances of one, or all of the other three states. A study of the market pattern for refined lead and zinc will indicate that the consumption of these metals is concen- trated in the States of Illinois, Ohio, Pennsylvania, Michigan, -10- and Indiana. These States represent 61 percent of the zinc, and 24 percent of the lead consumed in the United States. Refined products must, therefore, move eastward from the Four Corners States to find suitable markets. The rail transportation system is oriented to serve the prime mid-western markets. This fact, plus the topographical features of the Rocky Mountains, has placed Colorado in a strategic transportation position. Therefore, in view of these conditions, it was decided to make the State of Colorado the object of this study. -11- CO -H CO P w < p EH < CQ M S < § o En N s cn CM o o p CD P- 0- o u o o O O o o o O o o o o % <* *> ^ H r- m kO CTi o r» ID r- cn cn CN CN in r» LD O IT! o o cn o CT* t£> O CO ^ ■* •» «k LD n O r* CO on <* CN H LO cn [-«• r- CPi (X) l> cn o H cn O It »» -» •* cn «tf \D 00 O O CO CN <£> cn C^ 0> CO r» o H CO rH H ^ CTi •» * ■* ■* l£> CO in CN cn "tf CNJ rH CO CO m «tf CM rH H H O cn CO O *» ** »• •* m CT^ m rH P CD G £ •H cn M-l w cn rd rci C C £ £ rC A to cn CO in p -p •H •H c fi p P CO w Eh O 2 CN -P C CD e -p P rd ft CD P to >1 rQ T3 (D ^ cn •H G P 3 • <4-\ cn CD CD G P •H CD S £ m P 3 ■G rd cn CD P G 3 CQ •H -P s rd p e p •H P m CD c P •H g H rH <-{ m < I CN NON-FERROUS METAL PRODUCTION IN COLORADO During the 5-year period, 1959 through 1963, Colorado had an annual average production of 17,214 tons of lead, 40,154 tons of zinc and 2,347 tons of copper. These totaled 298,580 tons of recoverable metal with a value of $67,254,000. It most cases the lead/zinc ores of Colorado are complex sulphides containing, in varying percentages, each of these minerals. Under existing technology these minerals are sepa- rated first in the mill which is in most cases an integral part of the mining establishment. Concentrates of minerals are prepared at the mill and these concentrates of lead, zinc, and copper (in one case only in Colorado) are shipped to smelters (or refineries) for further concentration and refinement. While each of the concentrates contain a heavy percent- age of the selected mineral (55% zinc or 75% lead) it also contains smaller percentages of other minerals. This is illu- strated by the assays of each Colorado produced concentrate shown on Table 2. The zinc concentrate goes to the zinc smelter where a relatively efficient recovery of zinc can be expected but poor recovery of the other valuable minerals. The lead concentrate must be sent to the lead smelter with the same results, and so for copper. The net result of this diversion of mineral values is lower recoveries, and less re- turn to the miner- There are no smelters or metal refineries in Colorado, and in 1963, the mining companies paid out over $2,000,000 in freight to move their concentrates to the smelters in Texas, Oklahoma, Utah and Washington. The non-ferrous mines operating in Colorado during 1963 scheduled production of 167,017 tons of concentrates. These -13- concentrates were prepared by 8 flotation mills varying in out- put from the largest, responsible for 60,000 tons and represent- ing 36 percent of the total, to the smallest which contriubuted 5,400 tons, or 3 percent. The detailed analysis and annual production of each mill are shown on Table 2 which follows. A study of these concentrates indicates that eight (8) of the thirteen (13) minerals represented in the assays represent marketable minerals; these are: zinc cadmium lead gold copper silver iron sulphur Under existing commercial smelter technology and buying schedules (as of December 1963) miners receive payment for zinc, lead, copper, gold and silver in varying percentages de- pending on the type of processing smelter, freight, and current market prices. -14- a u h < Cm H C/3 t^ iJ 3 W M < O H OOinOvCOCOOOOOO OOOOOOOC^ coo^ooooocooon Eh W ° £i W en ^OC-OCOtNOOOOO^I'O'O H I^OOIOOOOOCOOLO ajiot^ocooooo^F— lOi «3 J w o Eh O 2 2 i ** O O rH O O i O M OOOOC'-^OCO CQC0C4OOOOOOO' H Q IS) o i/iOoooHooooococr- ^■•^(MOi-HOOOO^vOOCO ONOOOOCOOOOOOCOOO oco-^ooooot-oo vO O HCO^^OrHOCNOr-iaNOCN cocolq,hcnoOi— 100^00 l>COCM"tfr-HOOOOOrHOCN LO O LOO'^'OCrvCNCN-'^'OrHiHOCN v£> r- l -H,HOO^|OOCOOO CMoooocot^-^a^oooi-ouoo .— |02 • To convert the CO2 to CO resulted in a low thermal efficiency and high costs. The Imperial Smelting Process blast furnace development recognized the inherent pyrometallurgical problems in the smelting of zinc and developed a system around these problems. To illustrate, the oxidation of zinc (gas) is avoided at all stages from its generation to its condensation with the follow- ing steps: (1) The whole blast furnace charge is maintained at a temperature above the zinc re-oxidation temperature , and (2) The zinc vapors are not allowed to fall below re-oxidation temperature in passage from furnace to condenser, and (3) The gases are rapidly cooled in the condenser. The key to the successful development of the Imperial Smelting Process blast furnace was the use of lead as a circu- lating medium. Liquid lead containing 2 to 3 percent zinc can be pumped and handled with ease. it was further discovered that lead could be added to the furnace charge so that the simultaneous smelting of lead became possible. Furthermore, the requirements of coke in the furnace have been shown to be based on the need for zinc smelting and slag melting ; and so no extra amounts of coke are required for lead smelting. The effect is to give lead a "free ride." Not only does this give to the Imperial furnace an important cost advantage, it permits greater flexibility in the selection of concentrates and ores as feed stocks. THE OPERATIONS OF THE IMPERIAL SMELTING PROCESS BLAST FURNACE Zinc concentrates and lead concentrates are usually, but not invariably, recovered from the ore as finely divided sphal- erite (ZnS) and galena (PbS) . It is necessary both to burn the -21- sulphides to oxides and to agglomerate the grains into lumps suitable for feeding into the blast furnace. Both operations are carried out in the sinter plant associated with the blast furnace. The sulphur content of the concentrates provides the fuel, either wholly or in part, and the combustion gases, con- taining sulphur dioxide (SO2) can be utilized, after cleaning, for the production of sulphuric acid. If the zinc concentrates contain appreciable amounts of cadmium, this metal, which is more volatile than zinc, is largely eliminated from the sinter and can be recovered in a separate cadmium plant, or if refluxing is practiced, then the cadmium would be recovered at this point. The sinter is fed to the blast furnace in pre-weighed batches which also contain the correct weights of preheated coke. A small addition of fluxing agent, normally hard burned lime, may be incorporated to adjust the composition of the slag formed in the furnace hearth. The coke is preheated, using blast furnace gas as fuel, to improve still further the overall thermal efficiency of the process. Greater in total weight than the sinter, coke and flux is the air supply forming the blast. The cold blast passes from the blower to a preheater, burning blast furnace gas as fuel (or a standy fuel when blast furnace gas in unavailable) . The heated blast travels along an insulated bustle main for distri- bution to the water-cooled tuyeres which project through the blast furnace walls into the burden. Several types of blast preheaters are in use or contemplated. The blast furnace has many design features similar to a lead blast furnace since lead smelting proceeds simultaneously with zinc smelting. It is rectangular in plan with rounded ends. The lower part consists of water jackets through which pass the tuyeres, but the upper part, which has less extreme temperatures to resist, consists of a brick-lined, steel en- cased shaft, supported independently of the lower part. The roof is of the suspended type made of cast refractory concrete through which project the two double bell charging units. -22- The reduction of zinc oxide is highly endothermic (heat consuming) but lead oxide reduces to metal with some evolution of heat, the reaction: Pbo + CO = Pb + C0 2 being slightly exothermic. This means that lead oxide is re- duced without the need for additional coke. However, the gas from the furnace has higher carbon dioxide and lower carbon monoxide contents, but, on burning, is still capable of pre- heating the coke and air blast. The lead flows to the hearth of the furnace from where it is tapped periodically with the slag into a forehearth, which allows the metal and slag to form separate layers, and to overflow into a ladle and slag granu- lation launder, respectively. The crude lead bullion can be refined immediately, or cast in moulds for refining elsewhere. The ability to smelt lead and zinc in the same process is of particular value, as the two metals frequently occur to- gether in nature. This is true in Colorado where the sulphide ores contain mixtures of lead, zinc, copper, gold and silver. Separation is normally necessary by differential flotation to give zinc concentrates and lead concentrates for individual smelting. The Imperial Smelting Process can accept bulk flo- tation concentrates, vfaich may cover a very wide range of compo- sition. At Swansea Vale, for example, the zinc content of sinter at 40 percent is double the lead content. At Broken Hill, Northern Rhodesia, on the other hand, the lead content exceeds the zinc. This adaptability makes the Process ideal for a custom smelter. Some other metals which can have a dis- proportionate nuisance value in many processes cause little trouble . The zinc does not follow the lead, but instead leaves the top of the furnace as a gas after having been reduced to the metal. it is mixed with the furnace gases which consist prin- cipally of carbon dioxides, carbon monoxide, and nitrogen. A proportion of the hot blast (known as 'to air') is put into the furnace shaft above the charge level and reacts with the carbon monoxide to raise the temperature of the mixture of gases to 1000-1050°C/ which temperature allows the gases to reach the -23- lead-splash condenser before excessive re-oxidation of zinc has taken place. The gas stream passes out of the side of the furnace into a condenser which quenches the gas very rapidly to below 500°C. There is insufficient time for appreciable oxidation of the zinc to occur and it dissolves in the molten lead cooling medium. Furnaces can have either one large or two smaller con- densers according to design. A condenser consists of a pool of molten lead in which are immersed mechanical rotors that create an intense raid of lead droplets to cool and 'scrub' the gases. The cooling duty is heavy and the lead absorbs a great amount of heat. Attached to each condenser is a lead cooling circuit and zinc separation system. The zincy lead leaves the condenser by an underflow baffle, which forms a gas seal, and is pumped into cooling launders, which consist of water jacketed open channels. The solubility of zinc in lead falls with decreasing temperature so that the cooling metal eventually becomes saturated in zinc. Further cooling causes the zinc to come out of solution, and, due to the difference in densities, the zinc floats on top of the lead. The launder discharges into a separation system which allows the zinc to overflow to a heated holding bath and the lead to return to the condenser. It is necessary, for heat extraction requirements, to circulate some four hundred tons of lead through the closed circuit - condenser/pump/launder/separa- tion system/condenser - for every ton of zinc produced. The zinc is treated with sodium to remove arsenic, reheated to cast- ing temperature, and cast in traditional slab form for sale. The furnace gases leaving the condenser contain some zinc and lead which are recovered as a slurry of 'blue powder' by cooling and washing the gas stream in towers and mechanical scrubbers. The clean gas is boosted by a fan to the burners on the coke and blast preheaters. The blue powder is thickened and filtered for reincorporation in sinter. Drosses which con- tain appreciable amounts of lead and zinc are removed from several points in the condensation and separation circuit. These are also returned to the sinter plant. -24- DRUM MIXER ZINC AND LEAD CONCENTRATE SINTER GASES TO ACID PLANT UPDRAUGHT SINTER MACHINE CHARGE PREPARATION SYSTEM COKE PRE. \ COKE STORAGE BUNKER HEATER ZINC/LEAD SEPARATION SYSTEM CASTING ZINC SLABS -25- SCHEMATIC DIAGRAM OF CHARGE PREPARATION SYSTEM 1. Following the previous cycle, the system prepares to proportion the next charge. Cold coke is being fed to the top of the preheater on a signal from the automatic level detector. Although only coke and sinter are illustrated, other materials, such as fluxes, can also be proportioned if needed 2. The cold coke has been introduced into the preheater to main- tain the correct level. The coke skip is being refilled from the main storage bunker.When the next furnace charge is required, hot coke is extracted from the preheater and warm sinter from the insulated storage bunker. The charge bucket begins to rotate to ensure an even charge distribution 3. Correct weights of sinter and coke have been delivered to the weigh hoppers which are ready to discharge into the charge bucket. The level of coke in the preheater has fallen and the level detector calls for another skip of cold coke -26. 4. The hot coke has been discharged into the charge bucket, followed by the warm sinter. The complete charge will then be delivered to the furnace top. The full skip of cold coke is on its way to the top of the preheater. Proportioned charges are normally delivered to the furnace in this way at intervals of 10/12 minutes 5. The proportioned charge of sinter and coke, delivered to the furnace top by an automatic crane, is discharged into the furnace charging gear 6. The top bell is shut, the bottom bell opened, and the charge enters the furnace. The charge bucket meanwhile returns to the charge preparation system 7. Preheated blast air flows continuously into the furnace through water-cooled tuyeres. Zinc leaves the shaft as a vapour. Molten lead bullion and slag collect in the furnace hearth 8. Lead bullion and slag are separated in a forehearth. The molten slag is granulated with water in a launder. The lead bullion is cast into ingots or directly refined 9. The zinc vapour in the furnace gases is scrubbed out in a lead-splash condenser. The gases leaving the condenser, after further cleaning, are burnt to preheat the coke and blast air -27- 10. Hot condenser lead, containing zinc in solution, is cooled in water-jacketted launders. Zinc metal floats to the surface, is separated in a series of baths, and cast into slabs. The cooled lead returns to the condenser H ISTORICAL DEVELOPMENT OF THE IMPERIAL SMELTING PROCESS Following the successful operation of the experimental blast furnace at Avonmouth, two prototype commercial furnaces were built, also at Avonmouth. No. 1 furnace commenced opera- tion in 1950 and had a hearth area at the tuyeres of 55 sq. ft. No. 2 furnace was built in 1952 and had a hearth area of 69 sq. ft. Between 1952 and 1959 much metallurgical and engineering development took place and, as a result, the performance im- proved steadily and the design of the furnace and its ancill- aries became simpler and more robust. The development of up- draught sulphide sintering was a step of major significance. This facilitated the production sinter of consistent quality from a charge of mixed zinc-lead concentrates and also enabled the lead content to be progressively raised. As the economic advantages of simultaneous zinc-lead smelting became increas- ingly apparent, considerable advantage was also obtained by widening the upper section of the furnace shafts. This was done by sloping the jackets outwards above the tuyeres. An increase in capacity, with improved efficiency, was at once obtained. As a result of these and other developments, the output from the furnaces increased very substantially. Thus, No. 2 furnace, which in 1952 was designed to produce 28 tons of zinc per day, in 1959 was producing daily 70 tons of zinc and 30 tons of lead bullion. By 1958, such progress had been made that a bigger furnace was built to take advantage of the economies of large-unit operation which blast furnace smelting offers. The erection of a furnace to burn 110 tons of carbon per day (some 50 percent larger than No. 2 fu.rnace at Avonmouth) was consequently commenced at the Swansea Works. The furnace at Swansea presented the first opportunity of utilizing on a new site the experience gained during develop- ment period at Avonmouth from 1951-1958. Apart from the in- crease in size and the substitution of a telpher charging -28- system for the skip hoists used on the Avonmouth furnaces, the basic design developed at Avonmouth was closely followed. One feature of the Swansea plant is the exploitation of automatic control of the process, and considerable reliance has been placed on instruments and control systems developed specially for the purpose. The Swansea furnace was blown in on 9th of March, 1960. The horizontal retort furnaces at Swansea had been shut down a little earlier. Zinc smelting by the horizontal distillation process had been practiced at the Swansea Works since 1876 and the furnaces then in use had been in operation since 1916. Some difficulties were experienced during the first weeks of operation, but the furnace and its crew settled down rela- tively quickly and by mid-1961 production was at a rate of 112 tons of zinc and 56 tons of lead per day. During 1962 operations were very satisfactory. In the whole period from 1st of January to 31st of December, 1962, slab zinc production was 41,600 tons (14 percent more than in 1961), and bullion output was 20,751 tons. Production of zinc in 1963 was 41,000 tons, and of bullion 21,200 tons. The cause of the slight reduction in output in 1963 was the need to take a long shaft cleanout in November to carry out major repairs and modifications. Currently the furnace is producing at record levels, and although the furnace has still not yet reached its peak performance, the production rate is already 45 percent higher than that for which the furnace was designed. The Swansea furnace has not been operated for four years as a full-scale commercial unit. Before the Swansea furnace began operating, licenses were taken out in France, Australia, Northern Rhodesia and Poland, and furnaces built by Societe Miniere et Metallurgique de Penarroya at Noyelles-Godault . Sulphide Corporation Pty. at Cockle Creek N.S.W. and the Rhodesia Broken Hill Development Co., Ltd., in Northern Rhodesia are now in operation. Furnaces in Poland, Rumania and West Germany are at present under construction. A furnace in New Brunswick, Canada, has been started and a license has been granted to a company in Japan . -29- The output at Cockle Creek in 1963 was 49,200 tons slab zinc and 23,300 tons lead bullion, ASSESSMENT OF THE I.S.P. PROCESS Considering the various aspects of operations separately, the present position is as follows: Good continuity of operation has been achieved. As a cam- paign proceeds, a deposit of zinc oxide and sulphide builds up slowly on the upper jackets and walls of the furnace. This preserves the refactories but finally reaches such a thickness that the furnace performance is seriously impaired and the fur- nace must be shut down and cleaned out. During the last cam- paign at Swansea (No. 10) , the furnace ran satisfactorily for 32 weeks. The previous campaign lasted for 30 weeks. The present campaign is in its seventh week and the furnace is operating at record levels. Campaign life is thus longer than originally expected. Financially, this represents a consider- able improvement since, as with large-unit operation generally, continuity of operation is as important economically as metal- lurgical efficiency. Campaign length at Cockle Creek and Noyelle Godault are also higher than expected. In fact, as of July 1, 1964, Cockle Creek was in its 40th week of continuous operation, Correct charge sizing, accurate proportioning and effic- ient distribution of sinter and coke are, of course, basic essentials of efficient blast furnace operation. Particular attention has been paid to these requirements with beneficial results. Most of the fluxes and drosses made are incorporated in the sintered charge at controlled rates so as to give consis- tency of composition. Both sinter and coke are sized with some care in order to give uniformity of back pressure in the fur- nace. Fines are removed prior to charging since they tend to cause uneveness of charge density and if blown over into the condenser increase dross production. The Robson-type sintering process used at Swansea, but converted to updraught operation for lead-zinc sintering, has particular advantages in this connection. With this method of sintering, which was developed -30- at Avonmouth in 1933 for the horizontal distillation plant, only approximately 30 percent of the sintered cake discharged at the end of the machine is taken for output. The remainder is crushed and returned to the head of the machine to dilute the sulphur content of the incoming concentrates. With good proportioning and mixing, a porous mix is obtained with the optimum sulphur content (approximately 6 percent) which sinters well on the updraught machines. Since only a fraction of the cake discharged from the machines is taken for output, only satisfactory lump need be selected and one can afford to reject all fines. With a charge consisting almost entirely of lump sinter and coke, the furnace back pressure remains practically con- stant, and it is possible to run the furnace at a steady blow- ing rate. This is, in fact, kept at a constant value by auto- matic control. Under these conditions an almost uniform carbon consumption per day is maintained. The proportion of sinter to coke, and consequently the weight of zinc charged, per day is varied to suit the reduction policy chosen. In 1959, when the decision was taken by Consolidated Zinc Corporation to build a standard furnace at Cockle Creek in Australia, it was also decided that this unit should have only one condenser instead of the two condensers as at Swansea. Since only one lead cooling system and separating bath was re- quired, and as the automatic gas splitting control system de- veloped for two-condenser operation is not necessary, the single condenser system allows some saving in capital cost to be made. Although at first it was thought that the single condenser system was more efficient than the twin condenser, recent data following some changes at Swansea suggest that the difference is not so large as was perhaps thought. At both Avonmouth, Swansea and Noyelles-Godault, a feature of operation which is of growing importance arises from the ability of the process to treat a wide range of zinc and lead- bearing materials. A proportion of the charge is still made up of relatively -31- high grade concentrates, but increasing amounts of medium grade and bulk concentrates containing both lead and zinc are used. This latitude is possible because the composition of the slag is not critical, particularly with regard to iron content. With a choice of raw materials, flux additions can be kept to a mini- mum and to this extent a diet consisting only of high-grade concentrates is a handicap. Since precious metals are recovered at high efficiency, they can make a useful contribution to the economics of operation. As well as recovering zinc, the furnace has proved itself to be an efficient producer of lead. This arises primarily from the fact that the basic reaction for lead reduction in the furnace PbO + CO ► Pb + C0 2 is exothermic, and lead oxide reduction makes no demands on the thermal economy of the process. If PbO is added to the charge the CO present in the gas will effect reduction with a slight net gain in heat. The equilibrium constant is such that the reaction must occur rapidly near the top of the charge, so that adding PbO to the charge while producing extra C0 2 in the final gas (with which the condenser can deal) has no effect on the gas composition lower down in the furnace where most of the zinc is not affected. Lead can thus be simultaneously produced at little extra cost. During 1961 and 1962 at Swansea, the lead content of the charge has been progressively raised as lead-bearing materials became available, until the weight of lead charged is half that of the zinc. This increase in lead tenor had no adverse effects on furnace performance or operation. How far the lead content of the charge can be increased without causing any deleterious effect on zinc production is not yet known. Sinter containing over 25 percent Pb has been smelted successfully at Avonmouth. An additional advantage of the Process is that copper is produced dissolved in the bullion. Since the temperature of the bullion, when tapped, exceeds 1000°C, its capacity to carry -32- copper is high. Copper can be removed from lead to form a high grade matte by addition of sulphur (either elemental, or as lead concentrates, or as pyrites) . Continuous lead decopperiz- ing processes have been operated elsewhere. A process is under development at Avonmouth to recover copper from the I. S. Furnace bullion, which tends to be lower in sulphur and arsenic than bullions produced in normal lead blast furnace practice. So far, the recovery of copper by this technique has averaged 70 percent in the bullion. This provides a useful addition to the economics of operation when the cost of copper in the sinter is low, but does not permit the purchase of high grade copper concentrates specifically for treatment. Work to improve the recovery of copper is in hand. Since the zinc produced has been dissolved in lead in the condenser, and separated on cooling, its final lead content corresponds to that of the saturation value of lead in zinc at the separating bath temperature. The slab zinc output thus contains 1.1 - 1.2 5% Pb. Most of the arsenic leaves the furnace in the furnace bottom products, but some is volatilized and enters the conden- ser where it is removed with the dross and returned to the sinter machine. A small amount enters the zinc which can con- tain up to 0.04% as it leaves the separation bath. This is removed by adding sodium metal before casting. The final analysis of the slab metal output after this treatment is: Pb 1.0 - 1.25% Fe 0.014 - 0.02% As 0.001 - 0.003% Cu 0.003 - 0.005% Sn < 0.003% Na <0.0015% The metal is of Prime Western quality and can be used in all the commercial applications of this grade. -33- The metal can be used as a feed to a conventional type of refluxing unit to produce zinc of 99.99% grade in the standard manner. Other methods of purification are under examination at Avonmouth at the present time, including vacuum de-zincing. These methods have not reached the stage where they are avail- able for commercial application. The process has already found a place amongst the estab- lished methods of zinc production. Three furnaces are in oper- ation by the Rio Tinto-Zinc Corporation, Ltd. - at Avonmouth, Swansea and Cockle Creek in Australia. The process is also operating under license at Noyelles-Godault in France, and at Broken Hill in Northern Rhodesia. Furnaces are under construc- tion in Rumania, Poland, Germany and New Brunswick (Canada) . Early in 1964 the Sumitomo Metal Mining Company became a licensee. -34- AMMENABILITY OF COLORADO PRODUCED ORES AND CONCENTRATES TO THE I.S.P. FURNACE A preliminary step to the determination of the amen- ability of Colorado ores and concentrates to the I.S.P. blast furnace was the obtaining of samples of each concentrate, and the submission of assays and samples of these concentrates to the metallurgical group of the Imperial Smelting Processes, Limited, at their research facility at Avonmouth, England. It was the conclusion of the Imperial Smelting Processes, Limited, that the Colorado concentrates were entirely ammenable to the I.S.P. processes. The "annual performance" to be expected from a standard sized I.S.P. furnace was determined by the metallurgical group and these results are shown on Tables 3, 3-a and 3-b. The pro- jections for capital cost, process materials, operating costs and recoveries of the I.S.P. blast furnace are based entirely on the "annual performance" as determined by Imperial Smelting Processes, Limited. -35- TABLE 3 ANNUAL PERFORMANCE of IMPERIAL SMELTING PROCESSES FURNACE Tons Carbon in hot coke burnt in furnace 54,800 input Tons Concentrates - zinc - lead - copper Fluxes - limestone - sand Approximate sinter weight Total new feed - zinc - lead - copper - sulphur Output Slab zinc (1.2% Pb) Zinc in slab zinc Bullion Lead in bullion Copper in bullion Lead addition to condenser Slag Distributions (as % of new zinc and lead) Slab zinc Net lead in bullion Slag Sintering loss I.S.F. loss The copper can be removed from the bullion to give a matte containing about 45% Cu and 30% Pb. Tons Matte produced 9,913 Cu in matte 4,461 Pb in matte 2,974 pb in decopperized bullion 22 , 365 All weights in short tons. Figures are generally rounded off to nearest 100 units. -36- 115,700 42,300 9,000 23,300 1,100 180,600 63,800 25,900 5,100 44,600 59,800 59,100 30,400 25, 300 4,500 1,500 54,100 Zinc Lead % % 92.6 2.8 - 91.7 5.1 1.4 1.0 2.0 1.3 2.1 100.0 100.0 TABLE 3-a ANALYSES OF RAW MATERIALS Concentrates As shown on Table 2 2 . Coke As % of Fixed % Ash Analysis Fe as FeO Carbon Fixed carbon 88.2 1.024 Ash (assumed) 10.2 CaO Si0 2 A1 2 3 1.214 4.630 3.989 10.857 3. Fluxes Limestone °A FeO /o 0.27 CaO 53.8 sio 2 0.3 Others 1.6 Sand % FeO 1.0 CaO 1.0 Si0 2 97.0 Others 0.5 55.97 99.5 -37- TABLE 3-b SINTER AND SLAG ANALYSES (Approximate only) AFTER PROCESSING CONCENTRATES AS SHOWN ON TABLE 2 IN IMPERIAL FURNACE Sinter Slag (Zn free basis) % % Zn 39.5 Pb 17.9 Cu 2.8 FeO 10.8 40.0 as Fe 8.4 CaO 7.0 26.7 Si0 9 4.3 20.6 ■38- DEVELOPING A METAL REFINING COMPLEX A study of the developed technology for refining the currently marketable minerals in the complex sulphide ores leads us to the obvious conclusion that several different pro- cesses must be employed in order to refine each of the eight (8) "pay minerals" available in Colorado concentrates to the point of routine general marketability. To illustrate, the Colorado concentrates contain approx- imately 0.16 percent of cadmium. This valuable mineral can be recovered only to a limited extent in preliminary refinery operations, but in the refining of Special High Grade Zinc at least a 75 percent recovery can be expected. Therefore, the cadmium contained in the Colorado concentrates represents a gross market value of approximately $1,000,000 each year. A second reason to justify the concept of a complete re- finery complex with support marketing is that it provides a flexibility in products produced that will permit maximum market return. To illustrate, in to-day's zinc markets Special High Grade is in great demand, yet this grade of zinc is most vulnerable to the competitive inroads of substitute materials. It is possible that a few years hence new research and develop- ments would have established a completely new grade of zinc, and zinc alloys for entirely new uses. A market oriented re- fining complex would be capable of adjusting to meet the changed market environment. A third reason for the creation of a refining complex capable of producing market usable products is basic to the background and purpose of this study. Refined products avail- able in the Area makes possible the creation of manufacturing industries utilizing the refinery products to produce shapes and assemblies for the consumers markets. In to-day's highly com- petitive industries, we find that the successful raw material producer is extending his operations so as to encompass all -39- stages of production, manufacturing and marketing, and thereby insures his markets and increases his profits. It would be a normal extension of the function of the refining complex to undertake the manufacture of consumer and industrial items utilizing the metals and minerals produced. To illustrate, the pound of zinc purchased from the Colorado miner for 3 to 4 cents has a value of $5.46 per pound when cast as a carburetor for use in the "Oldsm o bile S t arf ire" . In order to create a metal refining complex possessing the capabilities of refining Colorado sulphide minerals to be the point of maximum market return it was decided to provide a zinc refinery , a lead refinery , and a. sulphuric acid plant , and a. fertilizer plant . The cost of constructing and operating a complex including these items are developed in this report. In developing the costs of the site and in plant service facilities, it has been assumed that all of the basic refining units mentioned in the preceding paragraph would be installed originally. Since, as it was pointed out earlier, the success- ful refinery complex must be capable of flexibility and adjust- ment to meet various market developments, we feel it advisable to provide generously for the site and service facilities so that changes, including additions, would be possible with mini- mum expense. In other sections of this report the operating and capital costs of a metal refining complex are developed in a manner that will permit independent evaluation of each segment of the complex. This will allow maximizing profits consistent with capital availability. In essence, the proposed refinery complex recognizes the "market back" philosophy. Products must be created that satis- fy a market need. There is no advantage to be gained if a product is first produced and only then is consideration given to its marketability. During the course of this investigation several efforts were made to secure commitments from established companies in the base metals field to accept semi-refined zinc and lead -40- products from the proposed metal refining complex for further refining and marketing. Obviously, the effect of such commit- ments would be to reduce the capital cost of the proposed re- fining complex and to relieve the operators of the marketing burden. Not one of these companies was prepared to give such commitments in advance although several would like to have the opportunity to consider such arrangements after the project has taken more definite shape. In the absence of commitments the only alternative is to provide for complete refining facilities and a marketing program. -41- CAPITAL COSTS OF THE METAL REFINING COMPLEX It was fortunate that several I.S.P. "standard size" furnaces have been recently built or are currently under con- struction. Information on the costs to construct these in- stallations was made available to assist in the preparation of this report. While some difficulty was experienced in trans- lating factors of construction labor productivity to local con- ditions, it is felt that this was accomplised and that the capital costs developed in this report are adequate for the considerations involved in this study. During the course of this investigation several possible sites in Colorado were considered as locations for the metal refining complex. Each site considered has factors both favor- able and unfavorable; however, all of these variable factors were operational matters such as, transportation, availability of raw materials, water, power and labor. Generally it was found that in matters of construction costs, the sites con- sidered were equally favorable. For this reason, the capital costs have been projected on the basis of the whole refining complex being sited in Pueblo, the easternmost site considered. Using these costs as a base, and using the variable operating costs developed for each of the other sites, we have been able to objectively evaluate each site separately. The following capital costs are considered to be applicable to each site. This study assumes that a complete metal refining complex producing refined zinc, lead, cadmium, gold, silver and sulphur in the form of sulphuric acid would be constructed at one site. It is developed later in this report the fact that the local market for sulphuric acid would be unable to absorb 120,000 tons of acid, that considerable freight absorption must be accepted in order to reach more distant markets. In keeping with the objective of maximum return on all products it has been determined that greater returns on sulphur can be realized if it is utilized as an intermediate in the manufacture of high -42- nutrient fertilizer. This would result in an increased net return on the sulphur. The markets for the high nutrient fer- tilizer can be found to a limited extent in Colorado, but the large markets are in the farm areas in states adjoining Colorado to the east including Kansas, Oklahoma and Texas. It has been determined, therefore, that a site closer to these markets and oriented to sources of natural gas would be more reasonable than to place a fertilizer manufacturing plant alongside the metal refining complex. This theme is developed in later sections of this report. Although the project capital costs of a fertilizer plant are listed with the other refinery units the matter is treated as an entirely separate plant facility. The basic refinery unit of the metal refining complex is the I.S.P. furnace. All of the concentrates and ores must start with this unit, and its accessory sintering plant. It may be that other refinery units could not be included initially because of capital availability, therefore, it has been decided to provide generously for the site preparation so that addi- tional units may be added as necessary. In another section of this report the relative profitabil- ity of each refinery unit is evaluated. -43- CAPI TAL COSTS BREAKDOWN SITE PREPARATION, SITE FACILITIES, AND AUXILIARY INSTALLATIONS OUTSIDE OF PLANT BATTERY LIMITS Since no specific site has been selected, an estimate is made on the basis of experience and arbitrary lump sums placed against the elements required. This estimate assumes all utilities brought to site boundaries. Site Preparation & Civil Works $ 150,000 Railroads & Roads 75,000 Utilities & Distribution 200,000 Fire Protection 50,000 Cooling Towers 80,000 Change House, Dispensarty, etc. 150,000 Office & Equipment 100,000 Shop & Garage 175,000 Laboratory & Equipment 150,000 Stores & Warehouse 50,000 Metal Stores 50,000 Thaw Shed 70,000 Land (100 acres) 10,000 $1,310,000 CONCENTRATE AND FLUX HANDLING Raw material receipt and storage, and recovery from storage. Rail and truck receipts of concentrates, limestone, silica and coke to be provided for with covered storage for custom lots of concentrates and open storage for limestone. Covered storage for fluxes and coke. Drying facilities for coke and fluxes as well as blending facilities for concentrates is included. Concentrate Storage $ 150,000 Coke & Flux Storage 50,000 Flux Crushing & Drying 100,000 Material Handling 100,000 Concentrate Blending 100,000 $ 500,000 -44- SINTERING PLANT Proportioning Plant, sinter plant, sinter recycle handling and gas cleaning . Costs of recently installed sinter plants are available. These have been adjusted for escalation and factored for inclu- sion of productivity. Direct Erected Cost $5,000,000 FURNACE PLANT & CHARGE PREPARATION These estimates are for a standard I.S.P. Furnace of 185 sq. ft. Estimates for costs of Swansea Vale, Cockle Creek, Rhodesia Broken Hill and Penarroya have been made available for our study. The basic problem in translating these costs to United States practice is one of assessing labor productivity. Based on these factors, it can be concluded that the single condenser furnace installation in the Colorado area will carry a direct cost of: $5,600,000 SULPHURIC ACID PLANT The available sulphur from the sinter plant will require an acid plant with a capacity of 130,000 tons annually. These plants are available in the United States on a turn-key basis for: $2,300,000 FERTILIZER PLANT The recommended fertilizer plant is designed to produce a high cost, high nutrient material. The sulphuric acid produced by the metal refining is a basic ingredient, but also required would be ammonia and phosphate rock. -45- Three turn-key process units would be used in addition to the Sulphuric acid. Ammonia 60 TPD $1,750,000 Phosphoric Acid 120 TPD 1,600,000 Diammon -Phosphate 2 50 TPD 1,750,000 Offsite Facilities 500,000 $5,600,000 ZINC REFINERY The cost of a reflux plant to refine 60,000 short tons of I.S.P. zinc per year will be of the order of: $2,000,000 This would cover the Amax or the New Jersey Zinc type furnace . LEAD REFINERY The direct cost of a lead refinery to handle 30,400 tons of crude bullion is based on estimates made for another I.S.P. installation under construction. This cost is: $ 950,000 SUMMARY OF CAPITAL COSTS 1. Site and Site Preparations $1,310,000 2. Concentrate & Flux Handling 500,000 3. Sintering Plant 5,000,000 4. Furnace Plant 5,600,000 5. Sulphuric Acid Plant 2,300,000 6. High Nutrient Fertilizer Plant 5,600,000 7. Zinc Refinery 2,000,000 8. Lead Refinery 950,000 $23,260,000 -46- ENGINEERING COSTS AND CONTRACTING FEES AGAINST NONTURN-KEY PACKAGES (a) Engineering 8% 740,000 (b) Contractor 10% on labor 30% on erected cost 308,000 CONTINGENCY @ 10% 1,860,800 LICENSE (I.S.P. ) 1,250,000 STAFF TRAINING (estimated) 90,000 START-UP COSTS (15% operating costs) 915,000 PRE-PRODUCTION ALLOWANCES 150,000 $28,573,800 The total cost required to construct and place in opera- tion a metals refining complex, including a standard Imperial Smelting Process Furnace, Sinter Plant, Sulphuric Acid Plant, Zinc Refining Plant, Lead Refining Plant and High Nutrient Fertilizer Plant capable of processing 167,017 tons of concen- trates annually, and producing 120,414 tons of refined products having a gross market value of $35,124,011 is then estimated to be .... $28,573,800 =47- o o o o o o 1 1 i 1 I o i 1 1 1 1 o o o lO 10 in in D o o o o =1 o o ^0 o o o r-H D 1 o 1 o 1 i 1 1 I U3 1 en o o i-H CTi H It 3 t ft- 3 D H 0- in i i 1 i m CN 1 1 I 1 i o Q O O o o CN o o o o in G\ I o o 00 «f o rH o «t vO CO a: 1 1 o o o in H rH O o o in H o o o o rH o o o \ri O CN o m c/> o o m m v> O o in O vO vD CN «• O D O o o o o o O in K O o o kD a o o c* "1 o o o in O o oo Ol ~J o o o 1 i 1 i i o o in k0 3 O o in lit rH <* c^ r-i in 0- in in r~ 2 CO ^> in 3 O o O O o o o o o o o o 3 O o o o o o o o o o o o 3 O o o o o o o o o o CO CO 3 O o o o o o o 03 o in o p-t H O o o o o o i:1 T in in 10 r* n in o 10 ro ID o o\ O CN rH co in h 0- in in CM in CN rt i— 1 ^ CO CN OPERATING COSTS OF THE METAL REFINING COMPLEX It has been pointed out in prior sections of this report that several possible sites for the Colorado Metal Refining Complex were considered in order to evaluate the overall effects on costs, the object being to determine possible refin- ery sites that offered the greatest number of advantages to the miners without seriously affecting the operating cost, or efficiency of the refinery complex. To begin with, these operating costs totaling $5,902,863 were developed on the basis that the refinery complex would be located in Pueblo. It is interesting to note that considering the entire re- fining complex, 39.8 percent of the operating costs are consumed by staff and labor. The next largest expenditure would be coke representing 2 5.3 percent of the total. The annual royalty to the imperial Smelting Processes, Limited, of $289,451 represents 4.9 percent. This royalty is calculated as 1.5 percent of the value of zinc and other metals (except gold and silver) produced by the furnace. The total operating costs (based on a refinery sited in Pueblo) is shown on Table 5. ALLOCATION OF OPERATING COST BY REFINERY UNIT The total operating costs have been allocated by refinery unit, and the results are detailed on Table 6. These alloca- tions indicate that direct operating costs (exclusive of depre- ciation) required to operate the I.S.P. furnace and the associ- ated sinter plant would amount to $4,172,718 annually at the volume of concentrate production in Colorado during 1963. The I.S.P. furnace operation represents 70.6 percent of the total operating costs of the metal refining complex (exclusive of the fertilizer plant) . -49- TABLE ANNUAL OPERATING COSTS FOR METAL REFINING COMPLEX BASED ON COST FACTORS AS DEVELOPED FOR PUEBLO, COLORADO Category Annual Costs Percent of total Personnel Staff ( 61) $ 412,500 7.0% Hourly Labor (316) 1,933,320 32.8% $2,345,820 39.8% Coke 1,491,144 2 5.3% Power 369,000 6.3 Fuel 273,180 4.6 Fluxes 167,507 2.8 Water 52,000 .9 Maintenance Materials 291,000 4.8 Process Materials 175,000 3.0 Miscellaneous 55,000 .9 I.S.P. Royalty 289,451 4.9 Contingency (5%) 29 3,761 5.0 Taxes & Insurance 100,000 1.7 $5,902,863 100.00% NOTE: Pueblo is used here as an example only. Five additional sites have been considered and similar projections have been prepared. -50- w Eh H en n < m CD U] ft 4J O cn o o o o o O o o rH o rH O ^ fv CO o o ■* in co o in O O rH rH in o r* r~ r* VD in I 1 1 1 i in c^ ^ ID o ro ro CM <* ro ■tf nf h - - o o o o o >* O o O o o O ■<* o o co vD en r~ o iD o o in o CO o o 0> CM ID rH o ■* in ^0 CN cn in 1 1 I C~ C* rH r^ co 0> ■* r- CN ID in m CN CO CNJ r-l (N >* rH in ro o rH ro in VI- o o o o o o o o O o o O O O vD 10 CO r~ o o in o o •& O O ■* ■* ro ro o o rH ■- 1 03 o iD rsi \D ■* r> en ro CN r- co ,-h" CO r~ rH ^D in vo ro CO cn rH rsi - Vr ^> O O O o ■* o eo O o o O o o 00 O O CM CM <* ro ro o o o o o in ro o rH in o r^ CN ■-I >* eD in o CO in in ■* VD cn r^ vy V>- v>- o o o o O *>I) *J o o r^ O o O O o in o in co >* r> CO o o o o o in vD O \o o in o o o o T r- o CO (N fM H in rH id r- •>* 0> r- CM rH m tn en ro o CM ^j in n m cn ID r~ yQ in en r*- in CO en o o ^t CM rH CM CM CN rH 01 rH cm v> v> rH VI- in e rHl Cn rH j) K h CJ CO 111 CO ^ X CO CO m cn w rJ Eh < O H Z O H The zinc refinery required to process zinc from the Prime Western Grade produced by the I.S.P. furnace to Extra High Grade Zinc would require annual operating expenditures of $723,060, representing 12.2 percent of the total annual costs. This unit would also process the cadmium to marketable grades, The lead refinery designed to accept the lead bullion, including gold, silver and copper would require $702,534, representing 12.2 percent. The acid plant provided for the purpose of converting the SC>2 gas collected from the sintering operation would require only $304,551 annually, representing 5.0 percent of the annual operating costs. Summary of Operating Costs Allocations by Refinery Unit (1) I.S.P. furnace & Sinter plant (2) Zinc Refinery Unit (3) Lead Refinery Unit (4) Sulphuric Acid plant ALLOCATIONS OF OPERATING COSTS BY CONCENTRATE Three types of concentrates, zinc, lead and copper are produced in Colorado and these (in the amounts indicated on Table 2) have been evaluated in terms of variable and non- variable operating costs, and these costs have been allocated as shown on Table 7. The zinc concentrates representing 69 . 3 percent of the total tons of concentrates requires $4,086,596 of annual operating costs, or 69.2 percent of the total. The lead concentrates amounting to 25.3 percent of the total tons require 28.3 percent of the operating costs. Copper concen- trates totaling 9,000 tons, or 5.4 percent, require 10.7 per- cent of the total annual operating costs. $4, ,172, 718 70 . 6% 723,060 12.2% 702,534 12.2% 304,551 5.0% $5, ,902,863 100.00% -52- 8 3 B 8 X o a § fa o o o n X u en & | tH H tn CD § 05 OS ^ o Ul On O U W Eh O H 2 02 M H O s CD to a, g O CM fc, Z O o ui D 2 W O 01 H < H m < U h Mn o c^ o o m <* O ro 3 m tr (U 0] OS 4-1 w m H U «3 (0 ■H c M ro > T3 I (1) c to td z CO We have calculated and summarized here the operating costs, per ton, of each type of concentrate. These unit costs are used for projections of possible smelter buying schedules but it must be emphasized that from an operational point of view this is not a proper procedure. It will be explained later in this report that each concentrate must be evaluated separately in order to determine its thru-put costs. Summary of Allocated Operating Costs Per Ton of Concentrate In-Put (1) Zinc Concentrates $ 35.34 per ton (2) Lead Concentrates 39.57 per ton (3) Copper Concentrates 16.34 per ton (4) Total Concentrates 35.36 per ton STAFF AND DIRECT LABOR REQUIREMENTS It is indicated on Table 8 the annual dollar expenditure required to staff the Metal Refining Complex and to provide the direct labor. These figures are based on the assumption that the present volume of concentrates produced in Colorado will be available to the complex. Summary of Personnel Requirements For Metal Refining Complex Staff ( 61) $ 412,500 17.6% Labor Force (316) 1,933,320 82.4% Total (377) $2,345 f 820 100.00% The salary rates provided for staff members is based on studies of similar job functions in related industries. The average annual salary is $6,762 and the range is between $25,000 and $3,600. The labor force is projected as three categories and the wages have been based on national averages in the metal refin- ing industry, plus 50 cents an hour to provide for normal -54- increases during the start-up period. The average wages for e each of three labor classifications are as follows: Class "A" - $3.73 per hour Class "B" - $3.17 per hour Class "C" - $2.89 per hour In addition to the rates listed above, $90,000 is provided to cover the expense of staff training, and $915,000 is provided to cover unforeseen "start-up" expenses. -55- TABLE 8 PERSONNEL REQUIREMENTS FOR METAL REFINING COMPLEX GENERAL MANAGEMENT Classification Works Manager Superintendent Superintendent Asst. Superinte Secretaries 7 Total $79,000 Number Annual Cost 1 Operations 1 Services 1 ent - Operations 1 3 -56- TABLE 8 (continued) OPERATIONS Classification Number Annual Cost I.S.P. Furnace Superintendent Clerk Labor - Class A Class B Class C Totals I.S.P. Furnace Sinter Plant Superintendent Clerk Labor - Class A Class B Class C Totals Sinter Plant Acid Plant Labor - Class A Class B Class C Totals Acid Plant Zinc Refinery Superintendent Clerk Labor Class A Class B Class C Totals Zinc Refinery 1 1 5 18 54 79 1 1 5 8 22 37 18 18 1 1 4 20 19 45 $ 18,000 $463,540 $481,540 16,000 $215,180 $231,180 $114,120 $ 15,000 $266,460 $281,460 -57- TABLE 8 (continued) OPERATIONS ( continued ) Classification Number Lead Refinery Labor - Class A 4 Class B 29 Class C 17 Totals Lead Refinery 50 Annual Cost $311,960 -58- TABLE _8 (continued) Classification Plant Engineer Draftsmen Plant Metallurgist Jr. Metallurgist Instrument Engineer Instrument Mechanics Chief chemist Spectrographer Chemists Samples Master Mechanic Labor - Class A Class B Class C Chief Electrician Labor - Class A Class B Yard Gang Boss Labor - Class A Class B Class C TECHNICAL SERVICES Number 1 2 1 _3_ 4 1 1 6 1 26 17 2 45 11 9 20 8 7 Annual Cost $ 24,000 $ 27,000 $ 32,500 $ 61,000 $ 10,000 $313,300 $ 8,000 $139,120 $ 7,000 15 $ 91,180 -59- TABLE 8 (continued) GENERAL SERVICES Classification Number Annual Cost Office Manager Secretary 1 1 $ 13,000 Purchasing & Traffic Clerks $ 16,000 Warehouse Foreman Clerks $ 14,000 Labor - Class A Class B Class C 2 i. 3 $ 18,460 Chief Accountant Cost Accountants Clerks 1 1 _2_ 4 $ 20,000 Manager - Personnel & Safety Safety Inspector Nurses Clerks Telephone Operator Pool - Steno and Clerks 1 1 2 2 1 7 14 $ 52,000 -60- TABLE 8 (continued) SUMMARY OF PERSONNEL Classification Number Annual Cost Percent Total GENERAL MANAGEMENT 79,000 3.3% OPERATIONS I.S.P. Furnace Staff 2 $ 18,000 Labor 77 463,540 79 $ 481,540 Sinter Plant Staff 2 $ 16,000 Labor 35 37 215,180 $ 2 31,180 Acid Plant Staff (see note) — Labor 18 $ 114,120 18 $ 114,120 Zinc Refinery Staff 2 $ 15,000 Labor 45 266,460 47 $ 281,460 Lead Refinery Staff (see note) 20.5% 9.9% 4 . 9% 12.0% Labor 50 £_ 311,960 50 $ 311,960 13.4% Technical Services Staff 18 $ 169, 500 Labor 80 543,600 98 $ 713, 100 30.4% General Services Staff 26 $ 115,000 Labor 3 18,460 29 $ 133,460 5.6% GRAND TOTALS Staff 61 $ 412,500 17.5% Labor 316 1 ,933, 320 82.5% 377 $2 ,345,820 100.0% -61- TABLE 8 (continued) SUMMARY OF PERSONNEL (continued) NOTES: Supervision of the Acid Plant responsibility of Superintendent of Sinter Plant. Supervision of Lead Refinery responsibility of Superintendent of Zinc Refinery. -62- PRODUCT RECOVERIES FROM THE METAL REFINING COMPLEX The complete metal refining complex as recommended in this report will include the refinery units which will produce finished and intermediate market oriented products based on the input of 167,017 tons of concentrates as currently produced in Colorado alone (see Table 2) . The refinery units, their function and the product recoveries from each are developed in this section. IMPERIAL SMELTING FURNACE AND SINTER PLANT The I.S.P. furnace is operated in conjunction with the sintering plant since all of the Colorado produced sulphide (ZnS and PbS) concentrates must first pass through the sinter plant where the sulphides are burned to oxides and, at the same time, agglomerated into lumps suitable for feeding into the furnace. The sulphur content of the concentrates provides the fuel wholly, or in part. The combustion gases containing sul- phur dioxide (SO2) are collected and after cleaning are utilized to manufacture sulphuric acid. The zinc concentrates produced in Colorado contain signi- ficant amounts of cadmium. This metal, more volatile than zinc, is eliminated from the sinter and is recovered in a re- covery unit which is included as part of the furnace installa- tion. The inputs to the I.S.P. furnace representing the metal contents of the concentrates (see Table 2) are as follows: Zinc 63,800 tons Lead 25,900 tons Copper 5,100 tons Sulphur 44,600 tons Cadmium 267 tons Silver 2,167,800 ounces Gold 15,030 ounces -63- The I.S.P. furnace will, from the inputs shown above, pro- duce the following: Slab zinc, containing 700 tons of lead 59,800 tons Bullion, containing 22,365 tons of lead 4,500 tons of copper 30,400 tons The copper can be removed from the bullion and to the copper matte, we have no operating experience with the re- covery of silver from matte and so we must estimate the over- all recovery at 95 percent. Gold reports to the lead bullion and, again, we estimate the over-all recovery to be 95 percent. Both cadmium and sulphur are volatilized in the sintering operation and it is difficult to evaluate the recovery of these materials. We have estimated sulphur at 90 percent, and cadmium at 75 percent. ZINC REFINERY The zinc refinery (either Amax or New Jeisay Zinc) is pro- vided to refine the slab zinc (prime western grade) to special high grade. This increases the value of the zinc produced and insures its marketability. Prime western grade, although it is quoted in the market, often requires special blends to reach the market «, The I.S.P. furnace produces slab zinc which contains 59,100 tons of zinc. Experience with the New Jersey type re- finery indicates the recovery of zinc to be 99.4 percent efficient, however, there are skimmings which must be recycled; so we actually develop an operation yield of approximately 97 percent. The lead contained in the slab zinc is recovered in its entirety. Depending on the metallurgical process, cadmium can also be recovered in the zinc refining operation or the sinter operation. -64- The losses in the I.S.P. furnace, slag and the sintering operation are approximately 7 percent; assuming a 97 percent yield in the zinc refinery we estimate an over-all recovery factor for zinc of 9_0 percent . LEAD REFINERY The lead refinery will produce pig lead and will at the same time, produce by-product drosses containing such metals as antimony, bismuth, arsenic, silver and gold. In addition to the lead bullion from the I.S.P. furnace, the lead refinery will process lead from the zinc refinery, although part of this material is recovered as a dross and is recycled through the I.S.P. furnace. Part of the initial lead input to the I.S.P. furnace is retained there for use in the condenser. Considering all of the various metallurgical factors such as recycling and by-product operations, we estimate the over-all recovery of lead to be 9_0 percent . SULPHURIC ACID PLANT The up-draft sinter plant associated with the I.S.P. furnace produces sulphur dioxide (SO2) which is the basis for manufacturing sulphuric acid by the long established contact process . In this process sulphur dioxide is converted to sulphur trioxide by the use of a metal, or metal oxide, catalyst. The sulphur trioxide is then absorbed in recycling concentrated sulphuric acid. The efficiency of the sulphuric acid plant is high but the effectiveness of the collection system for the SO2 gas is diffi- cult to measure. Considering these factors we estimate the over-all recovery of sulphur and its processing into sulphuric acid to be 9_0 percent . FERTILIZER PLANT In an effort to up-grade the market value of the sulphuric acid produced by the metal refinery complex, a fertilizer com- plex is recommended. Starting with 120,000 tons of sulphuric acid, representing 90 percent recovery of sulphur contained in -65- the concentrates, we can project an annual production of 82,500 tons of diammon -phosphate, a high nutrient value fertilizer. In order to obtain this production the sulphuric acid is com- bined with phosphate rock and anhydrous ammonia, manufactured from natural gas. -66- TABLE SUMMARY OF OVER-ALL RECOVERIES OF THE METAL REFINING COMPLEX Mineral Refined Form Zinc Special high grade Lead pig lead in matte Copper in matte Gold refined metal Silver refined metal Sulphur diammon-phosphate Cadmium refined metal & dust Antimony dross Bismuth dross Arsenic dross Sulphuric Acid refined (100%) Quantity 57,400 tons 20, 336 tons 2,974 tons 4,461 tons 14,275 ounces 2,059,000 ounces 82,500 tons (2) 200 tons 120,000 (1) NOTE: (1) Available as marketable sulphuric acid or can be utilized in the acidulation of phosphate rock. (2) Tons of diammon-phosphate produced from 120,000 tons of sulphuric acid in combination with anhydrous ammonia and phosphate rock. (3) Except for the materials added in the fertilizer operation (as in 2 above) all other metals are contained in the Colorado produced concentrates. -67- MARKETING THE PRODUCTS OF THE METAL REFINING COMPLEX THE PRODUCTS OF THE REFINING COMPLEX The proposed Colorado Metal Refining Complex would pro- duce 170,414 tons U) f refined products from 167,017 tons of concentrates, representing a gross market value of $35,124,011 at prices in effect on January 2, 1964. These products and the quantities are listed on Table 10 that follows. The "Colorado Refining Complex" upgrades the gross value of the Colorado produced ores from the approximate current smelter receipts of $13,573,647 to $35,124,011 - an increase of $21,550,364, or 158 percent. The margin of $21,550,364, representing the difference between the present level of receipts by Colorado miners, and the gross receipts projected for the refining complex, must provide for: (a) the direct operating costs, (b) deprecia- tion, (c) interest on capital, (d) profits for the refining complex owners, (e) increased returns for the miners, (f) the costs of marketing the products, and (g) freight to markets. Footnote: (1) Finished product tonnage exceeds input tonnage since anhydrous ammonia and phosphate rock are added to the material mix in the fertilizer manufacturing operation. •68- TABLE 10 PRODUCTS TO BE PRODUCED AND MARKETED BY THE METAL REFINING COMPLEX Product Annual Unit Gross Volume Prices (1) Value (2) Special High- Grade Zinc 57,400 tons $ 280.00 $16,072,000 Refined Lead 20,336 tons 252.08 5,126,280 Cadmium 200 tons 6,000.00 1,200,000 Gold 14,275 ozs. 34.9125 498,375 Silver 2,059,000 ozs. 1.293 2,662,287 Copper Matte 9,913 tons 2 2 3.53 2,305,069 Copper 4,461 tons Lead 2,947 tons Diammon-Phosphate 82,500 tens (3) 88.00 7,260,000 170,414 $35,124,011 Notes: (1) Unit Prices are those in effect on January 2, 1964, and are listed with sources on Table 12 in this report. (2) The expenses of freight to markets and the selling costs have not been deducted for the gross value shown on th i s t ab 1 e . (3) If sulphuric acid is not used in the manufacture of diammon -phosphate under one of the alternate programs suggested then it must be marketed with the following estimated gross receipts: Annual Volume Unit Price Gross Value 120,000 $ 23.00 $ 2,760,000 ■69- TABLE 11 SUMMARY OF GROSS MARKETING INCOME FROM SALE OF REFINED PRODUCTS Product Freight Net Gross to Marketing Value Market Income $16,072,000 $ 998,186 (1) $15,073,814 5,126,280 353,643 (2) 4,772,637 2, 305,069 241, 381 (3) 2,063, 688 4, 360,662 25,000 (4) 4, 335,662 7,260,000 660,000 (5) 6,600,000 Zinc Lead Matte (Cu & Pb) Au-Ag-Cd Diammon-Phosphate (6) $35,124,011 $2,278,210 $32,845,801 Notes: (1) Freight on Zinc (projected) to Chicago (a> $17.30/ton (2) Freight on Lead (projected) to E. Chicago (§) $17.39/ton (3) Freight on Matte (recorded) to El Paso (a) $24.35/ton (4) Freight on Au, Ac & Cd (projected) @> $83.00/ton (5) Freight on Diammon-Phosphate (projected) @ $ 8.00/ton (6) Sulphuric acid produced by the sintering operations of the metal refining complex will be absorbed by the manufacturing process of diammon-phosphate unless it should be decided to market this directly and, in this case, the gross marketing income will be estimated as follows: Gross Value Fgt . to Market (7 ) Net Market Income $2,760,000 1,560,000 $1,199,000 (7) Freight estimated at $13.00 per ton. -70- TABLE 12 PRICES AND SOURCES OF PRICE INFORMATION USED IN REPORT Wherever prices have been necessary in this report for purposes of projecting gross values, royalties, etc., the generally accepted sources have been used and the date of these quotations has been set as January 2, 1964. Product Z inc Zinc Lead Matte 45% CU 30% Pb Cadmium Silver Grade Unit Price Source Gold Diammon-Phosphate Copper Sulphuric Acid Prime Western 13C per lb. Spec. High Grade 14C per lb. Refined Grade 12.604C per lb. Crude $2 32.53/ton Refined Dust & Metal Refined Refined 18-46-0 100% $ 3.00 per lb. E&MJ E&MJ E&MJ AS&R (5/22/64) E&MJ $ 1.293 per oz . Handy & Harman $34.9125 per oz . Mint Price $88.00/ton Marketing Development $30.35C per lb. E&MJ $23.00/ton Local Market -71- THE MARKETING ORGANIZATION In the foregoing pages each of the products to be produced by the Colorado Metal Refining Complex have been discussed and the probable plant net-backs of each has been developed based on current transportation costs. It is proposed that the Colorado Metal Refining Complex equip itself to sell refined products directly to the market. This step is recommended to provide the independence that can insure maximum profits and at the same time remain flexible to the market demands. This policy requires a salaried staff to handle marketing and promotional functions. It is estimated that 75 percent of the sales of lead and zinc are made to customers on a contract price. For these types of customers no intermediate warehouse facilities with an organization of distributors, jobbers and dealers is required. The relationship between customer and salesman is close and at a high corporate level. Under those conditions a small market- ing staff of highly experienced personnel is required. It is reasonable to expect that such a staff would consist of not more than four individuals supported by an adequate clerical staff. Such a staff would be capable of marketing all of the products to be produced by the Colorado Metal Refining Complex. The annual cost is estimated as follows: Job Responsibility Annual Cost General Sales Manager (1) $ 35,000 Sales Manager (Zinc) (1) 20,000 Sales Manager (Lead) (1) 20,000 Sales Manager-Special Products (1) 20,000 Total Compensation $ 95,000 Office Staff (Secretary, Clerks) 30,000 $125,000 Overhead and Promotional Expenses 150,000 Total Marketing Expenses $275,000 -72- A REVIEW OF THE MARKET STATUS OF EACH PRODUCT TO BE PRODUCED To provide a current background against which a marketing program can be visualized each of the products to be refined in the proposed "metal refining complex" is discussed briefly on the following pages. Zinc In 1962 the total slab zinc consumption in the United States was 1,013,900 tons the second highest level exceeded only by the year 1955. Preliminary figures for 1963 indicate a total of about 1,100,000 tons. In 1962 the known consumption was distributed as follows: In tons of 2,000 lbs. Zinc Base Alloys 386,395 Galvanizing 370,246 Brass Products 128,344 Rolled Zinc 39, 381 Chemical Products 23,666 Zinc Oxide & others 18,517 1962 Total 1,013,949 1961 Total ....... 931,213 1960 Total 877,884 1959 Total 956,197 A current and recent high rate of zinc consumption is pri- marily connected with the activity in zinc die casting and sheet galvanizxng industries. Zinc Die Casting Zinc die casting in the automotive industry continues to expand with each years models showing increased decoration, larger size and greater power. The trend continues as we find more zinc die castings on standard and luxury models, as well -73- as on compacts which are growing larger. Yearly increases of several pounds has resulted in averages of 94 pounds, or better for standard and luxury cars and 40 pounds for compacts. The automotive consumption of zinc die castings resulted from not only the pounds per car but also the 6,933,000 passenger cars produced in 1962 and the 7,550,000 cars in 1963. In addition to zinc alloys for die casting, the other alloys commonly used are aluminum, magnesium and copper. Zinc offers the greatest number of desirable mechanical properties and casting characteristics at low cost. For many years, zinc has been the most widely used die casting material. Zinc die castings are important constituents of thousands of consumer and industrial products - automobiles, home appli- ances, electrical products, office and store equipment; tools, hardware, plumbing specialties, instruments; agricultural; mining and construction equipment; timing and time operated devices; photographer's equipment; toys and novelties. The same alloys used for die casting are used for making sand castings and similar alloys are used for permanent mold and slush castings. According to the American Die Casting Institute there are 962 die casting plants in the United States. Of these, 433 are captive plants producing parts for their own use in their finished products and are producing primarily zinc die castings. There are also 529 custom plants which produce die casting for their customers. The custom plants make both zinc and aluminum die castings, and in some cases only one or the other. It is necessary that zinc die casting alloys be formulated with Special High Grade (99.99 + % pure) zinc. In 1962, over 57 percent of all zinc consumed in the United States was of this grade. Galvanizing Galvanized steel sheet accounts for more than 5 percent of the total production of carbon steels by the American steel -74- industry. The record 1962 production was 3,532/708 tons of galvanized sheet steel. The 1963 figure is approximately 4,000,000 tons. There are 2 3 basic steel producers operating continuous lines. There is one plant with a non-continuous line. There are a total of 46 sheet galvanizing lines. The other zinc consuming galvanizers vary from small to large and are located all over the country. In 1962 galvanizing consumed 370/246 tons, the estimate for 1963 is 400,000 tons. The breakdown is as follows: Sheets 237/000 tons Wire and Wire products 36/000 Tubes and Pipes 54,000 Fittings 7,000 Job shop galvanizing 66,000 Galvanizing total . . 400,000 tons While the applications have been expanding in many markets the most outstanding increase is in the automotive industry. The increased use of salt and chemicals for ice and snow re- moval has created the need to control corrosion of automobile bodies. In the future, door panels and fenders may present another use and further increase the need for galvanized steel sheet. In 1962, when about 7 million passenger cars were pro- duced, the steel industry shipped the automobile industry 474,072 tons of galvanized sheet steel, 90 percent of which was produced by the hot dip process. Contributing to the growth of galvanized sheet steel are building construction, general manufacturing, zinc coated steel culverts, air conditioning and ventilation. The 370,246 tons of slab zinc used for galvanizing is accounted for as follows: sheets 211,381 tons; tubes 51,361 tons; wire 37,333 tons; and others, including pole-line hard- ware, hollow ware, chains, wire cloth - 70,171 tons. Prime Western Grade is used. -75- Normally, Prime Western Grade is considered suitable for galvanizing operations; however, the growth and refined tech- nology of the continuous strip galvanizing plant has resulted in market demands for many special formulations. The following table illustrates the specifications established by three major steel companies. Pb Cd Fe Al Prime Western Grade 1.60 max, (ASTM) Steel Company "A" .30-. 40 Steel Company "B" .18-. 2 5 Steel Company "C" .70 min 03 max. 03 max. .08 max, .03 max, .02 max, .08 max, .15-. 25 .22-. 27 The above illustrates the flexibility that is required in the metal refinery to meet the market demands. Brass Products The production of brass used 128,344 tons of slab zinc in 1962. The estimate for 1963 is for about the same tonnage. The average brass contains approximately 30 percent zinc and 70 percent copper. The grade of zinc used depends on the process methods and the type of alloy being manufactured. High purity slab zinc grades are used for sheet alloys to be hot rolled or for high ductility and malleability in the finished product. Prime Western Grade is used for brasses, white lead is added, or, is not objectionable. Rolled Zinc The conventional grades of slab zinc are rolled into sheet, strip, ribbon, foil, plates and rod. In 1962, 39,381 tons were consumed in making rolled or wrought zinc. The use of rolled zinc for dry battery cups represents a major market. The rolled zinc battery cup is an important part of the cost of a dry battery. Special High Grade slab zinc with some modifications is generally used by the battery manu- facturers . -76- Rolled zinc sheet finds use in building construction and photo-engraving and lithographers' plates. Rolled zinc sheet or strip is usually priced 9 or 10 cents per pound over the slab zinc price. However, because of the large volume bought by the battery manufacturers, a special lower price is the rule. Pricing Slab Zinc in the Market Slab zinc prices are based on the price quoted f.o.b. , East St. Louis. Sales are made for delivery at the places where required and prices are figured back to East St. Louis basis: or else they are made on East St. Louis basis and figured up to points of delivery with allowance for freight differentials, either way. Prices for Prime Western Grade and Special High Grade slab zinc are publicized industry prices with established differen- tials between standard grades. Special High Grade zinc slabs are customarily priced one cent per pound above Prime Western. High Grade is priced 85/100 cents above Prime Western base price. These differentials are subject to change due to market conditions. When a buyer specifies an analysis other than the standard arades, the price is arrived at by negotiation or just plain fudging. While the basic prices are well known, sales are made at shaded prices depending on the market conditions and the stock available. Supply and demand are the main factors in price changes. The current high rate of production of the auto- motive and steel industries accounts for the present firm base price and the application of the grade differentials. These two industries represent the major markets for slab zinc. Prices in 1963 ranged between 11.5 cents and 13.00 cents. The 1958-1962 range was from a low of 10.00 cents to a high of 13.00 cents base prices, f.o.b., East St. Louis. -77- Grades of Slab Zinc The American Society of Testing and Materials furnishes standard specifications for slab zinc and revises them from time to time. The latest available ASTM Designation is B 6 - 62 T. Lead Iron Cadmium Zinc GRADE Maximum Maximum Maximum Minimum percent Percent Percent Percent by difference Special High Grade 0.003 0.003 0.003 99.990 High Grade 0.07 0.02 0.003 99.90 Intermediate 0.20 0.03 0.40 99.5 Brass Special 0.6 0.03 0.50 99.0 Prime Western 1.6 0.05 0.50 98.0 Special High Grade Zinc (99.99% purity) is specified by ASTM and SAE for zinc alloys for die casting. In order to ob- tain the maximum physical and mechanical properties in zinc die casting, low limits on contaminating elements are required and specified by ASTM and SAE standards. Production of Slab Zinc (Domestic) by Grades In 1962, the total production of slab zinc for the United States was 940,623 tons. (1963 estimated 953,496) This total was divided according to grades as follows: In tons of 2000 lbs. Special High Grade 399,396 tons Regular High Grade 80,22 7 Intermediate 18,2 32 Brass Special Prime Western 442, 76 8 940,62 3 tons Produced from secondary material 54,905 Produced from ores, domestic and foreign 885,718 Since 1958, production from foreign ores has exceeded that from domestic ores by a slight margin except in 1962. -78- The plants that produced the 940,62 3 tons of slab zinc in 1962 had a total capacity of 1,278,500 tons. Primary Plants Capacity ] Productior L % Distillation 712,000 531,586 74.6 Electrolytic 490,500 354,132 72.1 Secondary Plants Zinc Distillers 76,000 54,905 72.3 Total 1,278,500 940,623 73.5 Electrolytic Plants Location Company Capacity Production Corpus christi, Tex. American S.&R. 105,000 89,832 Monsanto, 111. American Zinc 60,000 59,918 Co., 111. Great Falls, Mont. Anaconda Co. 162,000 129,144 Anaconda, Mont. Anaconda Co. 86,500 Suspended Silver King, Idaho Bunker Hill Co. 77,000 76,756 490,500 355,650 Horizontal Retorts Daily Capacity Location Company American Smelting & slab tons Amarillo, Texas 160 Refining Co. Bartlesville, Okla. National Zinc Co. 114 Blackwell, Okla. American Metal CI imax, Inc. 250 Dumas, Texas American Zinc Co. of Illinois 150 Fort Smith, Ark. Athletic Mining & Smelting Co. 80 Henryetta, Okla. Eagle-Picher Co. 150 La Salle, ill. Matthiessen & Hegeler Zinc Co. 80 984 Vertical Retorts Palmerton, Pa. Depue, 111. Meadowbrook, W. Va. New Jersey Zinc Co. New Jersey Zinc Co. Matthiessen & Hegeler Zinc Co Electrothermic Units Joseph town, Pa. St. Joseph Lead Co. -79- Slag Fuming Plants Selby Calif. American Smelting and Refining Co. El Paso, Texas American Smelting and Refining Co. E. Helena, Montana Anaconda Co. Kellogg, Idaho Bunker Hill Co. Toledo, Utah International Smelting & Refining Co. Herculaneum, Mo. St. Joseph Lead Co. Secondary Zinc Distillers In 1962, secondary zinc distillers produced 54,905 tons of slab zinc. In addition to the A. S. & R. Co. Federated Metals Division, Beckemeyer, Illinois plant, and American Zinc Co. of Illinois, Hillsboro, Illinois plant, there are nine other sec- ondary zinc distillers. Plants are located in Alabama, Calif- ornia, Pennsylvania, Texas, Illinois and Ohio. The Competitive Position of the Metal Refining Complex On the basis of ores and concentrates now available in Colorado and the refining facilities included in this proposal, 57,400 tons of Special High Grade Zinc would be available for the market. This would represent 5.2 percent of the total slab zinc production in 1963. It is, of course, expected that the availability of a modern metal refining facility in Colorado will stimulate additional mining developments which would in turn make more refined zinc available in the market. Since the market demands for zinc are increasing this would be a normal and healthy development. In terms of operating efficiencies it is to be expected that the Colorado refining facility will be more efficient than existing smelters operating on technologies developed many years ago. The Competitive Significance of Freight Location-wise the Colorado Metal Refining facility will initially have to overcome some freight disadvantages with -80- respect to zinc smelters located in the "gas belt" of Texas and Oklahoma. On the basis of presently established freight schedules the cost of moving a ton of refined zinc from a Colorado site to eastern markets would compare with competitive smelters as follows: From To Freight-$ per net ton Colorado Amarillo, Texas Colorado Amarillo, Texas Colorado Amarillo, Texas E. St. Louis E. St. Louis Difference Chicago Chicago Detroit Detroit Difference Difference $17.92 10.80 $7.12 $19.22 14.40 $ 4.82 $23.92 23.71 $ .21 It must be remembered that the Colorado-to-market rates are not realistic in that no movement now exists; however, once a substantial movement is established competitive rates will be developed. Rates on refined zinc from Blackwell, Oklahoma to midwest- ern markets are lower even than from Amarillo as follows: To E . St. Louis To Chicago To Detroit $ 7.50 N.T. 10.50 N.T 19.86 N.T, When it is considered that the principal markets for Special High Grade Zinc and galvanizing zinc are east of Chicago, the freight factors tend to equalize. Under existing freight tariffs the cost of moving a re- fined product to market is the same whether the product origi- nates at Grand Junction or Pueblo. This not the case with con- centrates. For example, the cost of moving a unit of zinc -81- metal in concentrated form the 12 5 miles from Telluride to Grand Junction is $11.54 per net ton — to Amarillo the cost goes up to $22.02 per net ton -- but the same unit refined can move all the way to E . St. Louis for $17.92 per net ton. It becomes axiomatic that the refining unit should be placed as close to the source of ores and concentrates as is possible. It is assumed that the average cost of freight to move be refined slab zinc produced at the Colorado Metal Refining Com- plex to markets will be initially $17.39 per net ton. The gross marketing receipts are thereby reduced as follows: Gross Receipts $16,072,000 Freight to Market @ $17.39 998,186 Net Gross Receipts $15,073,814 -82- SPECIAL METALS GOLD, SILVER AND CADMIUM The precious metals of gold and silver represent no marketing problems. Both are in strong demand and will continue in that status. Cadmium, a by-produce of zinc refining, is in very short supply and apparently will remain in this position for some time. The capital projected for this refinery complex includes suitable facilities for producing refined cadmium metal or dust. The freight costs for moving these special by-product metals of the Colorado Metal Refining Complex to market are estimated as follows: Annual Production Gross Value Gold - .45 tons $ 498,375 Silver - 65.71 tons 2,662,287 Cadmium - 200 tons 1,200,000 266.16 tons $4,360,662 Freight - 266.16 tons (§> $83.00 (1) 25,000 Net Gross Return $4,335,662 NOTE: (1) Freight has been estimated. ■83- COPPER MATTE The copper is recovered as part of a bullion from the basic I.S.P. furnace. Also included in the bullion is the gold, silver and lead. Subsequently, it is possible to prepare a matte containing 4,461 tons of copper and 2,974 tons of lead. No facilities have been provided at the Colorado Metal Refining Complex to refine this matte, therefore, a market must be de- veloped at an existing copper refinery. In view of the firm demand for copper this program is reasonable of attainment. For purposes of estimating the price that might be nego- tiated for copper matte, we have obtained a quotation from a regular lead-copper smelter. Thus, for 9,913 tons of matte we project a gross value of $2,305,069. This is equivalent to $232.53 per ton . Freight to the nearest copper refinery would approximate $24.35 per net ton, therefore, the gross return on copper matte would be as follows: Annual Volume Gross Receipts 9,913 tons $ 2,305,069 Freight @ $24.35/N.T. 241,381 $ 2,063,688 -84- REFINED PIG LEAD The Metal Refining Complex will be equipped with a conven- tional lead refinery unit to receive the semi-refined lead pro- duced as bullion in the I.S.P. furnace. This provides the re- finery flexibility to produce the grades of lead currently re- quired in the market place. U. S. Lead Supply and Consumption (Short tons of lead content) Mine production Secondary production Quota imports Ore recoverable Pigs and bars Other imports (Mainly for stockpile) Ore recoverable Pigs and bars Total Changes in stocks at primary smelters and refineries Total Exports Total available . . Industrial Consumption Estimated Stockpile shipments Consumers and secondary smelter stocks Unaccounted for Total . . 1963 Est. 255,000 1962 237,000 466,000 445,200 132,300 132,300 222,400 222,400 6,600 1, 34,800 1 ,075,700 ,078,300 80,000 64,000 (deer.) (deer.) 1 ,155,700 1, ,142,300 1,200 5,000 1 , 154, 500 1, ,137,300 1 ,165,700 1, ,109,600 41,400 6,000 (deer.) 11,200 7,700 1, ,154,500 l.i 137,300 -85- Of the industrial consumption of 1,165,700 tons about 60 percent was in the form of metal or lead alloys and about 40 percent in chemical compounds, respectively 649,700 tons and 516,000 tons. About half of all lead used each year is concentrated in the storage battery and anti-knock compounds industries. About 80 percent of the lead used in batteries is recovered from scrap, refined and reused as secondary lead. The gasoline in- dustry completely dissipates the lead that goes into its prod- ucts. To-day, approximately 190,000 tons, or between 15 and 20 percent of total lead consumption, goes into gasoline anti- knock compounds . The amount of lead used for storage batteries and anti- knock gasoline is not dependent on the rate of production of automobiles, but on the number of automobiles in operation and on the distance they are operated. Gasoline is used in driving cars not building them, and about four replacement batteries are needed for every one that goes into new equipment. New cars take about 7,800,000 batteries while the replacement market takes about 32,000,000 batteries, each containing about 18 pounds of lead. Industrial batteries use some 45,000 tons of lead, and this field is growing. Pricing of Pig Lead Prices of pig lead are quoted in cents per pound in New York and St. Louis and are for Common Desilvered Lead. There is a spread of .10 cents per pound over Common Lead for the other grades, Corroding Lead, Chemical Lead and Acid-copper Lead. Outlook for Lead The outlook for lead is encouraging. The consumption in 1963 was over 5 percent greater than in 1962. This increase was on top of an 8 percent increase in 1962 over 1961. , Increases in lead consumption were recorded in nearly all categories of use but the most encouraging outlook is based on -86- new uses. Waterproofing of pools and planters , antivibration pads for building and machinery foundations and sheet lead for soundproofing are contributing to the new lead market demands. The refined lead produced at the Metal Refining Complex would total 21,554 tons representing about 1.8 percent of the total industrial consumption in 1963. The custom lead smelters producing base bullion from ores and concentrates are located as follows: E. Helena, Montana El Paso, Texas Shelby, California Bradley, Idaho Tooele, Utah The custom Silver-Lead refineries producing refined grades of lead equivalent to the lead refinery included in the Metal Refining Complex are located as follows: Shelby, California Barber, New Jersey Omaha, Nebraska Bradley, Idaho E. Chicago, Illinois With respect to the competition of the lead smelters a Colorado based facility is well located. The most competitive location would be El Paso. All others would be further West and less competitive freight-wise. The freight tariffs in existence to-day show these differences: From To A Rate of Colorado E. St. Louis $16.74 per N.T. El Paso, Texas e. St. Louis 14.61 per N.T. A difference of $ 2.13 per N.T. Colorado Chicago $20.70 per N.T. El Paso, Texas Chicago 19.44 per N.T. A difference of $ 1.26 per N.T. -87- The lead-silver refinery at Omaha, Nebraska would enjoy lower freight rates to markets but to these lower rates must be added the cost of moving base bullion from the smelters. In summary, we can assume that the Colorado based refining facility would be at least equally competitive with respect to freight to markets with the Omaha, Nebraska refinery. It is assumed that the average cost of freight to move re- fined pig lead to markets will be $20.70 per net ton. The gross marketing receipts are thereby reduced as follows: Annual Volume Gross Receipts 20,336 tons (2) $5,126,280 20,336 tons @ $17.39 (1) 353,643 $4,772,637 NOTES: (1) Assumecl freight cost to consuming markets . (2) Does not include lead reporting to matte . -88- UPGRADING SULPHURIC ACID The Colorado produced concentrates and ores are generally in the form of sulphide minerals containing, on the average, 27 percent sulphur. In the operation of the I.S.P. blast furnace, these concentrates and ores must be sintered; it is here that the sulphur is liberated in the form of SO2 gas in concentration of 7 to 8 percent. This liberated sulphur rep- resents an economic asset and, in order to maximize profits, must be recovered and converted into marketable forms. It is quite obvious that elemental sulphur is the most marketable form of sulphur. It presents no problems of storage or transportation. The cost of transportation for elemental sulphur is more efficient since it represents the highest unit concentration, and the recent development of liquid sulphur cars permits high efficiency in loading and unloading. The net result of these assets is the substantial broadening of the com- petitive shipping radius of elemental sulphur as compared to sulphur in other forms. To illustrate, nearly 20 percent of the sulphur market in the Mid-western states is now competit- ively served by sulphur producers in Alberta, Canada, a dis- tance of over 1,600 miles. Nearly 82 percent of all elemental sulphur is eventually converted into sulphuric acid. Roughly, one (1) ton of elemen- tal sulphur makes three (3) tons of sulphuric acid. This 3 to 1 ratio is another reason it is more efficient to ship the sul- phur as compared to the sulphuric acid. Starting with SO2 gas, intensive efforts were made to find ways to manufacture elemental sulphur. However, no method of doing this could be developed that would result in profits for the refining complex. To illustrate, using natural gas to re- duce the. SC>2/ the estimated cost of the sulphur produced would be in the range of $28 to $33 per net ton. This, to begin with, is in excess of the market price for sulphur. Other pro- cesses investigated produced the same results. Since the production of elemental sulphur was not possible, sulphuric acid offered the next best opportunity and production -89- TABLE 13 SULPHURIC ACID CONSUMPTION (Thousands of Short Tons, Gross Use, 100% H2SO4 Basis) Ten Largest Users 1962 1961* 1960* 1959* 1952 Phosphatic Fertilizers 5,900 5,500 5,450 4,985 4,053 Chemicals (not elsewhere 1,750 1,600 1,550 1,425 1,245 classified) Inorganic Pigments 1,800 1,625 1,500 1,525 1,249 Iron & Steel Pickling 950 930 900 850 838 Ammonium Sulfate, Synthetic 750 710 650 830 628 Ammonium Sulfate, Coke Oven 450 470 475 470 680 Other Petroleum Products 600 600 600 580 482 Rayon Aluminum Sulfate Non ferrous Metal Processing 720 740 790 800 218 ****** Gross Total Consumption 20,113 18,600 18,618 18,402 14,644 *Estimated Source: u. S. Department of Commerce As in Chemical & Engineering News, Facts & Figures Issues -90- 525 455 430 480 529 500 480 475 485 360 costs were most reasonable. The total annual cost to make 120,000 tons of sulphuric acid would be $457,200 equivalent to $3.81 per ton of finished product. Sulphuric Acid i n Colorado Since the marketing of sulphuric acid faces limitations imposed by freight costs, it was hoped to find markets in a reasonable shipping radius of the site of the Metal Refining Complex. In 1958, Colorado users required 120,000 tons of sulphuric acid. Some of this acid was shipped into the states from Texas, Wyoming and Louisiana, and some was manufactured within the state from pyrite ores mined at Rico, Climax and Eagle. The consumption of sulphuric acid in Colorado is heaviest in the uranium industry which accounts for nearly 80 percent of the total demand. Fertilizers are next with 8 percent, with the remaining miscellaneous uses totaling 12 percent. Colorado is nearly self-sufficient, or can be, in its sul- phur requirements. A plant in Rico manufactures sulphuric acid from local pyrites and a plant in Denver manufactures acid from pyrite ores shipped from Climax and Eagle. The Union Carbide Corporation uranium operations in the Grand Junction area re- ceive elemental sulphur from Canada and manufacture their own requirements of sulphuric acid. It is reasonable to predict that the Colorado based Metals Refining Complex would be capable of producing sulphuric acid at a lower cost than any existing acid manufacturing facility in the State. To illustrate, the freight rate on pyrite ores from climax to Denver is equivalent to $10.97 per net ton of sulphur. If we add to this the mining cost of pyrites and the manufacturing cost of acid, we come to a total direct cost of almost $10 per net ton of acid. This is over two times the cost of producing the acid in the Colorado Metal Refining Complex. -91- Using Sulph u ric Acid in the Fertilizer Market Notwithstanding the competitive price status of the Colorado Metal Refining produced sulphuric acid, we have searched out other means of utilizing the sulphuric acid pro- duced. We have kept in mind that the basic objective of this study is to create new employment in Colorado. The possibility of using sulphuric acid as a part of another industry offers the opportunity of upgrading profits to the maximum, creating additional employment opportunities, and at the same time, avoiding upsetting a tight local acid market. The use of fertilizers in the United States has been in- creasing at a rapid rate and markets in most sections of the Country have increased to a point where new producing plants have been, or will be built to keep up with the demand. Consider that there are three basic types of fertilizers: Nitrogen Phosphate Potash Most of the world's high quality phosphatic fertilizers are made by processes which involve the acidulation of phosphate rock by sulphuric acid. These two materials are used to pro- duce normal superphosphate and wet process phosphoric acid. Phosphoric acid is then, in turn, used to make triple super- phosphate and then combined with ammonia, available from natur- al gas, to make the ammonium phosphate. In the final stages before use these high nutrient fertilizers may be blended with potash materials and trace elements to fill the most exacting market demands. Consider then the competitive status of a high nutrient fertilizer manufacturing facility in connection with the Metal Refining Complex. The sulphuric acid is available at a by- product cost basis of $3.81 per ton. Ammonia is available lo- cally in the natural gas produced in the State. Phosphate rock is currently available commercially in Idaho, North Carolina, Tennessee and Florida. (Deposits are reported under development -92- in Wyoming) . These phosphate deposits are not convenient to the proposed refining complex. However, producers in adjacent markets such as in Kansas, Nebraska and Oklahoma enjoy little, if any, competitive advantages. Potash, another fertilizer ingredient, is soon to be available in the neighboring state of Utah (Moab) where The Texas Gulf Sulphur Company has invested approximately $50 million in a mine facility that is expected to provide 8 per- cent of the Free World's supply of this vital plant food. Manufacturing Diammonium -Phosphate It is consistent with our objective to upgrade products of the Metal Refining Complex to the maximum extent possible. The availability of low cost sulphuric acid suggests that it be employed to manufacture a high nutrient value fertilizer (actually 30 percent of all sulphuric acid consumed is used in the manufacture of phosphatic fertilizers) . The availability of low cost natural gas and the prospects of obtaining phos- phate rock in the immediate area automatically suggests the high nutrient fertilizer of diammon-phosphate (18-40-0) . Marke ting D i ammon ium -Ph o sph a t e No firm market price is available for the adjacent market areas. We have available the posted prices of U. S. Phosphoric Products which shows that effective February 1, 1964, bulk diammonium-phosphate was quoted at $77.50 per net ton, F.O.B., rail car, East Tampa, Florida. The typical delivered prices, based on established freight rates to surrounding market areas would be as follows: Garden City, Kansas $92,70/ton Franklin, Nebraska $92.50/ton Oklahoma City, Oklahoma $91.10/ton Rocky Ford, Colorado $97.50/ton The C.F. & I. Corporation, using a furnace manufactured phosphoric acid offers a diammonium-phosphate (21-53-0), F.O.B. Pueblo, at $112.35 a net ton in carload lots. This is a higher grade product than is planned for this project, and would not -93- TABLE 14 OPERATING AND CAPITAL COSTS REQUIRED TO PRODUCE DIAMMON-PHOSPHATE FERTILIZER Annual Costs Natural gas (S 2 3.1 cfm Phosphate Rock (? $14.79/ton (3) Sulphuric Acid @ $4.93/ton (4) Power P 9.3 mills/KWH Labor @ $3.17/Hr. Water Supplies & Maintenance Insurance & Local Taxes $ 262, ,000 1,848, ,000 512, ,000 334, ,000 634, ,000 50, ,000 391, ,000 90, ,000 Total $4,121,000 PLANTS NEEDED & CAPITAL REQUIREMENTS (2) Ammonia 60 TPD $1,750,000 Phosphoric Acid 120 TPD 1,600,000 Diammon -Phosphate 250 TPD 1, 750,000 $5,100,000 Off-site facilities (1) 500,000 Total Capital Costs $5,600,000 Notes: (1) It is anticipated that these plant facilities will be sited differently from the metal refining operation. (2) Capital costs for sulphuric acid plant facilities not included in these projections but are included in the basic metal refining complex as an essential function of the sintering operation. (3) Includes freight from source to metal refining complex site of $7.60 / ton. (4) Includes freight from metal refining site to fertilizer complex site of $1.12/ton. -94- be directly competitive. Furthermore , the C.R. & I. operation is very high cost and would not be able to meet price compe- tition. A net-back of $80.00 per ton is planned for a plant site somewhere along the railroad from Colorado Springs south to Trinidad. This is a conservative estimate. Actual market studies in this area have projected net-backs as high as $88.00 per ton. The projected net-back of $80.00 would be very competitive with Florida based shipments as indicated above. There is every reason to expect that the proposed fertilizer complex would be able to market the outputs projected. The plant output of 82/500 annual tons represents only about 25 percent of the existing market in adjoining states for ammoniated phosphates. These markets are growing rapidly. On the basis of a selling price of $88 we project an operating profit as follows: $88 - 50.00 (operating cost) - 8.00 (fgt. to market) = $30.00 $30 x 82,500 (tons) = $2,475,000 -95- TABLE 15 PRIMARY FERTILIZER CONSUMPTION FOR 1963 IN THE MARKET AREAS ADJACENT TO THE METAL REFINING COMPLEX ( Annual Short Tons ) TYPES COLORADO KANSAS NEBRASKA OKLAHOMA TEXAS Total Fertilizers 159 # 930 589,752 527,167 310,600 1,232,728 N. 30,796 155,562 208,110 59,880 327,385 P 2 5 24,367 84,570 52,379 52,753 161,727 K 2 2,938 9,896 4,892 13,534 43,959 Total Nutrients 58,101 250,028 265,381 126,167 533,066 Ammoniated Phosphates 8,419 62,621 17,548 33,394 182,735 -96- PROFITABILITY OF THE METAL REFINING COMPLEX In this study we have considered a refining complex in- cluding six different units. The I.S.P. furnace is the basic unit and is essential to all of the others. From the I.S.P. furnace, and its associated sinter plant, comes the finished, or semi-finished, products that are further refined in other units. There are various motivations for considering these different refinery units as a single refining complex. In the case of the zinc refinery unit, the production of Special High Grade zinc is insurance of ready market acceptance of the product, whereas the Prime Western grade, normally pro- duced by the I.S.P. furnace, would be more difficult to market. The zinc refinery unit represents capital expenditures of $2,660,600 and annual direct operating costs of $72 3,000. The increased revenue obtained by upgrading from Prime Western grade to Special High grade would amount to $524,000, less than the operating costs. Obviously, before an investment was committed for a zinc refinery the market situation must be thoroughly studied. The lead refinery unit represents increased profits in contrast to the zinc refinery. The I.S.P. furnace is capable of producing a lead bullion which must be further refined be- fore it is marketable. The 30,400 tons of lead bullion, with the contained metals of gold, silver, lead and copper, produced by the I.S.P. furnace, is estimated to have a value of $9,335,217 if sold to another lead refinery at posted prices for lead concentrates. If this bullion were refined in the lead refinery in the Metal Refining Complex the value would be raised to $10,592,011, an increase of $1,256,794. The lead refinery represents a capital expenditure of $1,357,000, and annual operating costs of $702,534. There would also be freight savings of $212,800 which would increase the relative income. The additional cash flow developed by the lead refinery would therefore represent $699,210 (before taxes) annually. -97- We should keep in mind that while the I.S.P. furnace is primarily a zinc refinery unit, it refines lead at very low cost and under the input load projected for the I.S.P. furnace in Colorado, 64,000 additional tons of lead concentrates could be added at incrimental costs and materially improve the over- all profitability of the entire Metal Refining Complex. The sulphuric acid plant represents a capital investment of $3,093,160 and annual operating costs of $304,551. The cash flow developed by the acid plant (before taxes) can be calcu- lated to be $741,800. The development of local markets will improve this cash flow and such development can be expected. The fertilizer complex planned for the complete metal refinery complex includes facilities upgrading the low cost sulphuric acid. The capital cost of the fertilizer complex (exclusive of the acid plant) will be $5,600,000. This complex will generate a cash flow of $2,109,000. We have used the cash flow principle to evaluate various combinations of refinery units to guide our considerations. These separate case studies are developed on the pages that follow. It would appear that the combination of refinery units as shown in CASE II represents the most attractive earnings potential with respect to capital investment. The second potentially most attractive ratio of cash flow to capital in- vestment would be the I.S.P. furnace alone. However, this would require discharging SO2 gas into the atmosphere and this may not be possible. Depending on cash availability it may be practical to consider the basic I.S.P. unit alone to start, with provisions for adding additional units as required. -98- TABLE 16 CASE I COLORADO METAL REFINING COMPLEX PROJECTION OF CASH FLOW ASSUMPTIONS (a) Concentrate Payment on Basis of $1, 252, 435 credit to miners as compared to current smelter returns. (b) Complex includes all Refinery Units such as: I.S.P. Furnace, Zinc Refinery, Lead Refinery, Acid Plant and Fertilizer Complex. (c) Total capital investment $28,573,800 TOTAL RECEIPTS $35,124,011 OPERATING COSTS METAL REFINING Direct Costs - Operating $ 5,902,863 Cost of Concentrates 15,341,200 Freight to Markets 2,278,210 $23,522,273 FERTILIZER COMPLEX Direct Costs 4, 125,000 4,125,000 MARKETING EXPENSE Staff 225,000 225,000 $7,251,738 Cash Flow Developed $7,251,738 -99- TABLE 17 CASE II COLORADO METAL REFINING COMPLEX PROJECTION OF CASH FLOW ASSUMPTIONS (a) Concentrate payments on basis of $1, 252 , 485 credit to miners as compared to current smelter receipts. (b) Includes all Refinery Units except Fertilizer Complex - Acid included. (c) Total capital investment $22,973,300 TOTAL RECEIPTS $30,624,011 OPERATING COSTS METAL REFINING Direct Costs - Operating $ 5,598,312 Cost of Concentrates 15,341,200 Freight to Markets 3, 378,210 $24,317,722 MARKETING EXPENSE Staff 225,000 225,000 $6,081,289 Cash Flow Developed $6,081,289 -100- TABLE 18 CASE III COLORADO METAL REFINING COMP LEX PROJECTION OF CASH FLOW ASSUMPTIONS; (a) Concentrate payments to miners on basis of $1, 252 , 485 credit as compared to current smelter receipts. (b) Units installed in the metal refining complex: I.S.P. Furnace, Lead Refinery and Acid Plant. (c) Capital investment $20,313,200 TOTAL RECEIPTS $29,076,011 OPERATING COSTS METAL REFINING Direct Costs - Operating $ 4,875,252 Cost of Concentrates 15,341,200 Freight to Markets 3, 378,210 $23,594,662 MARKETING EXPENSE Staff 225,000 225,000 $ 5,256,349 Cash Flow Developed $5,256,349 -101- TABLE 19 CASE IV COLORADO METAL REFINING COMPLEX PROJECTION OF CASH FLOW ASSUMPTIONS (a) Concentrate Payments on basis of $1, 252 , 485 credit to miners as compared to current smelter receipts. (b) IoS.P. Furnace only refinery unit used in Complex - no recovery of SO2 Gas from Sinter Plant. (c) Total capital investment $15,862,950 TOTAL RECEIPTS $25,483,217 OPERATING COSTS METAL REFINING Direct Costs - Operating $ 4,172,713 Concentrate Costs 15,341,200 Freight to Markets 1, 618, 210 $21,132,128 MARKETING STAFF 225,000 $21,357,128 $4,126,089 Cash Flow De ve loped $4,1 2 6,089 -102- TABLE 20 METAL REFINING COMPLEX SUMMARY OF PROJECTED CASH FLOWS OF VARIOUS COMBINATIONS OF REFINING UNITS CAPITAL GROSS OPERATING CASH INVESTMENT RECEIPTS COSTS FLOW CASE I $28,573,800 $35,124,011 $27,872,273 $7,251,738 CASE II 22,973,800 30,624,611 24,542,722 6,081,289 CASE III 20,313,200 29,076,011 23,819,662 5,256,349 CASE IV 15,862,950 25,483,217 21,357,128 4,126,089 The following refinery units are included in - CASE I CASE II CASE III CASE IV I.S.P. Furnace I.S.P. Furnace I.S.P. Furnace ISP Furnace Lead Refinery Lead Refinery Lead Refinery Zinc Refinery Zinc Refinery Acid Plant Acid Plant Acid Plant Fertilizer Complex RATIOS OF CASH FLOW TO CAPITAL INVESTMENTS .253 .264 .258 .260 -103- The Effect of Price Changes on Profits of the Refining Complex To evaluate the effect of price changes on the refining complex we go back to the lowest market quotations during the past 10 years, and we find lead at 9% cents in 1962, and zinc at 10^ cents in 1957-58. These low prices are 3 cents and 2% cents, respectively, lower than the prices in effect on Decem- ber 31, 1963, which is the basis on which the profitability of the refinery complex has been based. The effect of these low- est prices would produce a loss in gross revenue of approxi- mately $4,000,000, however, the cash flow would be adequate to cover. This hypothetical situation is based on no reduction in operating costs and no reduction in payments to miners . If payments to miners were reduced to their current receipts under existing smelter arrangements then the cash available tp the refinery complex would be at the minimum, $1,300,000. The prices for lead and zinc must fall below the levels in existence in the priced-controlled era of 1940-45 before the refinery complex would force a financial crisis. Conversely, the Colorado Refinery Complex would represent a force of stab- ilization for the miners being able to absorb price variations which many miners are unable to do. Financing The Metal Refining Complex There are numerous methods that have been suggested for financing the Metal Refining Complex. Although this study has been sponsored by the Area Redevelopment Administration, no financial support beyond the study has been contemplated. In- stead, it was the objective to Area Redevelopment Administra- tion to stimulate private investment, provided this study indi- cated economic and technical feasibility. There is no doubt that the I.S.P. furnace, and the other refining units considered for this metal refining complex, are technically proven. Assays of the ores and concentrates pro- ducing mines and mills in the State of Colorado have been thoroughly evaluated by the metallurgical group of the Imperial Smelting Processes, Limited, and by practicing metallurgical -104- engineers in this cpuntry. In fact, the Colorado produced ores and concentrates are exceptionally well suited for the I.S.P. furnace. Most of the newly constructed I.S.P. furnaces in other parts of the world operate on ore and concentrate feed far less suitable than the Colorado produced materials. The ores and concentrates produced in the other Four Corners States of Utah, Arizona and New Mexico, are similar to Colorado pro- duction and, therefore, it is assumed that these materials would be equally ammeniable. Since there is no question as to the technical qualifi- cation of the I.S.P. oriented Colorado Metal Refining Complex we turn our attention to the economic aspects of this feasi- bility study. The normal procedure involving capital expendi- tures of the magnitude projected for this metal refinery would be to select a depreciation schedule of 20 years (5 percent) . However, in this instance, we are unable to select a depreci- ation schedule until after each mining company has had the opportunity to review this report and to evaluate the technical and economical implications for each mining property. When this has been accomplised and the mining properties represent- ing potential ore, or concentrate, commitments are identified, then it will be possible to determine a realistic depreciation schedule based on the ore reserves of the specific properties to be involved. Referring to Tables 16, 17, 18, 19 and 20 we find cash flows projected for various combinations of refining units. These show that the complete metal refinery complex, including the I.S.P. furnace, sinter plant, zinc refinery, lead refinery, cadmium recovery, acid plant, and diammon-phosphate fertilized complex, will develop a cash flow, before depreciation and in- come taxes, of $7,251,738. This is based on processing Colo- rado produced ores and concentrates. Furthermore, it presumes that the net-backs to the Colorado producers will be approxi- mately $1,250,000 greater than existing smelter net-backs. If we assumed the net-backs to Colorado producers would remain the same then the cash flow produced by the metal refining complex would be over $8,500,000. -105- If we restrict our metal refining operations initially to the I.S.P. furnace and the sinter plant, the cash flow will be $4,126,089, or with no credit to producers it will be nearly $5,400,000. During the investigations incidental to the preparation of this report the idea of the miners participating in the owner- ship of the metal refining complex was discussed with each of the Colorado producers and with a limited number of non-produc- ers actively engaged in exploration and development; however, no commitments were asked and none received. Yet it is obvious that an undertaking of this magnitude will require the active interest and, indeed, the financial support of all of the Colorado producers, or their equivalents, in other Four Corners States. It is also obvious that whenever possible miners should join in the ownership of the refinery complex in order to further improve their net-backs by participation in the profits. It is reasonable to expect that many of the operating mining companies in the Four Corners would commit ore reserves and financial support to a Metal Refining Complex. In the course of this investigation financial institutions and industrial companies have been contacted and conferences held with key officials to determine the depth of interest and probabilities of financial support for the Metal Refining Complex. We can report a real and significant interest on the part of major financial houses, large industrial companies, and local and state community, and governmental agencies. A Financing Program Until the ore reserves are established for the participat- ing mining companies, a depreciation schedule selected, and a method of financing determined, it is impossible to accurately calculate profits. However, we have made several projections of profits based on an assumed set of conditions where the participating mining companies contribute up to 2 5 percent of the capital required. Preliminary discussions with financial institutions have been favorable to the plan outlined as follows: -106- (a) Miners and mill operators contribute 25 percent of the total capital funds required and commit the production of their properties. In return, this group would control 75 percent of the equity ownership and management. (b) The financial group would contribute 75 percent of the capital required and would receive de- bentures (convertible) carrying a 5 percent interest rate. The debentures would be prior to equity holders and could be converted into equity shares at the holders' option. (c) Since there will be some difficulty, initially, in developing "proven" ore reserves, it is suggested that provisions be made for a "sinking fund" for the purpose of accumulating sufficient funds to assure pay-out in shorter period, with the further provision that this arrangement would be adjusted at regular intervals to reflect the current status of the proven reserves in the committed properties. This is perhaps an over-simplification of a very complex arrangement, but it will serve to illustrate the type of approach that this matter warrants. Profit Expectations Using the foregoing "financing format" we can project the profit expectations of each of the various combinations of re- finery units suggested on the preceding pages. (Tables 16 through 20) . These projections are summarized on Table 21. The earnings on invested equity and pay-out are substantially the same for each Case Study, with variations between 2 7 and 28 percent return and 2-4 to 2-7 years payout. In addition to the interest provided for the debenture holders we have provided a sinking fund of 2*2 percent. These are points of negotiation with interested financial groups. -107- TABLE 21 PROFIT EXPECTATIONS OF VARIOUS COMBINATIONS OF REFINING UNITS BASED ON SINKING FUND FINANCING PROGRAM CASE I CASE II CASE III CASE IV TOTAL RECEIPTS $35,124,011 $30,624,011 $29,076,011 $25,483,217 OPERATING COSTS 27,872,273 24,542,722 23,819,662 21,357,128 INTEREST Operating Funds Debentures (5%) 160,000 1,071,517 160,000 861,517 160,000 761,745 120,000 594,800 OPERATING INCOME 6,020,221 5,059,772 4,334,604 3,411,289 CAPITAL Invested Depreciation (5%) 28,573,800 1,428,690 22^,973,800 1,148,600 20,313,200 1,015,600 15,862,950 793,100 NET INCOME 4,591,531 3,911,172 3,319,004 2,618,189 INCOME TAXES Federal State 2,410,553 241,055 2,053,365 205,336 1,745,796 174,579 1,374,549 137,454 APPARENT PROFITS 1,939,923 1,652,471 1,425,629 1,106,186 SINKING FUND (2%%) 714,345 430,758 380,872 396,573 CASH FLOW AVAILABLE 2,654,269 2,370,313 2,060,357 1,502,713 EARNINGS ON EQUITY Invested 277o 28% 28% 27% PAYOUT PERIOD ON EQUITY INVESTMENT 2.7 years 2 .4 years 2 .4 years 2.6 years -108- It is expected that the percentage of profits to be set aside for the sinking fund would be adjusted at intervals to reflect the status of ore reserves. A more favorable sinking fund rate would be obtained by developing additional "proven" ore reserves, thus providing an incentive to the mining companies, and conversely, a less favorable rate would be reflected by the lack of such development. It is felt that an arrangement of this type will be necessary to overcome the uncertainties of ore reserve status. The maximum capital investment projected where the entire refining complex is undertaken at one time is $28,573,000. These facilities will generate profits after taxes of $1,937,000, on gross receipts of $35,124,000. These are profits on the operation of the refinery complex, and do not reflect additional profits to the mill operators of $1,252,000. The annual total profits to the mill operators and the refinery complex would be $3,189,000. These double profits represent approximately $19.00 per ton of concentrate currently produced in the State of Colorado. -109- SELECTING THE SITE FOR THE METAL REFINING COMPLEX There are many considerations involving the selection of a site for the Metal Refining Complex. Factors to be considered are the availability of concentrates, process materials/ power, natural gas, water, coke, labor and transportation from mines and to markets. Transportation is perhaps the most significant factor to be considered. First is the matter of transportation from mines to the refinery site. The map of Colorado, which follows, gives an idea of the problems of transportation. Each of the mill sites where concentrates are prepared are indicated by stars. The railroad is indicated by a heavy line. It can be seen that only two mill sites are actually adjacent to the rail lines (Creede and Gilman) . Other mills must haul concen- trates over highways to reach railheads. Standard Metals Cor- poration, a major producer at Silverton, hauls concentrates from its mill to Bernalillo, New Mexico to reach a rail head. The cost of shipping concentrates from operating mills to existing smelters is in excess of $2,000,000 annually. To select a site which would represent maximum freight savings to miners, a complete evaluation of current shipping schedules was prepared and compared against projected rates to six (6) carefully selected sites on the D. & R.G. Railway system. The results of this evaluation are shown on Table 22. Inspection of this Table will show that a metal refinery complex located at Gilman would represent annual freight savings of $1,252,485. The freight bill for Colorado miners would be reduced from $2,084,740 to $832,245. The savings for each of the other sites evaluated are substantial and are summarized here: -110- /Note: Page 111, a map, has been deleted/ Proposed Site Annual Freight Savings Gilman $1,252,485 Leadville 1.-132,997 Ridgeway 1,118,082 Glenwood Springs 1,0 34,354 Grand Junction 1,016,438 Pueblo 857,399 Research into markets for the refined metals to be pro- duced at the complex indicated that shipments would be necessary as far eastat Illinois, Indiana, Michigan, Ohio, and Pennsylvania. It is an odd fact that the freight cost for re- fined metals to these mid-western markets is the same, regard- less of the location of the refinery complex. This removes the matter of " freight-to-markets" from consideration in selecting a site for a refining complex in the State of Colorado. In restricting possible refinery sites to the railroad we are mindful of the large reserves, and production, of lead and zinc ores in the other Four Corners States, namely, Utah, Arizona and New Mexico. Since shipments of ores or concen- trates from these would normally move through Colorado to mar- kets, a site on the railroad would make a Colorado Metal Refin- ing Complex available to miners in these other states with no significant increase in the total "mine-to-market" freight cost. To determine the effect of other factors on each proposed site the operating costs were segregated as to variable and non-variable. The non-variable costs included such items as labor, licenses, taxes, etc. The variable costs included items such as coke, power, fuel and fluxes. The variable costs were carefully accumulated for each site. For example, the cost of coke at Pueblo was determined to be $24.00 per ton, while at Glenwood Springs the cost was calculated to be $16.75 per ton. Each site, therefore, represented varying cost factors depend- ing on the availability of raw materials, power, etc. These variable factors, plus the non-variable factors and the freight savings, were combined on Table 2 3 and the composite effect of all factors resulted. We can see by inspection of Table 2 3 -112- o o U CI o <\ D OS §3 OS O a, CJ X Z ►J M 2 0) a: h D 0) U 10! a 1 co Z OS w u U E-" Z J 8§ CO z o CO <, CO C O n) 83 18 ?! I Ck 01 01 J Q H w £; X c u o -j S O 9' OS . Cw|l-3 I 2 i i n oil ! O M U 10] 1 . _ll Z 43 o u M Dm H O 4J u -h ■y c Z 3 HO H« co S H 10 X OS u| . ■U Z u N Cu I I c c o cu u u o o CD en o o * oo r~ cm ■■* en in (N *t (n in o o * in id on on vO in CM CM i-H in o vo co vo on O in in O vO 10 on on CO h ^ H on O O p- rH on o r» V0 ■* o O o CN CO m -tf CO CO Cn ro CI m o ^ on O •* o t- O CN ■* in ro <* CO 3 i-H o o ro vO co o « - » « < J rH rH o rH o (N S rH s u a 2 O CN -t o o rH ro CO ■«* CM -» O •* <* in VO rH o on o CO P» >* VO cm in on p- r( I>1 H IB O O vO VO O cn co in O CO rH <• VO VO CM O vO P- i-> rH CO rH ■>* o m in O VO VO r-l CM ■* on in ^" vo r» o o o o o o O in in vo vo CM p- <* cm o o o O CM O cn r- vo vo <* o CM CO VO o o o CM CM «* CO CO VO co on cm CO CN VO o o o o o o p- P» ^ o p- p- oo oo vo o o o o o o o o o on vo vO •>* cm P- O r~ P» O •«* ■* in cm r* I I I ?o o I I r» •* p» p- vo p- co CN co HHH < m o on cm CM ro CO ^f rH rH ffl U m in o in vo 00 CO m vo CM en GO co in •-1 cn U fu n oo r-i CO vO P~ oo u on 'j co on r- O rH r-f 00 O CO rH CO io O O on O O CM c O ■P rl <0 > r c 10 (0 4J C rH N 0. Eh a fl o Cm Eh 81 ■O ■rl U G CU X = o CO rl PO 10 +J r3 Cw Eh 10 4J r- O 0, Eh 3 m TD 4) ■U 01 CU M U 10 4J A O 0. Eh cu rH Cm rl V > = CO •-! 10 C rH O N Pm Eh U U 10 10 lit CU >< X c rl O O > rH CM eg m tn tn C C •H -rl > > 10 m co co rH rH rH CO «J (0 +J +) 4J OOO Eh Eh Eh SB CO ■p c cu n cu u Cm O Eh >. CU that Glenwood Springs represents the most favorable combination of cost factors. It is a fundamental precept in the research programming of this study that the mine operators must receive the maximum possible benefits. There are logical reasons for this position, Unless the mine operator can receive a profitable return on his investment of capital and effort he cannot afford to operate his mine, hence, no concentrates to feed the smelter. Increas- ing the net-back to the miner will generate more mining activi- ty which is the basic objective of this study. If each mine could afford its own private smelter the op- timum conditions would exist, but unfortunately smelters cost a great deal of money to build and operate and, furthermore, require considerable volumes to bring the unit cost of operat- ing down to competitive levels. The size and location of a smelter, therefore, must be a compromise of many factors in- cluding location with respect to markets, sources of ores, sources of process materials, sizes, etc. We start with the "standard size" I.S.P. furnace which several years of experience has shown can be operated at com- petitive levels of cost with average grades of input feed. A furnace one-half the standard sized unit would reflect much higher unit costs and would, therefore, not be competitive. The "standard size" I.S.P. furnace was deemed capable of accepting 78,200 tons of zinc concentrates. Now, experience has shown that the same basic unit has a projected capability of 115,700 tons of zinc concentrates. It is reasonable to anticipate that the standard furnace will be capable of pro- cessing even greater volumes in the future. It is a fortunate coincident that the capacity of the standard I.S.P. furnace is capable of increasing its capacity to accept increased output expected from Colorado mines that the mere availability of the smelter will stimulate. Based on the current balance between output and the capa- bilities of the standard I.S.P. furnace, there is no question -114- ro i a\ Z O H -H < U) o c s ■rH ^ w U !H w H to T) Jx m IS c i H o « c < 3 > I-) 1 z -0 o c 2 (8 <* ^r o O r> m H ■* H o CO o CD ** o ~ o rH m CO ro CM rH 0> o> m r~ CM r> o ■* CD r» cD O CM H -H m H " t/> in in ^f cn CO ro H 00 ro CO cn in ■* o CD CO O CN CD r* •* ro ^t CN CO o ,-H CM r^ CD o CO ro LO 03 cn m ^f r^ en CD .H in CD <* m CO CM CD 0^ CO CO CD r- rH CM CO ro CN O ■* rH 0> r~ o CO «* in ro ■* t> in CM O ro ro ro O ^r rH m rH CD in O r- CM CD CM co CO CO ro CO rH o rH CD r^ r- r* o ro CO en ^f 0> o -H CO cri r> m no G\ rH CD r> CN ro CM CD O CO rH in rH CD try CO o o 0> cn CO r^ o> CD CO CM cn in in CO m r- CM CM CD cn C7i in *f CO o CD cD r> rH in ro cn CO r~ 3 rH 3 ct u 0j In fcr CO O 4J in i-i •H R fc, CO o TJ u tt) 4J a CO T, ■H H J H 2 a) 4-> W -H (i CO J-l H to U u u a H -p to a) rS J Di a ■H n Q* co •a 3 C m 1 3 H m l-J H •? ■H ci) T3 > H rn C T3 ^! T) rrj CO (U ■H U 0) 3 « a 1H a< to f) CP '.■•, c c H •H g •H ■P J co o c aj X ■a 3 >1 -H w o b rrj rH c 3 •H 3 T3 rrj CD > c C g 6i t) tT CD ra rH T3 (B c H ^ ■H ■H CD ■H o o o « 1-1 A! c rn Bi H CM ro ^ m but what a single standard sized furnace must be the only con- sideration and that it must be located so as to provide maxi- mum net-backs to the mines. It has been assumed that for maximum efficiency in over- all operations the I.S.P. furnace and associated refinery units must be located on a railroad. We must keep in mind that the refinery must transport 170,414 tons of finished product to market and approximately 260,000 tons of concentrates, coke and fluxes to the refinery for processing. In addition, the refin- ery must obtain annually 40 million KWH of power, 525,000,000 gallons of water, and 1.6 billion cubic feet of natural gas and, furthermore, must obtain and maintain a staff of 61 and a work force of 316. It has been also assumed for purposes of this study that the capital costs of constructing the refinery complex will be the same on any railroad adjacent site. The operating costs of the fertilizer plant have not been included in the analysis made to select a refinery complex. The considerations involving a fertilizer plant are entirely different from those of metal refining. The sulphuric acid produced as a by-product of sintering operations is the basic ingredient of the fertilizer operation, but it must be combined with ammonia and phosphate . The ammonia must be manufactured from natural gas and the phosphate must be mined and shipped to the site from Idaho or Montana. The markets for the high nu- trient fertilizer as projected can only be found in Colorado in limited volumes It will be necessary to look to Oklahoma, Kansas and Texas for markets sufficiently large to absorb the output of the proposed plant. It is logical, therefore, to consider locating the fertilizer plant separate from the metal refinery. A site along the railway from Colorado Springs to Trinidad would offer low cost natural gas and excellent rail facilities necessary to reach the markets to the east. It should be remembered that a final site selection cannot be made until definite commitments as to ore supplies, financial arrangements, and actual land acquisitions are completed. While Glenwood Springs appears to be the most favorable -116- location, it is possible that the people in this area are more concerned with remaining a resort area and would not welcome a refinery complex. On the other hand, if the refinery developers are unable to obtain commitments on concentrates from substan- tially all of the miners, then it would be necessary to look to adjoining states for concentrates and ores. Under such condi- tions a metal refinery in the area of Pueblo would be compet- itively located to bid on the substantial supplies of zinc and lead concentrates available in Arizona, Utah and New Mexico, three states which, like Colorado, have no zinc smelters avail- able within the state. We have worked diligently to obtain the best possible cost commitments on power, coke, freight, etc., but it is only natural that until the refinery complex approaches the point where construction is inevitable, the costs quoted will be only partially competitive. Gilman has been listed because of the obvious freight savings resulting from the availability of the concentrates from the Eagle Mine, however, the topography at Gilman would probably preclude the construction of a refinery complex. A nearby site, such as Minturn or Red Clift would be considered as alternates. A close examination of each community situation will in- fluence site selections that may outweigh dollars of operating savings. For example, financing the refinery may be easier to arrange in Pueblo than in Ridgeway. Labor availability, finan- cial assistance, and concentrate commitments are factors that will have important influences on the ultimate site selection. It must not be overlooked that this research project was sponsored by the Area Development Administration as a means of stimulating employment, in depressed areas. This must, there- fore, be an important consideration, although it is quite ob- vious from our studies of mine potential that the most signifi- cant effect on employment will be at the mines where the pros- pects of increased returns will stimulate the already active exploration and development programs. -117- Significance of Location to Process Materials Availability The most important item of the process materials to be con- sidered is, without question, coke. The I.S.P. unit requires over 50,000 tons of metallurgical grade coke annually. The only large scale coke manufacturing facility in Colorado is at the C.F. & I. plant in Pueblo and we have used coke prices, as quoted by C.F. & I. for the proposed sites at Pueblo and Lead- ville. The cost of coke transported to other sites would be prohibitively high and so we have projected costs based largely on using local coals at Carbondale and Durango blended with small amounts of special grades shipped from out-of-state and manufactured into coke at the refinery site. The Salem-Brosius Rotary Pancake coke oven appears to be suitable for this job. The availability of "hot coke" at the refinery site will repre- sent significant cost savings since pre-heat would be reduced, however, we have not considered these savings in our calcula- tions . The limestone required for fluxing amounts to some 24,000 tons and we have based our calculations on the availability of this material at Monarch and Glenwood Springs where commercial operations now exist. It is very possible that local sources of limestone would be devel oped once the refineries were sited and freight savings would result. The fuel requirements for the I.S.P. furnace, other than the coke, is not great. Fuel for starting the sinter opera- tion and pre-heat ing the coke and blast air would be required. Once started the sinter machine derives its heat from the sul- phur burning. Oil or natural gas could be used for these purposes and one, or the other, is available at each of the refinery sites considered. The largest requirement for heat energy would be the zinc refinery, and here 8,000 cubic feet of natural gas (or equiva- lent liquids) would be required for each ton of refined metal. This amounts to 459,200,000 cubic feet annually. This gas is readily available at low costs in the Pueblo area. Newly developed gas fields on the Western Slope will provide any -118- amounts of gas required at each of the other refinery sites. It would be practical to consider establishing the zinc refin- ery unit at a site separate from the I.S.P. furnace if the economies of gas should indicate. Water is not considered as a problem at any of the sites studied. The annual process requirements are 525 million gallons, and very little of this is actually consumed. xne complete refinery complex would require 40 million KWH of power annually, and our calculations have been based on firm quotations from established public utilities in each area. -119- DEVELOPING THE MINER'S POSITION RELATIVE TO THE METAL REFINING COMPLEX It is the first objective of this study to find ways to improve the net-back to the miner. The current "smelter net- backs", especially where zinc concentrates are involved, are very low and leave very little margin for profit. The incen- tives to explore, develop and mine are missing and, without such incentives activity in this industry will continue to decline. We have only to look back a few years to the uranium boom period to remember what financial incentives are able to accomplish. While we do not expect that a metal re- fining complex will be able to duplicate for base metals what Circular 5 did for uranium we do see opportunities for signifi- cant improvements . There are several avenues of approach to the matter of the miner's position relative to the refinery complex. The first is ownership. If the miners, as a group, could participate in the ownership of the refinery complex they would enjoy directly the benefits of the improved efficiency represented by the I.S.P. furnace and related refinery units. Their net-backs would be improved from lower refinery schedules and participa- tion in profits. A second avenue is one used successfully by some parts of the sugar beet industry. In this case the refinery pays a base cost for the beets shipped by the grower upon receipt at the refinery and, at the end of the season makes another payment based on the profits of the refining operations. In this manner the producer, whether he be farmer or miner, partici- pates in the profits. The refinery in such cases is very much in the same position as the farm cooperative. The end result is that the producer (miner in this case) participates to a greater degree in the price paid for refined metals which is basically a form of vertical integration — a very desirable objective for the metals industry. -120- The third avenue to approach the matter of the miner's relationship to the refinery complex is the more conventional one of the "posted refinery schedule" . The relationship here is similar to that which to-day exists between smelter and miner. A negotiated price for concentrates delivered to the refinery based primarily on the volume and analysis of the con- centrates, but also reflecting market strengths or weakness. In this latter case the refinery makes a base charge to cover all, or part, of its operating costs and by setting a percent- age of metal recovery "paid-for" participates with the miner in the market . It is possible that a fourth avenue could be developed in light of the special circumstances involved in the Colorado situation. This would be an arrangement whereby the refinery functioned in the capacity of a "custom refinery" and accepted concentrates to be refined for a "toll charge". The metal recovered would remain the property of the mining company and would involve no responsibility for marketing on the part of the refinery. In such cases the degree of refinement may well be stopped at some specified point, such as in the case of zinc refining where it would not be carried beyond the Prime Western Grade produced by the I.S.P. furnace. This last approach is a matter of negotiation and would require significant re-evalua- tion of the physical plant facilities projected for the refin- ery complex in this report. Developing the Refining Buying Schedule Our first step in establishing a refinery buying schedule must be to establish a p rocessing charge to cover the direct costs and return on capital. We feel that the refinery complex should expect to derive most of its income from fees or direct charges as opposed to the more speculative areas of revenue participation. This policy will leave to the miner the maximum opportunity for profit realization from development of higher grade deposits and improved milling practices. This policy will automatically penalize the miner who is careless with his milling or his mining, and will on the other hand, reward those who are careful to maintain a hiqh ratio of concentration. -121 In developing the base refinery charges, we feel that sim- plicity is the key-note. It has been shown that the composition of each concentrate has a direct effect on the costs of process- ing as per the quantities of coke, flux, etc., that is required. In actual practice each mine will negotiate with the refinery a fixed fee, or processing charge, for each type of concentrate. In other sections of this report we have devoted space to the discussion of ore reserves, geological prospects, produc- tivity capacity and current mine development activity. There is no question but what the geological prospects are exception- ally good, the productive capacity is greatly in excess of the ability of this refinery complex to handle, and the hundreds of mines currently being explored, or developed, inspire confidence in the future of the mining industry in Colorado. It must be admitted, however, that "measured ore" reserves are not of great magnitude "Indicated ore", "inferred ore", or "poten- tial resources" can be projected into millions of tons, and decades of production time, but not "proven" or "measured ore". We realize that financial commitments of the magnitude required by the Metal Refining Complex cannot be made on the basis of hope. Substantial ore reserves and assured produc- tion must be determined before depreciation schedules are selected and operating costs finally determined. We have made several hypothetical profit projections but until final deter- minations are made, these are not a suitable basis for project- ing a metal refinery buying schedule. Instead, we have shown here the cost factors that will be the basis of buying sched- ules. We have also calculated the approximate net smelter re- turns of each of the producing properties in Colorado on the basis of the limited information available to us on their existing smelter contacts. In the hypothetical profit projec- tions preceding this section we have assumed a cost of purchas- ing concentrates from Colorado producers that represents an increase in net returns of approximately $1,2 50,000. This is an increase of 9.4 percent. There will be, of course, varia- tions in these net returns for each individual mining company and for each refinery site. -122- It is obvious from our many contacts with, and studies, of mines, and miners in Colorado, that the matter of ore reserves is a matter of capital availability and this, in turn, is a matter of metal prices, smelter net-backs, etc. If a Metal Refining Complex is established in the State, we are confident that it will provide the necessary incentives that will make the capital available that will in turn develop the reserves. The lack of a market for Colorado metals in the past is the principal reason why "measured ore" reserves are in short supply to-day. Allocating the Refinery Expenses by Concentrates The allocation of expenses per ton of concentrate primari- ly revolves around the allocations in the I.S.P. furnace. This unit of the refinery (along with the sinter machine) represents 80 percent of the total capital costs and 70 percent of the total operating expenses. In the I.S.P. furnace unit the com- position and volumes of each separate concentrate have a direct relationship to the cost of refining that particular concen- trate. The carbon (or coke) required represents 34 percent of the total I.S.P. furnace operating costs. This cost item can be allocated directly to the concentrate on the basis of the following formula: C =0.725 (0.936 x Zinc Volatilized + 0.2173 x Slag Melted) In the above formula the figure 0.725 is the I.S.P. carbon estimation. Frequently in the operation of the I.S.P. furnace, values lower than this are obtained representing better metal- lurgical performance. The zinc volatilized in the formula above includes not only the zinc in concentrate, but also the zinc in recycled drosses and blue powder. The slag melted in- cludes the gangue originating from coke, ash and lime, plus any other fluxes required for the particular concentrate. These considerations mean that a certain amount of mathematical eval- uation is necessary for every concentrate and it must not be assumed that allocation of costs to any one concentrate is a simple matter. -123- oooooooolo 000 ooooo! o ooooooooo .DtoaiiniDrHm^-lo o o o r^ o ol r^ O to CO o in *t ** r^ a> m a> o! o i! ml OS „ «! c Slg to | *— eg fl rsi i— i ^ oj <"o CO 0> >£> O O *$ G\ \D «J W- .1 H Si ol H tn to wl OS OS u •: Ik n H -I OS <& p w| R' 01 < r- en r~ .-n f~- m VO] H 00 m *? O m £ ?! oo 1 ml m CO (? »t h r- c"J cr> cm! i> •n r- .— i CO c\ in i— l *r! CT* ^ lti i^O m m ifl m m! m lo *^r i^o" li co \D n ^ >*0 O fN CO H 01 *l -X'' lOi ID 01 r^ cnI in ai! 01 CN (I) ai! H ail o> o CN <*i ■* <*! "* u> to! tf> R O U. < 01 < Q Z 01 < Ul u a H OS 01 J ^ Ou § H i a r ai R I m CN w o OS M H o pa os a. m ►j w w <9 R 01 3 S O Z a. R £ 01 w R w CM ►J R tn S a OS 3 01 Cj o j H a. -1 in Ch o la (1 J iii < 01 < i 1 1 o ' ) ' ) o o o o o ID to in m o iTl CO iT) in kO r~ CN in rH W n oi VO in r* CN in m m o to -r 00 r^ m -r ■H r^ rH r*- «■ rH O m o o o o o o m cn O o ' i CN o I ) 1 1 ■f m o o 01 m r* o in r^ on CO m 10 * CN 10 -t in CN in ^H in 'to -H O vo r*- cr> r- OJ °l in > H H m in en m o> VD ■^ ^ VD « ^ H m * CO m in ID 01 01 U3 in 01 r-» CO in r-t o m in in v0 01 r- m 1/1 r^ ID 10 to in ID in -t to r~ CN in ID 01 in o •* CM in 01 01 CN 00 ai 't CN m ITl o 01 Ol in m m H ■tf co in ■* >* o r^ ■* vD in VI- 1-1 H H rH H H r-l v> ooooo ooolo ooooo oooo O O 01 VD O CO col CO in r^ ^p 01 m >* 1.0 ml VD in 01 in o r- ill CM -H r^ o CN VD IX) VD <* ml o VC rH O O O O O rninO(N tN OO^J" kD Oil (N 1.0 on m i~i to to n rH ■* ID Ol in CO o 't oo rH Ol in in m r^ VO * 10 to m CN CN CO »* 1- 1- m CN CN CN CN rH CN CN H CN n o l! r> o O O m m i l| M ^ <.n- «- II r- |l in H I n o OS a. H Z u OS OS w w III ex : M U u H U .1 > i > 01 r-l w H H a a u M :;! r-l H R 01 o m u OS u 01 ►J fc> E O f.l ►J w r-l H S ES R 01 O « u R H P S i ) ru 0. R 1 P CO w OS 5 H p 01 01 s K M The calculations showing the carbon and fluxes required for each ton of concentrate and the metal recoveries and dis- tribution are shown on Table 25. These same calculations are summarized to show total metal recoveries by each mill on Table 25. Using basic formulas such as above it is possible to very accurately project the cost of processing and the recoveries expected for a single concentrate. There is often a wide divergence between the composition of concentrates which affects the operating costs of the I.S.P. furnace. To illus- trate this fact we refer to Table 2 5 where we note that the zinc concentrates from the Telluride mill requires .459 tons of car- bon per ton of zinc concentrate while the zinc concentrates from Gilman require only .409 tons. In terms of coke this means .056 tons of coke more to be charged against Telluride Concentrates than against those produced at Gilman. In terms of dollars, the .056 tons of coke means $1,344. On the other hand, Gilman lead concentrates require .028 tons of coke more than the lead concentrates from Telluride. Of course, in the case of the Telluride concentrates they carry 7.22 percent more zinc metal than do those produced at Gilman. The minerals in- volved at each of these mines are different. -125- 00 fa fa a pej s fa a M fa fa §3 fa o < C J uo H u W P a s ^ a Q w *i o B Q Q H fa < SS fa- fa o fa fa r. O fa fa u O 2 H fa Z N C) o i— i iv S H i-h o o H p fa H Q O O O fa pel fa fa en p-i «S O eg H fa W § o H fa fa o o C3> CO LO i-H c CO o o o r^ co o fa B~5 co o n i^ ere co o en co co in co OJ ON cO OJ CM - O O i— i o ON o o >jo cm rv oo lo iv CD CTN LO OJ OJ CO ^H 1-4. X) ■— i cm r-. lo o o o o o o CO o o o o cO fa o o o o o o o o o r-4 r^ lo co H fa o H LO o o o o o o o o o o o fa in cn O co o m cn i— i i— j o co rv co d 1—4 i— 1 o O CO on o o o o fa OJ o o o o o o cO 1 o o o IV fa fa o o o o o o o o o ,-H CO cO CM H w H cO o o o o o o o o o o ON 00 O CO o r-v co t-v o r-v o oo H Xl 00 4-1 • H 01 CO ai ca u Xl a •H 0J o 4J CO CO CO CO U • •U co ca C c/j u u c h e •H -a 9 o D 4-1 U i-H i-H O) fa CU i-H ,-H .H • ■H u O en tH C c XI fa) CD 4-J CO CO JJ C CO CO CO |— 1 CO c G 4-> NO •H u cn u U S-S B~S s-S ■H E C C CO CD co r-i -H CD QJ QJ C Xi D LJ 0J •H • 1— 1 o X 0) XI CO faD i — 1 -a fa XI 4-1 4-1 CSl P-I C_> ■u 3 o o CO M XI 1 — 1 c u B c -u co i-i CO p- ca c c eve c CD ■H o co -H co o i—i 3 0) o aj • H •r4 O 3 o •H OJ s u O fa CO H CO PP fa fa fa co| CO U c-- o CN 1 fa CD CM OO i—l o NO o CM CO NO NO 00 o r^ o r^ cm i-4 r— 1 o o m o 1-4 On rH o o o o ON rH 1— 1 CO r— m on o r-~ ON r^ ►J in on on r~- on CO o oo oo o o NO r^ oo <)■ r-~ rH CM in ON M o U~l U~l r4 NO NO 1—1 — - 1 o —j m CO NO r-l o o CO o o o o o i— i CO c ■H 1— 1 1— 1 00 N u • rJ 3 N In • < CU N— ' 1—1 43 •i4 « cx O CD CU 01 Pm < 43 01 h H 4-1 60 3 4-1 •H e m4 i-4 44 43 00 44 • H 43 60 4-1 • O a CO T3 X) cu c 4-1 CO CO Cl TD CU C CO CO •H 3 ^-N u CO CU •H 4= CO 44 CD 43 r- • CO 01 CM f-S CO 01 rH r^ oi U 1 • rH C4H o c 1 3 O co Cl •i4 CU •H 44 tNl 60 CO •^ CO u rH 44 o co c 0) CU Cu c o •H Cl s-s O o TJ O fa fa m CO H Q w 2 CJ H ED Q co o fa fa < fa H B w fa - 3 W CJ > o M 3 O IS CO ,_, > u 01 CO 4-J c H no rN CO o o en H CN CO in fa fa 4-1 4J fa l-i c C fa 01 01 oj no co CM c cn i-i r~- rN eg 4-1 00 o NO iH U1 NO H NO ON ON i-l CO co r— co NO NO CO ON On ON NO l-l o 01 H CM ON r^ CO CO 00 oo -cl- CO o u 6-S 00 ON NO ON ON ON ON in ON ON W c ■* * ' • * ' * ' * m co oi rH 4-1 o H ON o CN ro CO CO CN CM . — i 1 — 1 i-4 OJ i—l r-4 in CM z H CO l-l > 4J 4-J O < c C < 01 r-l o OJ co co r-^ NO NO OJ CM ON rH CN rH cj &-3 fa c U -i-l . : ""'.' 0) N On O co r^ CO ON OI • NO 4J u IN] fa CJ IN] J N ij N hJ CN) rJ M fa tNO fa tN] fa w c w H CJ o E s fa 25 M PQ fa 25 a o fa fa o M H 2 Q M fa fa 52 a w fa fa H P W s CJ fa O CO > fa CJ fa ►J hJ fa- I CJ £ fa M O W M r-l fa r-l M a fa H CO O PQ o fa CJ CO METAL RESERVES IN THE FOUR CORNERS STATES The capital expenditures necessary to create the metal refining complex developed in the study are estimated to be $28,573,800. Certainly there must be adequate assurances of sufficient reserves of crude ores and contained metals to "pay-out" such a large investment. With this in mind, a major effort was made to determine the reserves of crude ore and contained metals in the Four Corners States. Public records were searched, interview and discussions were arranged with leading engineers and geologists in government service and in private practice, records of operating and non-operating mining companies were inspected, and surveys of operating mines were made by trained geologists on the contractor's staff Since Colorado had been selected for a test study, special efforts were made to evaluate geologically each mining district in the state, and to compile and evaluate the explor- ation and development activities under way during the period this report was being prepared. The summary of reserves estimated for the Four Corners States is set out on Table 27. No further breakdown of the estimated reserve tonnages shown in this table is made since in many instances it would violate confidences. The compilation of exploration - development activities and the geological evaluation of each mining district in Colorado is reported in the appendix to this report. If we assume that the optimum annual volume of the metal mining complex is as calculated in this report we can project the "years of operation" for a Metal Refining Complex based on the availability of metal in reserves as follows: -129- r- Eh o Ix, co w Eh £ H Eh GO w !> Pi w 1X1 < w Cri Eh < H in CO w o u Pi p o Ph o o o o o o o o o o o o o o o o o o r-l < o o o lO o 00 H no -tf Cn en o CO O H CN CD LO o PO H .. - ~ ~ - o rH ro rH r-t m o m o O o o o o Q o o o o o o Pi o o o o o o o o o o o en m (N Cn r^ o o CO fa H CO CO o UD H o ■xh «. •» *« m H CN H m o o o o o o o o o o o o o o o o o o o o o in o r> in CM ro en o cn CM rH 00 CO r-^ <^ rH ro rH CN T3 CD fi ■H ^-, td CO -P CD , — . fi U CO o a CD u o o rH - — - 3 rd o 0) p u M - — - u CD (D a) o £ ft rtf CJ > T3 a, rd G rH rH CD CO CD •H •H t) CO o J N CO o 3 u M u O CO 01 •H ir> -P M T3 U CD C ft rd - u « >t ft 03 u -p ft CD u e ft ftl ft u u O p u • c, 0) s» p >i 0) -P 0) •rH 4J CO -C u ffl p ft G to ■H -H MH «. S rG >1 -P u 13 c (3 CD C CD U -H •H Cn a C! rd c •H CD ft p A -H c -P P (D rd TS i UH M CD c CD !h M 1 TD m CD O 0) -H <& > ro £ CO •rl r-i o a CO cn 1 C a o o >i CD u fi -a >< rd d u CD rH m ^ m £ -p C -H ■H ^ -p p ft G c CO CD 0) CD "4H CO S -P CD CD (13 H m 6 -H ft SH ■H CD n •P fi M fQ CO C CD CO CO CD •H CD CD P CD > M fd fl Vh CD e +J • CD ft •3 tH CO ft P >^ rd CD CO U 3 U O CD u rd •H CD CD CD U > CO U CO -rl CD C CD P ^ £ -h rt: C Eh CO Eh c •H H H O S Reserves of Zinc Years of Operation Measured 14.0 Measured and Indicated 31.2 Measured, Indicated & Inferred 56.4 Reserves of Lead Measured 12.7 Measured and Indicated 29.4 Measured, Indicated & Inferred 73.1 It cannot be assumed that all of these reserves would be committed to a Colorado based metal refining complex At least three of the major producing mines in the Area are part of in- tegrated mining and smelting companies. It is also very prob- able that others are committed to long term smelter contracts and would not be free to choose regardless of the advantages that the new facility may offer. Be this as it may be, we feel that reserves are not the final answer to justification of this large expenditure for refining facilities. Ore Reserves in Colorado This study has been, by choice, concentrated in Colorado and, since most of our field research was in Colorado, we can discuss ore reserve matters with greater confidence in Colorado than is possible in the other three States. The collection of reliable information pertaining to ore reserves from many different operators is a discouraging task. First, is the problem of what constitutes an ore reserve, in this report we have used very strict definitions, accepted by all mining professionals, and these are shown on Table 28 which follows. Unfortunately, the interpretations by the individual miner of these "definitions" often is far from the mark. Secondly, there is the problem of obtaining ore reserve infor- mation from operators who consider this type of information as confidential. Thirdly, for the under capitalized small oper- ator, there are obvious economic and geological factors that will explain the absence of reliable ore reserve data at 272 of -131- TABLE 28 DE FINITIONS Mineral (Ore) Reserve : Material that can be mined, processed, and marketed at a profit under the economic and technologic conditions prevailing at the time of inquiry. Measured Ore ; Ore for which tonnage is computed from dimensions revealed in outcrops, trenches, workings, and drill holes and for which the grade is computed from the results of detailed sampling. The sites for inspection, sampling and measurement are so closely spaced and the geologic character is so well de- fined that the size, shape, and mineral content are well estab- lished. The computed tonnage and grade are judged to be accur- ate within limits which are stated, and no such limit is judged to differ from the computed tonnage or grade by more than twenty percent. Indicated Ore : Ore for which tonnage and grade are computed partly from specific measurements, samples, or production data and partly from projection for a reasonable distance on geolog- ic evidence. The sites available for inspection, measurement and sampling are too widely spaced or otherwise inappropriately spaced to outline the ore completely or to establish its grade throughout . Inferred Ore : Ore for which quantitative estimates are based largely on a broad knowledge of the geologic character of the deposit and for which there are few, if any, samples or measure- ments. These estimates are based on an assumed continuity or repetition for which there is geologic evidence; this evidence may include comparison with deposits of similar type. Bodies that are completely concealed may be included if there is specific geologic evidence of their presence. Estimates of inferred ore should include a statement of the special limits within which the inferred ore may lie. Potential Resources : Material that cannot be mined, processed and marketed at a profit under the economic and technologic conditions prevailing at the time of inquiry. Material that may become a mineral (ore) reserve with improved economic con- ditions or advancement in the mining and metallurgical methods. -132- the mining properties in the State of Colorado. Colorado base metal ores occur as shoots along veins as replacement deposits in sedimentary rocks, and as continuous vein fillings along persistent and major fissures. With the exception of a few of the major mineralized veins in the San Juan Region and of a very few large replacement deposits such as the Eagle Mine at Gilman, development work at producing mines does not normally proceed very far in advance of the actual mining operations. Therefore, proven reserves for most mines are usually small, but when considered on a basis of past pro- duction records, or on the past experience of the persistence of vein structures, or of the statistical expectation of ore shoots in a district, the probable reserve situation is often vastly improved. It is a very different situation than a bedded type mineral deposit to be mined by open-pit methods and where over-burden must be removed prior to reaching pay- metals, in such cases, the full extent of the mineral de- posit must be determined in advance so that the expense of re- moving the over-burden can be capitalized This is not to say that development and exploration of mines to determine ore re- serves in advance is not sound business. We have given a geo- logical rationalization as to why it is a matter that is often neglected in Colorado mines. The economic reasons for failure to develop reserves is a reflection of the uncertainty that has surrounded metal markets and "net-backs" to miners for years in Colorado. The chart which follow show the close relationship between price for metals and the production of metals. (Table 29) . Under existing smelter schedules a price increase is par- tially reflected in improved net-backs to miners Net-backs, however, are composed of many things of which price is only one. The cost of mining, milling, transportation and smelting are all ingredients that make up the net-back. The net-back to a mine can be improved by reducing any one of the cost items listed. The absence of a modern metal refinery, or smelter, in Colorado has clearly contributed to the imposition of lower -133- t L*- 1 Table 29 So- \\ 4o~ \ 3o- v \ ify\ Zo- v% I 1/ pj v lo- i 1 1 Lead -£> -/^ -/o C O 8. o -134- net-backs on mines resulting in w ide fluctuations in production and uncertain reserve development. It is reasonable to antici- pate that the improvement in the supply of dollars returned to Colorado miners as a result of the availability of a modern, conveniently located, metal refining complex will be reflected in increased production and more stable production rates and more reserves. The summarized reserves for the Four Corners States, which includes Colorado, we feel to be conservative. These totals reflect the information from less than 75 properties in the whole Four Corners States. They do not include information from some 2 72 properties in Colorado alone where active explor- ation and development activities are of record. Notwithstanding the very large potential of mineral re- serves we feel available in Colorado, we realize that substan- tial capital investments are projected for the proposed Metal Refining Project and that the availability of capital in large amounts depends on fully supported information to support capi- tal repayment. Since there has been no strong motivation that would encourage the development of "measured" ore reserves by the principal mining companies beyond a reasonable point con- sistent with normal production programming, we have suggested a financing program incorporating a flexible "repayment" arrange- ment. In addition to estimates of reserves and resources, con- sideration should be given to the probability of finding new reserves. Dr. Thomas B. Nolan, past director of the U. S. Geological Survey made the following comments in an address be- fore the National Western Mining Conference in Denver in 1959: "Here in Colorado I believe there are areas in which major ore deposits may occur that have not yet been adequately studied or explored. We do not yet know whether the Leadville ore bodies are beneath the town or extend westward beneath the four-mile- wide covered area that lies between Leadville and the mining districts at the foot of the mountains to the west. We have not determined whether major ore -135- bodies lie under the sedimentary rocks that adjoin the great Climax deposit and are separated from it by the Mosquito fault. In the San Juans, in dis- trict after district, survey geologists have found that the major known ore deposits are related directly to a late and rather brief stage in the volcanic activity that built up the great mountain mass. Is it not possible that major ore deposits lie buried by lavas that covered mineralized throats of older volcanoes that contributed to the development of the mountains? At Gilman, surface manifestations of the largest single base metal sulfide body known in Colorado are so weak that the deposit might still lie undetected had not the Eagle River cut a canyon through it. Might not other deposits lie in the larger area of geologically similar terrain that has no such deep canyon cut through it?" P ast Production of Lead/Zinc Ores in Colorado Past production records can be a helpful guide in estimat- ing areas and quantities of future production. Known ore reserves in Colorado have probably not changed greatly since 1900 , yet production records show that new sources of ore have consistently been discovered and developed. The inaccuracies of past predictions as to the limitations of ore reserves should be proof that measured or even indicated and inferred reserves alone cannot be used for predicting future production. The petroleum industry is a good example to illustrate the fallacy of reserves. Twenty years ago our "petroleum" reserves were thought to be sufficient to last our country only 10 years. Yet to-day, 20 years later, these reserves are greater than they were at the time these dire predictions were made. It is axiomatic that in the resource industries activity pro- duces and increases reserves. Table 29 illustrates the function of price as an incentive for production; provided, of course, the area offers the geo- logical opportunities for discovery. All of the geological -136- evidence points to the fact that Colorado represents a very sub- stantial mineral storehouse. Current Activity and Outlook For The Colorado Lead/Zinc Mines The amount of current exploration and development activi- ties in the Colorado lead/zinc mines far exceeded the expecta- tions of our field teams. While only 8 mines are currently in production, nundreds of mines are standing-by. While only 8 mills are producing concentrates, twice that number are on a stand-by basis with conditions rated good to very good. These stand-by mills are capable of increasing production of Colorado concentrates by 20 percent. The evidence of the current activity and discussions of the geological prospects to be found in the Colorado Mining Districts is included in the Appendix to this report. There follows a resume of current activities on a regional basis. -137- REGIONAL ACTIVITY AND OUTLOOK Front Range Region Presently producing mines include the Chataugua mine near Montezuma and Capital Prize and Griffith mines near Georgetown, and the Cascade, Forge Hill-Fairmont, and Bald Eagle mines near Idaho Springs. Chief of these is the Cascade mine operated by Humphries Engineering Corporation which produced about 4,500 tons of high grade silver ore in 1963. Properties at which active development is presently under- way or proposed for 1964, include the Stevens group, Hamil Tunnel group, Johnny Bull, Diamond Tunnel, Smith and Wesson group, Smuggler and Colorado Central near Silver Plume, the Independence Tunnel and Drummond groups near Lawson, the Lake Central group, Glory Hole, Nigger Hill group near Idaho Springs, and the Perigo and Gold Dirt mines near Rollinsville . In addition to the above, about one hundred (100) proper- ties have had a record of development or production since 1950. The outlook for small but sustained production from the Front Range region is very good. Present milling capacity can probably handle future production, but development of certain larger properties such as the Colorado Central might require additional milling facilities. Central Colorado Region Presently producing mines include the Wellington group near Breckenridge , the Hilltop and Twinkle mines near Fairplay and the Eagle mine near Gilman. The Eagle mine produces about 300,000 tons annually. Properties at which active development is presently under way or proposed for 1964, include the Washington mine near Breckenridge, the Evening Star, Double Eagle, Sweet Home group, -138- Black Prince, Buckskin Joe, Hock Hocking group, Union #5, and Two Sisters near Alma, the Continental Chief and Saguache Tunnel groups near Leadville, and the Gagen Tunnel group near Kokomo . In addition to the above, about thirty (30) properties have had a record of development or production since 1950. The outlook for continued large scale production from the Eagle mine is very good. The Wellington group will probably increase daily production from one hundred tons to four hundred tons by 1968. Other smaller mines in the Alma and Kokomo dis- tricts should attain significant production in the future years if economic conditions continue to improve. The capital costs necessary to re-open the Leadville mines make the outlook for that district subject to considerable doubt. San Juan Region Presently producing mines include the Rico-Argentine group near Rico, the Belle of the West Dump near Lake City, Emperius group near Creede, the Johnston group near Bonanza, the Bache- lor mine near Ouray, the Idarado group near Telluride, and the Brooklyn and Sunnyside mines near Silverton. Production at the Idarado Company mines has averaged about 400,000 tons annually during the past few years. The Sunnyside mine is presently producing at a rate of about 150,000 tons per year. Properties at which active development is presently under- way or proposed for 1964, include the California and St. Louis groups near Rico, the Highland Chief, Empire, Moro, and Chicago Tunnel groups near Lake City, the Solomon, Alpha-Corsair, Monon and Bulldog Mountain groups near Creede, the Warwick group near Bonanza, the Blowout group, American Nettie, and Senior ita groups near Ouray, the Del Paz and Camp Bird-Revenue Tunnel groups near Telluride, the San Bernardo, Andrus, Slide, Butter- fly and Favorite groups near Ophir, the Longfellow-Genessee group near Red Mountain, the Skyline group and Wewissa mine near Engineer Mountain, the Illinois, Silver Wing, and Big Jake, Mogul and Silver Queen groups near Silverton. -139 In addition to the above, about one hundred (100) proper- ties have had a record of development or production since 1950. The outlook for continued and increased production from the San Juan Region is very good. The exploitation of known and persistent vein systems by low level haulage tunnels at the Idarado, Camp Bird and Sunnyside properties, plus the continua- tion of mining and development projects in the Rico, Creede, Lake City and Red Mountain areas should assure significant production from the San Juan Region for many years. Miscellaneous Districts The Keystone mine, near Crested Butte is the only producing mine beyond the limits of the above mentioned major regions. Properties at which active development is presently under- way or proposed for 1964, include the Highland Tunnel near Aspen, the Forest Hill, Roy Carpenter, Micawber, Forest Queen, Silver Spruce, Lead King, and Hot Rock groups near Gunnison, and the Passiflora group near Westcliffe. In addition to the above, about forty (40) properties have had a record development or production since 1950. -140- APPENDIX REPORT ON CURRENT ACTIVITIES AND GEOLOGICAL PROSPECTS IN THE COLORADO MINING DISTRICTS -141- INTRODUCTION The following discussions include brief geological resumes, summaries of current mining activities, and the outlook for future production for the major mining districts of Colorado. The uniti- zation of districts into regions is a compromise between geographi cal regions and geologically similar regions. The purpose for the regional division is to group together mining districts with simi- lar geologic environments and yet do so in such a way that the regions will comprise a geographical unit in relation to various possible smelter sites. The geology resumes of the various districts have been abstracted primarily from U. S. Geological Survey publications. The excellent summaries of available publications which appear in "mineral Resources of Colorado" and Mineral Resources of Colorado, First Sequel" have been utilized whenever possible. The comments concerning "Out-look" are subject to the limi- tations of available current information. In a sense, such comments are outdated as soon as new exploration projects are commenced or as current development projects are either discon- tinued or result in significant discoveries that may portend significant increases in production in the years ahead. It is hoped that the list of current operations, plus the list of operations which have reported development or production since 1952, will assist those persons or organizations who are attempt- ing to update and evaluate ore reserves in terms of the current status of over-all operational activity. GENERAL COMMENTS ON MAJOR MINING REGIONS The three major regions, Front Range, Central Colorado and San Juan, are characterized by distinctive types of ore deposits and will accordingly react in different ways to changes in the economic picture. The Front Range ore deposits are typically small ore shoots which occur in narrow but persistent veins in pre-Cambrian rocks. The high grade of these ores, plus the relative ease of reopening many of the mines, would seem to indicate an immediate increase -142- in development and production in reaction to any improvement in metal prices, smelter schedules or haulage charges. The Central Colorado Region ore deposits are typically medium to large size replacement type ore bodies in limestone. Many of these deposits — especially in the Leadville area — require a large capital investment for dewatering and rehabili- tation before they can be developed and exploited. Therefore, their availability to a Colorado smelter is dependent on a sus- tained period of high metal prices and other favorable economic factors. The smaller but more accessible replacement type deposits in the Kokomo and Alma areas, and the higher grade silver- lead- zinc vein deposits of the Alma and Breckenridge Districts could be exploited with relative ease as the economic situation improves. The San Juan Region ore deposits are typically wide and fairly persistent vein- type deposits in volcanic rocks. Prob- lems of terrain and access require low level haulage tunnels to develop most of these ores. Relatively low grades but large tonnages require long range development programs and large capital investments, so any improvement in the economic picture should be followed by an eventual -- but not immediate — significant increase in production. -143- FRONT RANGE MINING DISTRICT The Front Range mineral belt extends from Boulder to Breckenridge. The belt is about 15 miles wide and includes the towns of Nederland, Central City, Idaho Springs, Silver Plume and Georgetown. The Breckenridge district is geologi- cally related to the Front Range mineral belt, but is included in the Central Colorado Region in this report because of its geographical relationship to that area. The rocks in the Front Range District are a complex mass of pre-Cambrian metamorphic and igeous rocks, locally cut by Tertiary intrusives and flanked by uptilted sediments of Paleo- zoic, Mesozoic and Paleocene age. The pre-Cambrian rocks include a wide variety of complexly folded schists and gneisses invaded by several different granites The earliest rocks are quartz-biotite schist and injection gneiss of the Idaho Springs formation, which were probably derived from ancient sediments. In places, the Swandyke horn- blende gneiss of probable volcanic origin lies with apparent conformity on the schists and is intercalated with them through a thick transition zone. Irregular sheet- like masses of quartz monzonite gneiss represent the earliest intrusive rock in the region. The early schists and gneisses are cut by batholiths, stocks and dikes of a group of pre-Cambrian granites, including the Boulder Creek Granite, the Pikes Peak granite and the Silver Plume granite, all of pre-Cambrian age. The pre-Cambrian rocks have been cut by a group of closely related early Tertiary stocks and dikes, commonly known as por- phries. These range in composition from diabase to alaskite, but most of the stocks and many of the dikes are of monzonite or quartz monzonite. These rocks are confined to a narrow belt that trends about N. 40° E. across the central part of the Front Range. The ore deposits of the mineral belt did not form until after Laramide fracturing had nearly ceased, but their localiza- tion was greatly influenced by both pre-Cambrian and early Tertiary structure „ Planes of weakness such as schistosity, -144- contacts between dissimilar rocks, or pre-Cambrian shear zones exercised a profound influence on Laramide fracturing. The relations of the granite masses to the mineral belt suggest that they acted as buttresses between which the incompetent schists and gneisses were fractured,, With the uplift of the Front Range at the beginning of Laramide time, intense folding and faulting occurred along the borders of the range. The western side of the Front Range is marked by great overthrusts. One of the most prominent of the Williams Range thrust fault, which is crossed by the mineral belt northeast of Breckenridge, shows a displacement of more than 4-1/2 miles. The eastern side of the Front Range was subjected to much less severe deformation, but was the locus of many echelon northwesterly folds and persistent steep north- westerly faults. These strong northwesterly faults are called breccia reefs because in many places they form prominent silici- fied outcrops which are colored red by finely divided hematite. They are abundant in the northeastern part of the mineral belt and are found as far southwest as Silver Plume. On most of the breccia reefs along which the direction of movement could be determined, the northeast wall moved northwest and either up or down. The total displacement amounts to several hundred feet. These breccia reefs exerted a strong influence on the distribu- tion of the ore deposits in many districts of the mineral belt, both in the localization of the districts themselves and in the localization of ore bodies within individual veins. It is believ- ed that these strong faults served as trunk channels for the deep circulation of the ore-forming solutions, which worked their way upward and outward and deposited ore in the more open ground pre- pared by the formation of the vein fissures. In some places, however, the breccia reefs apparently served as dams to the circulating solutions; for example, the Blackhawk fault, which largely terminates the Idaho Springs-Central City district on the northeast, and the Hoosier reef, which terminates the Gold Hill district on the northeast. In addition to the breccia reefs, there are several strong persistent steeply dipping faults of northeasterly trend on the western side of the mineral belt, but these apparently have had little influence on the distribution of ore deposits. The early strong Laramide faulting preceded the intrusions of most of the early Tertiary igneous rocks of the mineral belt. -145- The period of overthrusting and strong faulting was follow- ed by the formation of the vein fissures in the waning stages of Laramide compression, during and after the intrusion of the ig- neous rocks. These vein fissures are small and much less per- sistent than the early faults, but are abundant throughout the mineral belt. Most of them strike northeast and dip steeply southeast, but some trend northwest and some nearly east. Near- ly all of these fissures dip steeply. Displacement along the vein fissures has been small, commonly a few feet, and rarely more than 30 feet. These fissures were opened throughout a considerable range during the Laramide revolution and were fill- ed with a variety of ore deposits. ORE DEPOSITS The genetic relation of the ore deposits to the early Tertiary porphyries has been pretty well established. These relationships are discussed fully in several USGS professional papers and other publications. The main ore deposits occur as pyritic gold veins and lead-silver veins. Minor amounts of zinc and copper are present in most deposits. The localization of ore in the mineral belt seems to have been chiefly controlled by the presence of openings in ground within easy access to the ore- forming solutions. The breccia reefs and other early faults, in addition to serving as trunk channels for the deep circulation of these solutions, also served in places as dams or baffles, and tended to block or retard circulation. Open ground favorable for ore deposition was produced in the vein fissures at their junctions with earlier faults and veins, at junctions of two contemporaneous veins, or at junctions of two or more branches of the same vein. Abrupt changes in strike or dip of the veins also tended to form openings for the localization of ore. In the veins of north- easterly trend, where the southeast wall moved southwest, the more easterly trending parts were the most favorable; in those of east and east-northeasterly trend, where the north wall moved west, the more northeasterly trending parts were favor- abler and in the veins of northwesterly trend, where the north- east wall moved northwest, the more westerly trending parts were the most favorable. In normal faults along which there was a strong vertical component of movement, the steeper parts -146- of the veins were the more open, whereas, in reverse faults less steeply dipping parts were more favorable. The locali- zation of ore was also influenced by the character of the wall rock. Granite, porphyry and granite gneiss were favor- able host rocks, but chiefly in areas where they were intimate- ly mixed with schist. The schist itself tended to shear easily and form tight gouge-filled fissures unfavorable for ore deposi- tion. Large bodies of solid granite and porphyry tended to resist the compressive forces of late Laramide time and thus avoided any noteworthy amount of fissuracy except near their borders. A combination of the various structural factors mentioned above formed especially favorable ground for ore deposition and many of the larger ore bodies in the mineral belt were formed where such combinations occurred. OUTLOOK FOR FRONT RANGE MINERAL BELT The persistence of individual ore shoots in depth is seldom more than a few hundred feet; depths of 1000 feet are unusual. However, there is no evidence that the bottom of mineralization has been reached in any locality, as ore has commonly been found from the tops of the highest hills to the bottom of the valleys. Throughout the mineral belt, in dis- tricts that have been studied thoroughly, favorable structural locations are known that have not yet been explored; in other districts the detailed structural relations have not yet been worked out. It therefore seems likely that future prospecting on the basis of careful structural studies will uncover new ore bodies . Exploration and development activity has increased steadi- ly during the past few years, and can be expected to increase more in 1964. However, as a general rule, veins in the Front Range are narrow and weak, and although many are undoubtedly undiscovered, they are hard to find. Geophysical and geochemi- cal methods of prospecting are not particularly successful in this area. The relatively small size but high grade of typical ore shoots in the Front Range region, plus the relative ease of reopening many of the old mines make this area a natural for small operations with crews ranging from two to fifteen men. A few larger scale projects such as the Lake Central would involve simultaneous mining of several headings and stopes, but the -147- typical Front Range mine involves mining out a single ore shoot and then proceeding to find another. Recent improvements in milling procedures at the Black Eagle mill near Idaho Springs should result in higher recover- ies and subsequent higher smelter returns for custom shippers. Other flotation mills in the region can probably be enlarged and improved to handle increased production. ACTIVITIES IN MONTEZUMA And ARGENTINE DISTRICT The Burke-Martin Company operates several mining proper- ties in the Montezuma district and has done intermittent exploration and development work on these properties since 1953. The company operates a 50 T/D selective flotation mill at Monte- zuma. Intermittent production was reported for some of the properties during the early 1950' s. A 14-man crew is presently (1963) working at the Chatauqua mine and ores are being shipped to the Black Eagle mill near Ida Springs. A DMEA exploration program was carried out at this property in 1953. The Stevens group comprises over 350 acres at the head of Stevens Gulch southwest of Silver Plume. The present operators (Jack Pine Mining Company) propose a fairly extensive operation and development project for 1964 which will involve rehabilita- tion of the Stevens mine and development of several additional veins near the mine. This was a high grade producer in the 1880 's and about 50,000 tons of stope fill and dump ore can probably be salvaged from the mine. About 1,500 tons of this ore was milled in 1963 and contained . 05 oz. Au, 5 oz. Ag, 3%% Pb, 3%% Zn and .2% Cu. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Minor development was reported in the early 1950 's at the Minerva mine northeast of Montezuma in upper Shoe Basin. -148- Intermittent development and production was reported in the early 1950' s for the Allen Emory mine east of Montezuma. The last previous work at this mine was in 1894. Minor development work was reported in 1953 for the Bullion mine located south of Montezuma at an altitude of 13,000 feet. This mine was a producer in the 1930' s and 1940' s. Minor and intermittent development and production was reported in the 1950' s for the Mohawk mine south of Montezuma. Minor development and production was reported in 195 6 for the National Treasury mine in Horseshoe Basin near Monte- zuma. Minor development was reported in 1959 for the Cashier mine on Teller Mountain south of Montezuma. Minor development and exploration was reported in 1957, 1960 and 1963 for the Shoe Basin mine in Shoe Basin northeast of Montezuma. Minor development in 1953 and about 400 tons production in 1954 was reported for the Paymaster mine northwest of Monte- zuma. Intermittent development and production was reported from 1944 to 1953 for the Ida Bell Group southwest of Monte- zuma. Intermittent development and production was reported from the Grizzley mine from 1943 to 1953. The surface build- ings and mill were destroyed by fire in 1956. Production totaling about 3,000 tons was reported from the St. John Mine during the period 1951-1953. Additional mines with records of development or produc- tion, 1950/1963: Leila Florado Carroll Pinnacle Aldrien Morning Star -149- Quail Celtic Radical Queen Bee General Teller ACTIVITIES IN SILVER PLUME AND GEORGETOWN DISTRICT Intermittent development and production has been reported from 1917 to 1948 from the Capitol Prize mine near Georgetown. Exploration and development work was done in 1963 by Atlas Machinery & Development Company and the mine will be in produc- tion in 1964 „ Ore shoots occur in 14" -36" sulphide veins in schist and granite. A 10-man crew is presently working at the Capitol Prize mine and ores are being shipped to the Black Eagle mill near Idaho Springs. Development work and minor production was reported in 1963 from the Hamil Tunnel Group west of Silver Plume. The tunnel is a 1600-foot long, 6 foot by 8 foot crosscut and intersects sever- al high grade silver veins. Substantial development and production was reported for the Johnny Bull mine near Silver Plume in 1961. About 500 tons of lead-silver ores were produced at that time. Intermittent de- velopment work was also reported for 1962 and 1963. A develop- ment program is presently underway and the operators expect to be in production in the spring of 1964. The Diamond Tunnel serves several mines including the Dives, Pelican, 7-30, and others. The Bur-Jay Mining Company has operated this property for the past year and has reportedly exposed good mill ore on the Dives vein. Ore shoots occur in 8- inch to 4-foot sulphide veins in gneiss and granite. The operators report that the property might be in production in the spring of 1964. Rehabilitation and development work was reported in 1963 for the Smith and Wesson Group near Georgetown. The operator proposes to complete investigation of the old workings in 1964, and, if conditions warrant, to drive a 3,000 foot drift to undercut several known ore bodies. The owner reports that the mine should produce about 10 T/D of crude ores with an average -150- grade of .2 oz. Au, 30 oz. Ag, 30% Pb, 10% Zn and .8% Cu. About 5 T/D of higher grade shipping ores should also be available. Development and production averaging 500 to 2,000 tons per year was reported from 1942 to 1953 from the Smuggler mine near Silver Plume . Development work was also done in 1955 The operators propose to rehabilitate the mine and to commence development and mining operations in the spring of 1964. These properties were formerly producers of substantial quantities of high grade silver ores and were recently consoli- dated under one ownership. The present operator proposes to undertake exploration and development operations in 1964* MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 : About 1,000 tons were produced in 1953 from the Mendota- Terrible group near Silver Plume. The property is presently available for lease. Intermittent and minor exploration and development was reported in the early 1950's for the Silver Cloud mine near Silver Plume. Additional mines with records of development or production from 1950 to 1963s Ashley Tunnel Gold Belt Gab ant a ACTIVITIES IN EMPIRE AND LAWSON DISTRICTS The Independence Tunnel was being cleaned out and retimber- ed in 1963. A crosscut tunnel 5' x 7' and 3,000 feet long inter- sects several high grade base metal veins. Exploration and development work was reported in 1960 to 1962 from the Drummond mine near Lawson. A 4-man crew is pre- sently working at the property. -151- Intermittent development work was reported in 1962 at the Free American No. 1 mine near Lawson. Kerr-Magee did substantial exploration and development work in 1962 and 1963 on the Gold Dirt Group northwest of Empire. This is primarily a gold prospect and Kerr-Magee has recently dropped its option on the property. Drilling and other development work including retimber- ing of the main haulage tunnel was reported in 1962 for the Lombard mine northeast of Empire. Intermittent development and production has been reported for the Kitty-Clyde mine in the Spring Gulch east of Lawson from 1907 to 1952. In 1958-1959 the operators were reportedly working through a winze and prospecting for a vein junction. About 400 tons were shipped at that time. Intermittent and minor development and production was reported from 1917 to 1957 for the Bard Creek mine near Empire. Minor rehabilitation and prospecting work was done in 1958 at the Bellvue-Hudson mine near Lawson. Development work was reported in 1956 and 1962 from the Princess of India mine near Lawson. Minor development and production was reported in 1955 and 1956 from the Nabob mine near Lawson. Rehabilitation and development work was reported in 1956 for the Red Elephant mine near Lawson. Additional mines with record of development or production from 1950 to 1963: Princess Nevada Tunnel Jo Reynolds Mattie Jock Payne Tunnel Walt Stambel #1 -152- ACTIVITIES IN CENTRAL CITY AND I DAHO SPRINGS DISTRICT The Bald Eagle mine, north of Idaho Springs, produced intermittently from 1954 to 1961. One stope extended 400 feet along the vein and was 320 feet high. The present lessees have sunk a winze and incline below the main tunnel and hope to en- counter this same ore shoot at depth. The Lake Central Project is exploring and developing the mining properties along the two principal veins of the Idaho Springs District from the low level Central, or Big Five Tunnel which extends due north from Idaho Springs. The tunnel inter- sects the X formed by the two veins approximately 8,500 feet from the portal. The operators estimates inferred tonnages of well over one million tons with an average grade of .58 oz . Au, 5.7 oz. Ag, 1.8% Cu, 1 to 10% Pb, and 1 to 15% Zn, should be present between the lower tunnel level and the upper mine work- ings There is approximately 1,200 feet vertically of virgin ground between the two levels. Good ore has been extracted at a profit in the past from both the surface and tunnel level workings. The properties included in the Lake Central Project are the Crown Point and Virginia, Belman, West Doves Nest, Lake, Windsor Castle, Bald Eagle, and Diamond Joe. Extensive exploration and development work was done on the project start- ing in 1956 and carried through into the fall of 1963, which included rehabilitating the Central Tunnel. The Cascade mine, operated by Humphries Engineering Cor- poration and located near the head of Ute Creek southwest of Idaho Springs, is presently the largest active producer in the Front Range Region. High grade silver-lead ores are shipped directly to El Paso, Texas. A 12 -man crew is employed at the mine and production in 1963 totaled about 4,500 tons which contained high silver values and about 3% combined lead-zinc. The vein has been traced about a mile on the surface and is in a virgin area so future production could be significant. Minor production was reported in the 1950 ' s from the Forge Hill-Fairmont Group in Virginia Canyon west of Idaho Springs. A vein about 2J5 feet wide is exposed on the surface for 4,200 -153- feet and has a probable depth of at least 2,000 feet as ind- cated by its exposure in the Big Five Tunnel. The only mine workings on this property are two short tunnels and one p-f-or>e about 200 feet square. The present operator has done inter- mittent exploration and development work at the property since May, 1963 and a two-man crew has worked steadily since October. Ores are hand sorted at the mine site and separated into mill feed which assays about .12 oz . Au, 6-8 oz . Ag, 6% Pb, 5% Zn and .75% Cu and a shipping ore which assays about .12 oz . Au, 22 oz . Ag, 22% Pb, 20% Zn and 1^% Cu. The operator expects to produce approximately 100 tons per week of mill feed and shipping ores. A new level has been established above the old tunnel workings, in the Lake Central mine, and with the construction of raises from this level into the ore shoots, substantial tonnages of ore may be proven. The project is presently on a stand-by basis and exploration is expected to continue on a modest scale during the summer and fall months of 1964. Development and production has been reported during recent years at the Glory Hole or "Patch" near Central City. Large tonnages of mineralized rock are known to exist in a stock of brecciated rock about 750' long and 400' wide. The stock ex- tends from the surface 1,600' downward to the Argo tunnel, but with a marked decrease in mineralization. The operators con- structed a 3,000 T/D mill near the property, and propose to eventually treat large volumes of mineralized rock. Actual production in 1961 and 1962 totaled about 15,000 tons. Sampling at the 250' level of the "Patch" showed about 1% Zn, .07% Pb, .1% Cu, .024 oz . Au, and .27 oz . Ag. Other sample data substantiates the general low grade of the "Patch" area but indicates zones of Pb values of about 2% and Au values of about .1 oz . The operator reports that he hopes to commence open pit operations on company properties in the spring of 1964. -154- MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Intermittent development work and production has been re- ported from 1957 through 1962 for the Franklin mine in Gibson Gulch, north of Idaho Springs. No recent development or production has been reported for the Stanley Mine one mile east of Idaho Springs. However, the operator reports that about 750,000 tons of stope fill is present in these mines and might be exploited. Minor development and production was reported in the early 1950' s from the Humboldt mine near Ute Creek southwest of Idaho Springs. Intermittent development and production was also re- ported in 1963. During recent past years some ores from the Humboldt mine have been milled at the Mackey Mill on Trail Creek west of Idaho Springs. Minor production and development work was reported in 1958 and 1959 from the Crazy Girl mine on Trail Creek west of Idaho Springs. Minor development work was reported in 1958 at the Ashland prospect in Virginia Canyon north of Idaho Springs. Development work was reported in 1958 and 1959 for the Hot Pot mine in Virginia Canyon north of Idaho Springs. Exploration and development work was reported in 1957 and 1958 from the Lucania mine in Virginia Canyon north of Idaho Springs . Minor development and production was reported in 1957 and 1958 for the Fourth of July mine in Virginia Canyon north of Idaho Springs. Minor production was reported from the Fannie Mine near Central City in 1961. -155- The Hudson mine in Virginia Canyon north of Idaho Springs was de-watered and sampled in 1959. Minor development work was reported in 1957 for the Free Land Extension mine west of Idaho Springs. Minor development and prospecting work was reported in 1954-1956 for the Highlander mine in Virginia Canyon north of Idaho Springs. Minor development work was reported in 1956 and 1957 for the Keast Tunnel west of Idaho Springs. Minor development and rehabilitation work was reported in 1957 for the Tropics mine in Virginia Canyon north of Idaho Springs . Rehabilitation and development work including sampling and mapping was reported in 1959 and 1960 for the Lamertine mine about 5 miles southwest of Idaho Springs. -156- ADDITIONA L MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Lone Star Lode Two Sisters Anglo Celt Ivanhoe Mackey William Russell Mines Brighton No. 2 Little Albert Hays & Wheeler Philadelphia Quartz Hill Tunnel San Souci Caladonia Justice East Extension La Crosse Meeker-Success Pittsburg (Notaway Gap) Rara Avis Smith Spring Day Extension Treasure Key Tunnel Banta Hill Blanche Mammouth 114-A Lena Brown Gem - Freighter's Friend Lead Belt Little Emma Central Gold Mine Sante Fe Sun & Moon Dixie Calhoon Cherokee -Widow Woman Clara-Marie Enterprise Golden Dollar -157- ACTIVITIES IN CARIBOU AND GRAND ISLAND DISTRICTS The operator is presently rehabilitating the Golden Gilpen near Blackhawk and proposes to re-open the old Perigo mine near Rollinsville in 1964. Gold and silver are the predominating metals but some copper, lead and zinc minerals are present. The operator proposes to hand sort rock at the dump site in Gambil Gulch and ship ore 14 miles to the Golden Gilpen mill at Blackhawk. About 2 50,000 tons of rock containing values averaging 3% Pb, 4% Zn, .3 oz . Au and 2 oz . Ag are reportedly present at the damp. Minor and intermittent exploration and production was re- ported about 1956 from the Bluebird mine west of Nederland. A small tonnage of silver ore containing minor amounts of gold, copper and lead was mined in 1961. Intermittent but substantial development and production has been reported from the Comstock and Pandora mines since 192 9. The mines were shut down and machinery removed in 1956. One drift of the mine reportedly connects with the old Caribou mine workings Intermittent prospecting and development work was reported in 1956 and 1962 for the Tiptop Group in the Sugar Loaf area northeast of Nederland. Fairly substantial development and production was reported from the Caribou mine in the early 1950' s. A 12 5 T/D flotation mill treated ores from the mine. Although this mine is noted as a one-time large producer of high grade silver ores, the principal impetus for the more recent operations was the known occurrences of small shoots of uranium -bearing ores in the lower levels of the mine. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 Sherman-Grand Island Idaho Tunnel Western Slope -158- CENTRAL COLORADO REGION BRECKENRIDGE DISTRICT - SUMMIT COUNTY The Breckenridge district is near the headwaters of the Blue River in Summit County. The district is actually a portion of the Front Range mineral belt, but is included in the Central Colorado region because of its geographical relationship to that area. Pre-Cambrian schists, gneisses and granites are exposed only in two small areas east of Breckenridge. The sedimentary rocks include Pennsylvanian elastics and Cretaceous sandstones, quartzites and shales. These are much faulted and intruded by early Tertiary monzonite and quartz monzonite porphyries. The principal structures in the Breckenridge district are faults along the general northeast trending zone of weakness that forms the mineral belt of the Front Range. ORE DEPOSITS Initial productions from the Breckenridge district in the late 1800' s was from narrow but rich gold bearing veins on Farn- comb Hill. Present production comes from silver-lead veins which occur in a short narrow northeast trending belt extending from little Mountain to Mineral Hill east of Breckenridge. Most ore is found within monzonite porphyry or Dakota quartz ite, although the veins cut all the outeropping formations. Ore shoots appear to be localized in fissures in the harder and more brittle rocks, whereas the shaly rocks contain tight and impervious clay filled fissures. Certain limy layers in Cretaceous beds were replaced by ore next to some of the larger veins. Although most of the known lode ore has been exhausted, there are places where further prospecting is justified by the established relations of ore to geologic structure. PRODUCING MINES The Wellington mine in French Gulch east of Breckenridge has a record of intermittent but substantial production since 1882. Total gross production values are in excess of $30,000,000, -159- A northerly trending crosscut tunnel was driven from the old workings in 1948-1950 which intersected several previously undeveloped veins, and the present operators produced about 100 tons per day throughout 1963 and until March, 1964. The operators propose to install a gravity type pre-milling con- centrator which will treat minus ^ inch crude ore and make a three to one concentrate. This concentrate will then be treated in the company owned 150 T/D selective flotation mill. A proposed development program would eventually result in the opening of four levels and a gradual increase in production to 200 tons per day in 1964, 300 tons per day in 1965 and 400 tons per day by 1968. Ore grades average about .03 oz . Au, 2 oz . Ag, 6% Pb, 9% Zn, and .1% Cu. Ore shoots have an average mineable width of 5 feet, and a known vertical range of about 800 feet. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED Exploration along a vein outcrop was reported in 1960 for the Washington mine southeast of Breckenridge. Lead-silver ores occur in a vein along the contact of shale and quartz monzonite. The operator plans to drive a new drift under the old mine work- ings, and anticipates an immediate potential of about 20 T/D of ores that should average .06 oz . Au, 12 oz . Ag, .2% Cu, 19% Pb, and 16% Zn. A 25 ton test shipment of crude ore of this grade was sent to the El Paso smelter in 1963. Additional test drill- ing may be done in the Spring of 1964. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 Minor exploration and development work was reported in 1962 for the Ballard mine near Boreas Pass. Intermittent development work was reported in the 1950* s at the Cupel mine west of Breckenridge. The operators were driving a tunnel during summer vacations to intersect a vein. The Big Four mine near Green Mountain Dam north of Dillon is not in the Breckenridge District, but is geographically close by and is included herein for convenience. Intermittent develop- ment and production has been reported for the mine since 1938. An incline was driven in 1955-1956, and about 200 tons were -160- shipped in 1955. Lead-zinc-silver ores occur as small bedding replacement type deposits in Dakota sandstone. Trenching and drilling was done in 1955-1957 at the New York mine north of Breckenridge. The work was a part of a DMEA project. Minor exploration and development was reported in 1961 for the Boss mine north of Dillon. The operator has no plans for further development at this time. Minor exploration and development was reported in 1961 for the Dunkin mine or Nigger Hill southeast of Breckenridge. Trenching and open pitting along the vein outcrop was re- ported in 1958 and 1959 for the Alliance mine northwest of Breckenridge . ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 Rosebud Dump Last Dollar Carbonate Mountain Pride Blue Flag Monte Cristo The outlook for continued and increasing production from the Breckenridge District is very good. The bulk of the dis- trict's production will probably come from the Wellington mine, which has been a consistent and semi-large scale producer for many years. The present expansion program involving develop- ment of additional mine levels and installation of a pre-milling concentrator should result in increased production in the years ahead . A few small operations such as the Washington mine should supply small quantities of milling ores and higher grade ship- ping ores. A small custom mill in the vicinity of Breckenridge would be needed to treat such milling ores. -161- ALMA- HORSESHOE DISTRICT - PARK COUNTY The Alma-Horseshoe district is east from Leadville and lies between the crest of the Mosquito Range and a north- south line through Alma. Surface formations include pre-Cambrian rocks, pre-Cambrian rocks, pre-Pennsylvanian sediments aggregating 300 to 600 feet in thickness, Pennsylvanian sediments (mostly elastics) and Tertiary sills and dikes. The major structural features of the district are three longitudinal faults, the largest of which is the London fault with a total displacement of about 3,000 feet. The principal areas of mineralization are localized in general by the major structural features. Within each area individual ore bodies are localized along minor faults in certain favorable types of rocks . O RE DEPOSITS The ore deposits may be classified in order of value of past output as follows : (1) Gold veins of the London type which strike essent- ially parallel with the London fault and dip nearly parallel to the strata upturned against the main fault, and that occur within a zone of porphyry sills 175-275 feet thick near the base of the Pennsylvanian series . (2) Silver-lead bedded replacement bodies, most of which occur in the upper part of the Leadville dolomite. (3) Gold veins and replacement veins in Sawatch quartzite, (4) Miscellaneous types - primarily veins in pre-Cambrian rocks . Total production from the districts has been about $40,000,000, about 70% of which has come from the London area. -162- USGS COMMENTS ON OUTLOOK Nearly all the deposits that crop out in these districts have probably been discovered and essentially mined out; how- ever, there remain unprospected areas in which favorable ore horizons line concealed beneath rocks highly unfavorable to ore deposition. In several places, notably along the footwall of the London fault across Pennsylvania Mountain and beneath the summits of Mount Bross and Mount Lincoln, chances for con- cealed ore bodies may be regarded as good, and in some other places as fair. Prospecting at most of the promising localities, however, will be rather costly because of the depth to favor- able ore horizons. The future of the districts, therefore, may be determined by comparison of prospecting costs with value of ore reasonably to be anticipated in any given locality. PRODUCING MINES The Hilltop mine near the crest of the Mosquito Range west of Fairplay was operated intermittently until 1958 by the Leadville Lead Corporation. Ores occur as replacement type deposits in Leadville limestone. Rich zinc oxide deposits are reportedly present in the mine. The Four Mile Mining Company is presently operating the mine and constructing a 75-100 T/D gravity concentrator with jigs. Crude ores average .03 oz . Au, 12 oz. Ag, 10% Pb, 2% Zn, .8% Cu. The operators hope to produce a 40% Pb concentrate. Although the mine is located at an elevation over 12,000 feet, the operators are continuing their development program through- out the winter. The Silver Star Mining Company is presently driving a new tunnel to reopen the old Twinkle mine on Horseshoe Mountain west of Fairplay. The Horseshoe Mountain ore occurs as replace- ment type and fissure deposits in limestone, and have been mined in the past by both open pit and underground workings. Develop- ment work was done at the W. G. mine in 1956 and 1957. The mines are at an elevation of about 13,000 feet. -163- ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Minor development and production was reported in 1961 from the Evening Star mine along Mosquito Creek west of Alma. The owners plan additional development and mining efforts in the spring of 1964. The Double Eagle properties are near the old Russia Mine on Mount Lincoln northwest of Alma. Intermittent but substan- tial production is reported from this area prior to 1928. The present operators are developing a replacement type deposit which was discovered in recent years by bulldozing through the alluvium that overlies the limestone. About 500 feet of dozer trenches were dug in 1963, and a test shipment of 16 tons was sent to the smelter at Globe. Oxidized surface ore runs about 50 oz . Ag, 3% Pb, 1% Zn, 1% Cu. Lead-zinc values appear to be increasing at depth. Additional prospecting and development work will be started in the spring of 1964. Intermittent development and production was reported from 1958 to 1962 for the Sweet Home Group in Buckskin Gulch west of Alma. The present operators commenced development operations in July, 1962 and are rehabilitating some old haulage tunnels. They propose to drive a cross-cut tunnel from the main tunnel to intersect some old workings on the stope vein where there is reported to be 30,000 tons of mill- ing ore. About 15,000 tons of dump ore might also be concen- trated and milled. Ore occurs as spotty shoots in veins in pre-Cambrian granite and schist. The operators hope to resume operations in May (1964) with a 3 or 4-man crew. Development work was reported in 1962 and 1963 at the Black Prince Mine near Georgia Pass. A 600 foot tunnel has been driven to develop new ground under old mine workings. Ore occurs in veins in quartz monzonite porphyry. The opera- tors propose to resume development operations in the spring of 1964. The Phillips mine in Buckskin Gulch west of Alma produced from 1,000 to 5,000 tons per year of base and precious metal ores from 1934 to 1958. Ore occurs in veins and small replace- ment deposits in the Sawatch quartz ite, and in the overlying Peerless shale and white limestones. High grade zinc ores -164- occur as replacement type bedded deposits where the veins intersect the Peerless shale. The present operators propose to reopen the mine in April, 1964 and expect to sustain a production of about 25-T/D. The Hock Hocking group is on the slope of Pennsylvania Mountain near Mosquito Gulch west of Alma. The property has a record of substantial production from 1934 to 1940 when ores were treated in a company-owned 50 T/D mill. Intermittent operations are reported from 1940 to 1950 <> Ore occurs in veins in the Sawatch quartzite and in overlying limestones. The operator plans to reopen the mine in the spring of 1964 and^ expects to achieve a 50 T/D production rate within a few months. Known veins reportedly contain an average 3^' of shipping grade ores which should average .3 oz . Au, 20 oz . Ag, 6% Pb and 8% Zn. About 25,000 tons of dump material reportedly contains .3 oz. Au, 12 oz. Ag, 6% Pb and 3% Zn and may be concentrated and milled. The Union #5 mine in Buckskin Gulch west of Alma has a record of production until 1938. Intermittent rehabilitation and development was reported for 1962 and 1963. Work included drifting 30 feet, road building, retimbering, etc. Ore occurs in thin veins in a 20 foot wide fissure zone in quartzite. A typical assay across this fissure zone is .13 oz . Au, 3.6 oz . Ag and 1-5% Pb. Development work will be resumed in the spring of 1964. The Two Sisters group includes an area of slide rock in a glacial cirque on Mount Bross and an area of mineralized quartzite and limestone beds above the slide rock. The opera- tors set up a small mill in 1963 to recover and concentrate metal values in slide rock. Gold and lead values in the fines of the rock debris are reportedly high enough to justify such an operation. The operators also propose to mine along the contact of the pre-Cambrian and the Sawatch quartzite. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 The Colorado Springs group is in Red Amphitheatre near the head of Buckskin Gulch west of Alma. Although no recent work has been done at this property, the present operator believes that continued favorable metal prices would justify -165- a large scale development program at this property. A 13 foot wide porphyry dike along the boundary of an igneous stock is the locus of significant mineralization. Intermittent development and production has been reported through 1955 at the Champagne mine at the headwaters of Mosquito Creek west of Alma. Ores occur in fissure veins in Silver Plume Granite. Intermittent development and rehabilitation and minor pro- duction work was reported in 1952 for the Harrisburg mine in Mineral Park west of Alma. Ore occurs in veins and as replace- ment deposits in Devonian limestone. Intermittent minor development work and production was reported in the early 1950' s for the Ling mine on North Star Mountain west of Fairplay. Ore occurs in veins in pre-Cambrian rocks and in porphry dikes. Although known deposits are not high grade, the property has a potential of up to 50 T/D of milling ore. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Red Cross Dump Nelson Betty ALMA - HORSESHOE DISTRICT - PARK COUNTY The outlook for the Alma-Horseshoe district is fairly good if metal prices maintain present or higher levels. Interest and enthusiasm is high among local mining men as evidenced by current and projected operations west of Alma and along the crest of the Mosquito Range. Also indicative of this interest is the community effort to provide a custom milling facility at the cooperative Progressive Mill. The present activity is motivated in part by the in- creased price of silver. Many prospects and old mines in the district have good showings of high grade silver ores contain- ing significant amounts of lead and zinc. Some outside capital is already committed to projected development efforts, but in -166- other cases additional capital is needed if the operators are to proceed with projected ventures. Production from the district for the past few decades has been small and sporadic. Production records do not accu- rately show the gross content of lead and zinc in ores that were mined prior to 1950, and estimates of actual assays are subject to considerable guesswork. Estimates of future pro- duction are likewise very difficult to make, and must reflect not only the present optimism of the operators but also the records of past production and the problems inherent in the typical small mine operation. LEADVILLE DISTRICT - LAKE COUNTY The Leadville mining district, one of the most produc- tive in Colorado, lies on the west slope of the Mosquito Range, in Lake County. Surface formations of the district are primarily glacial terraces and moraines which are underlain in the western part of the district by alluvial deposits of the late Tertiary Dry Union Formation. Beneath these recent formations are the Minturn and Belden formation; Leadville or "Blue" limestone, and limestones and quartzites of Devonian Ordovician, and Cambrian age. The pre-Cambrian complex of granite, gneiss and schist is well exposed in surrounding areas, and is cut by some of the mine workings. Dikes, stocks, and sills of porphyries of many kinds were intruded into the sedimentary rocks during late Cretaceous and early Tertiary times. The intrusion of irregular sills and dikes of porphry greatly disturbed the sedimentary rocks, particularly the Lead- ville dolomite. Blocks of limestone and some large slabs were thrust aside here and there, with abundant local fracturing, and some large slabs were enclosed in thick sills. This dis- turbance marked the beginning of faulting, which continued until after the ore stage. -167- ORE DEPOSITS The principal types of ore deposits are as follows: (1) Veins of mixed sulfides in siliceous rocks which predominate in the eastern part of the district. A few of the larger veins have been productive down to the level of the Yak tunnel, 1,300 feet below the surface. (2) Replacement deposits of sulfide ore in dolomite. These replacement bodies or "blankets" lie along fractures, sheeted zones, or dikes in dolomite beneath porphyry sills. The most productive zone for such deposits, known as the "first contact", is in the Leadville dolomite just beneath a wide- spread porphry sill that lies at the contact between the Leadville and the Belden. Other favorable zones or contacts occur in places deeper in the Leadville, or in the underlying Dyer or Manitou dolomites . At some places, notably Dome Hill and the outlying area near the crest of the Mosquito Range, only one or two contacts have been productive, but in the Carbonate Hill and Iron Hill areas as many as eleven contacts have been profitably worked. The largest replacement bodies, at the top of the Leadville dolomite, exceed 2,000 feet in length, 800 feet in width, and 200 feet in thickness. (3) Secondary type deposits caused by the oxidation and enrichment of the original primary ores are present in various parts of the Leadville district. USGS COMMENTS ON OUTLOOK The following comments were written in the early 1940' s, prior to the driving of the Leadville drainage tunnel. Northeast of Leadville in Little Evans Gulch, siliceous silver ores reported to have been productive before the collapse of the silver price in 1893, remain for further consideration. -168- Prospecting through the Yak tunnel of ground near the Mosquito fault east of the Resurrection mine is worthy of consideration as the surface along the west side of the fault shows distinct evidence" of mineralization. The stimulation of gold mining from 1931 to 1941 proved that the eastern part of the district, despite the extensive work done in the Ibex mine, is entitled to further exploration. There are large tonnages of mineralized siliceous rock in the eastern part of the district that deserve thorough sampling to determine its value as milling ore. Similarly, the treatment of low-grade zinc-lead ore from dumps in the Iron Hill and Carbonate Hill areas gives some idea of the grade of ore left unmined. Large tonnages of this grade of ore no doubt remain as well as unknown quantities of higher- grade material which awaits exploration. Beneath the eastern part of Rock Hill structural condi- tions near the Mike fault may have been favorable to ore deposition, but the Leadville dolomite is so deeply buried there that it would remain at least 100 feet below any exten- sion of the Leadville drainage tunnel. This area is not far north of the small porphyry stock in Iowa Gulch where there is evidence of a minor center of mineral deposition. If the water in this vicinity were lowered to the level of the drain- age tunnel, its surface would lie about 600 feet below the bottom of Iowa Gulch, and the ore bodies there, which have hitherto been accessible only by heavy pumping, might be mined. To the east of the main district and close to the crest of the Mosquito Range, three mines of impressive size, the Continental Chief, Hilltop, and Peerless, have been productive in times past, and a few others are credited with appreciable production. The ore bodies have all been in the upper part of the Leadville dolomite. Structural conditions appear favor- able for the occurrence of similar ore bodies, particularly beneath the crest of the range where the Leadville dolomite is cut by numerous mineralized fissures and is overlain by a thick sill of early White porphyry, locally separated from the dolomite by a thin bed of the basal shale of the Weber formation. The extreme altitude of about 13,000 feet and the relative inaccessi- bility of the porphyry-dolomite contact along the steep slope -169- are obstacles of exploration, especially as even the largest ore bodies thus far found are small in comparison with those of the main district. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The Continental Chief mine near the top of the Mosquito Range east of Leadville had a record of substantial and high grade production from veins in pre-Cambrian rocks in the late 1880' s. The present operator proposes to re-open the mine and to be in production in 1964. Several properties in the Sugar Loaf area near Turquois Lake west of Leadville have been unitized by the present operator. He plans to re-open the Saguache tunnel which cross cuts several veins at depth. Silver-lead pyrite veins occur in granite, and although most of the veins are relatively narrow, one ore shoot in the district has been mined vertic- ally for 1,000 feet and horizontally for 2,000 feet. About 200,000 tons of dump rock might be concentrated and milled. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 Moderate production was reported for the Hayden Shaft mine from 1951 to 1957 The Irene Shaft about 3 miles east of Leadville was com- pleted in 1953 by the American Smelting and Refining Company to exploit known lead-zinc deposits in a down faulted area bounded by the Weston, Garbutt, Modic, Ball Mountain, and Iowa faults. Exploration and development of the fault block area had been started in about 1945 from the Garbutt mine and cul- minated in sinking a winze and raising above the winze to complete the Irene Shaft. Newmont Mining Company conducted exploration and develop- ment operations in the southern portion of the fault block in 1954 and 1955 and eventually commenced mining operations through the Hellena Shaft. The Irene and Hellena operations were then combined as a joint venture and operated by Newmont -170- from July, 1956 until the mines were shut down in October, 1957 because of the decline in metal prices. During this period about 12 5,000 tons of ore from replacement type deposits in the Leadville limestone with an average grade of 4.8 oz . Ag, 4.2%Pb, and 8% Zn were mined from the fault block area. The Ressurection Group consists of about 1,000 acres of unitized diverse ownerships in the vicinity of the Ressurec- tion shaft about four miles east of Leadville. Operator of the group was Ressurection Mining Co, owned by A.S. & R. and Newmont. The area is drained by the Yak tunnel, and was mined steadily from about 1935 to about 1953. Moderate tonnages were produced by lessee operators from 1953 to 1956. Rehabilitation and development work was done in 1951 and 1952 by A.S. & R. at the Robert Emmett Shaft on Carbonate Hill. However, the project was discontinued because of the decline in metal prices. LEADVILLE DRAINAGE TUNNEL The Leadville drainage tunnel extends from the portal near the Arkansas River two miles north of Leadville in a south- easterly direction for about 12,000 feet and terminates in an upthrust fault block in pre-Cambrian granite about one mile east of Leadville. The tunnel is about 300 feet lower than the Yak tunnel (which extends from California Gulch near Leadville to the Ressurection Group) and was intended to drain certain parts of the western area and to relieve the pumping head in adjacent areas further east. The tunnel was started in 1944 by the Bureau of Mines, discontinued in 1946 and then completed in 1950. To date no significant production has resulted from the draining of portions of the western area. The Hayden Shaft was connected to the tunnel by a short lateral drift and moderate production was reported from this area from 1951 to 1957 by the Cadwell Mining Company. -171- ADDITIONAL MINES WITH A RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Gordon Little Alice Lucky Five Bi-Metallic & Free Coinage Defender Fanny Rawlins Young America M. R. & Tom Thumb Adams Mine Fortune Valley Lease Greenback OUTLOOK The outlook for the Leadville district is subject to con- siderable doubt. No significant tonnages of base metal ores would be available to a Colorado base metal smelter under present economic conditions. Estimates by qualified mining men of measured, indicated and inferred replacement type sulfide ores range from two to three million tons for the western area (immediately east of Leadville) and an equal amount for the Ressurection-Joint Venture area. The average grade of such ores is hard to estimate, but based on production for the last few decades, might be 10-12% Zn, 2-4% Pb, 2-3 oz . Ag and .02 oz . Au. These estimates are based in part on historical developments which show that exploration and development work usually results in the delineation of significant reserves and to a lessor degree by inferred continuations of presently known deposits. The principal reasons why the productive potential of the Leadville District is difficult to determine are as follows: 1. The areas containing most known or inferred reserves are under water and some have not been open in 40 years; they would require extensive and costly pumping and rehabilitation efforts prior to production. -172- 2. Ownership of claims in the Leadville district is so diverse that unitization of properties to justify new mining developments or cooperative projects such as a deeper drainage tunnel is extremely difficult. 3. Economic conditions. The principal operators, New- mont Mining Company and American Smelting & Refining Company, state that present economic conditions do not justify the capital expenditures necessary to reopen their Leadville properties . 4. The Ressurection Mill at Leadville was shut down several years ago, so operators are faced with the problem of no readily available custom mill. In spite of the foregoing, the fact remains that the Leadville district is historically the number one producer of base metals in Colorado, and that significant reserves of sul- fide ores very likely remain. In addition, in excess of a million tons of zinc carbonate ores possibly averaging about 10% Zn are reported to have been left in the older mines in the western area, and a nearby ISP type smelter might justify exploitation of these resources. Possibilities exist for large-scale open pit type opera- tions in certain areas of the district where low grade minerali- zation has been diffused through entire rock units. Such resources can be measured in the tens of millions of tons. KOKOMO DISTRICT - SUMMIT COUNTY The Kokomo mining district lies in the southwest corner of Summit County in north-central Colorado. Kokomo, the main settlement within the district, is on State Highway 91, about 5 miles north of Climax and about 22 miles north of Leadville. The rocks exposed in the area include formations of pre- Cambrian, Cambrian (?), Pennsylvanian, and Permian (?) age, invaded by porphyries of late Cretaceous or early Tertiary age -173- Pre-Pennsylvanian and Pennsylvania)! deformation is indi- cated by an unconformity at the base of the Pennsylvanian rocks, and by folds, and faults and unconformities within the Pennsyl- vanian rocks. Laramide and Tertiary structural features include a north- ward plunging syncline, the Mosquito fault and numerous related smaller faults and fissures. Localization of ore is thought to have been influenced by these structures, as indicated by the accordance in trend of faults and ore shoots. ORE DEPOSITS The productive ore deposits of the Kokomo district, com- posed chiefly of zinc-lead sulfides, occur in a relatively narrow zone of northeasterly trend on the northwest side of Tenmile Creek. The ore deposits are of two types, sulfide replacement deposits in limestone and sulfide veins in sili- ceous rocks, but output has come chiefly from the replacement deposits . The most productive deposits have been found in the Robinson limestone and the middle bed of the White Quail limestone, but small deposits have also been found in the Jacque Mountain limestone; all of these are in the middle unit of the Pennsylvanian and Permian (?) sequence. Some of the underground workings near the head of Kokomo Gulch may have penetrated limestone beds in the lower unit of the Penn- sylvanian rocks, but these workings are inaccessible and not much is known as to their extent and production. The bulk of the district's output has come from replacement type mixed-sulf ide shoots. They consist of pyrite, sphalerite (marmatite) , and galena, all more or less argentiferous, accompanied by accessory pyrrhotite and little gangue. In most of the ore the sulfides are mingled irregularly, but in some shoots the ore is banded, and locally galena is concentrated in pockets or lenses. Quartz and carbonates, chiefly siderite, are the most common gangue minerals. -174- The ore shoots are irregular in size and shape, though in general they occur as fingerlike shoots trending N. 50 to 60 E. As the regional trend of faults and fissures is also N. 50° to 60° E., the ore shoots were presumably controlled by dominant fissures. Recent work suggests that the ore-form- ing solutions migrated along the bedding from their deep-seated source and were guided by fissures or other structures, and thence migrated laterally replacing the limestone. The ore shoots range from a few feet to 300 feet in width, and some, as in the Robinson mine, have been mined down the dip for more than 2,000 feet. Although the thickness of the ore is locally as much as 300 feet in width, and some, as in the Robinson mine, have been mined down the dip for more than 2,000 feet. Although the thickness of the ore is locally as much as 30 feet, it rarely exceeds 10 feet. The roof of the ore bodies is clearly defined at the top of the limestone beds but the base is irregular. USGS COMMENTS ON OUTLOOK Reserves of known ore in the district are fairly large; furthermore, geologic conditions are favorable for the exten- sion of known ore bodies to great depths and for the discovery of new ore bodies in unexplored or inadequately explored ground. As ore has been mined in the Robinson mine down the dip for 2,000 feet with no indication of restriction of mineralization in depth, deep exploration of other known ore bodies is warrant- ed. The most productive ore bodies in the district are the replacement deposits in the limestone beds and future prospect- ing should be chiefly concentrated on these beds wherever there is evidence of mineralization. Vein deposits have been rela- tively unimportant; they offer opportunities to the small lessee but are too small to justify a plan of extensive development. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Intermittent exploratory work has been done since 1959 at the Gagen Tunnel and adjacent properties about 1-h miles south- east from Kokomo on the slope of Gold Hill. Gold Hill Mining and Milling Company is making surface investigations and doing ■175- some exploratory drilling and drifting in an attempt to dis- cover Pennsylvanian limestone replacement deposits similar to those in the main Kokomo district. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 Although there has been no production from the Kokomo district since the early 1950' s, some mention should be made of the Walter Bryon properties. Mr. Byron owns about 2,400 acres in the district including the Yukon (half interest) , Kimberly, Col. Sellers, Breen, Queen of the West, Silver Queen and Mayflower. Some of the mines are on a standby basis with compressors and other necessary equipment already installed and operative. Also, a 75 T/D gravity-selective flotation mill one- half mile west of Kokomo was completed in 1952 and is operative, Mr. Byron states that a sustained production of 150 T/D could be attained immediately if the mines were to be reopened, and that an eventual production of 1,000 T/D could be attained with additional capital investment. Mr. Byron also stated that the average grade of mineable ores is about .15 oz. Au, 3 oz. Ag and 25-30% combined PB-Zn. Locally ores will carry as much as \-% oz . Au and 30 oz . Ag. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Groff Silver Cloud Wilfley OUTLOOK The outlook for significant production for the Kokomo district is very good. Although reserve estimates are not available for the district, the continuity of known ore bodies, and the presently defined zone of mineralization plus the good geologic possibilities of extensions of this zone north-eastward should justify rough estimates of inferred reserves and resources in excess of a million tons. -176- The nature of the manto-type replacement ore bodies is somewhat similar to ore deposits at Gilman, if this analogy is carried to the speculative stage, there are reasonable geologic prospects that chimney type deposits may be found as mining and development continues down dip or northeastward The district deserves and will undoubtedly receive re- newed attention and development efforts. The fact that many properties in the district are now under a single ownership should aid in these efforts. Also encouraging is the fact that rehabilitation of mines with known reserves will not be hampered by the serious drainage problems that are present at Leadville. Although a small flotation mill is presently available, additional mill facilities will be needed if the district is to attain its full potential. GILMAN DISTRICT - EAGLE COUNTY The Gilman district, also known as the Red Cliff or Battle Mountain district, is on the northeast flank of the Sawatch Range, in southeastern Eagle County, about 20 miles north- northwest of Leadville, Colorado. It covers an area of three or four square miles between the towns of Gilman and Red Cliff. Gilman, the present-day mining center, is at an altitude of 9,000 feet at the top of the cliff wall of Eagle Canyon. Eagle River and the track of the Denver and Rio Grande Western Railroad are 600 feet almost vertically below Gilman. Early mining was concentrated in the walls of the canyon, but in later years the center of mining has been east and southeast of Gilman,, under Battle Mountain. The bottom of Eagle Canyon is in pre-Cambrian rocks which include granite, schist, and minor gneissic diorite. The pre-Cambrian rocks are overlain by Paleozoic sedimentary rocks ranging from Cambrian to Pennsylvanian and Permian (?) in age. The lower formations up through the Leadville lime- stone are well exposed in the northeast wall of the canyon, but from this locality northeastward for 10 miles, to the Gore fault, they are covered by the thick series of Pennsylvanian and Permian (?) rocks. The mines are all in the lower forma- -177- tions and no ore deposits are known in the great mass of Pennsylvanian and Permian (?) rocks in the vicinity of Gilman. The only igneous rock of late Cretaceous or early Tertiary age in the Gilman district is a persistent sill of quartz latite porphry which lies a few feet above the Leadville limestone. The principal structural features of the Gilman district include a 12° regional dip which continues northeastward from the Sawatch Range to the Gore Range where the beds are sharply uptilted. Bedding faults near the known ore bodies are prob- ably related to the regional uplifts to these ranges. Gentle folds and a few steep faults of minor displacement are found in the Eagle mine. Ore deposition might be related to these relatively weak steep faults. ORE DEPOSITS The ore bodies include several different types as regards form, stratigraphic occurrence, and mineral content. Fissure veins in the pre-Cambrian rocks contain pyritic gold and com- plex sulfide ores, and small veins in the Sawatch quartzite contain gold-silver telluride ore. Replacement deposits in- clude pyritic gold and auriferous sideritic sulfide bodies or mantos along bedding veins in the quartz ites, chimneys of pyritic silver-copper ore in the limestones, and zinc-sulfide mantos in the limestones. By far the greatest output has come from the replacement bodies in the limestone. The ore bodies in the limestones are arranged roughly in the shape of a three-pronged spear or trident pointing south- west or up dip. The tines of the trident are three long, slender zinc mantos which turn downward into steeply pitching pyritic copper-silver chimneys at their lower or northeast ends. The chimneys are connected by zinc mantos that are nearly parallel to the strike of the limestone. The tines are each about 4,000 feet long, and the outer ones are about 4,000 feet apart at the upper end. The chief gold deposits in the Sawatch quartzite are under the trident and approximately in line with the upper ends of the zinc mantos. -178- PRODUCING MINES Eagle Mine The Eagle Mine at Gilman is the largest base and precious metal mine in Colorado. The New Jersey Zinc Company entered the Gilman district in 1912, and over a period of years consoli- dated most of the larger mines into the Eagle mine. Pyritic silver-copper shipping ores are mined from chimney type deposits in limestone, and lead bearing zinc ores are mined from manto type ore bodies trending up dip from the chimney deposits. The silver-copper chimney ores typically contain .2 oz . Au, 20 oz . Ag, and 2.3% Cu with minor amounts of lead and zinc. The manto type ores which presently account for a high percentage of the total production typically contain .02 oz. Au, .7 oz . Ag, .01% Cu, 1.3% Pb and 9.1% Zn. Production during the past dec- ade has averaged about 300,000 tons annually. Silver-copper ores are shipped directly to a smelter, and lead-zinc ores are concentrated at a company-owned selective flotation mill. Total value of production from the area included in the Eagle Mine is about $250,000,000. OUTLOOK The outlook for continued production from the Gilman district is very good. Company policy prohibits public re- lease of reserve data, so for purposes of this report a pro- ductive potential of ten years is arbitrarily assumed. Improved economic conditions would undoubtedly stimulate exploration and development efforts by the New Jersey Zinc Company. Such efforts would reasonably be expected to result in the discovery and delineation of significant new reserves. -179- SAN JUAN REGION The San Juan Region of southwestern Colorado comprises an area bounded on the north by the Gunnison River, on the east by the San Luis Valley, and on the south and west by the San Juan and Dolores Rivers. The area has been an important producer of base and precious minerals for over 80 years. The San Juan region is superficially a high volcanic plat- eau which was formed in the Tertiary, and since that time has been deeply carved by erosion into the present mountains. The entire geologic history is complex, however, and at least six provinces of the region must be taken into consideration in defining the various metallogenetic epochs and environments under which mineral deposits were formed. The principal geologic formations of the San Juan Region are as follows: 1. The pre-Cambrian rocks consist of schist, gneiss, granite and folded and faulted sedimentary rocks, chiefly quartzite, conglomerate and slate. 2. The Paleozic and Mesozoic formations include chiefly marine and continental sedimentary rocks. Locally they under- lie the volcanic rocks of the mountains, but have been largely removed from beneath the central part of the San Juan uplift. 3. Five main periods of volcanic eruptive activity during middle Tertiary time resulted in thick accumulations of lava flows, tuffs and other volcanics over the entire San Juan area. Near the close of volcanism in late Tertiary time the San Juan region as a whole was deformed relative to its surround- ings. In most parts of the San Juan a collapse of the crust which had begun during the earlier volcanic epochs culminated in faulting and fissuring that localized many of the larger intrusive bodies and associated ore deposits. In the western part of the region the local sinking of crustal blocks and the -180- consequent fissuring permitted the penetration of large intru- sive bodies into the shallower formations. Further fracturing of the rocks during the final crustal adjustments about these centers provided fissures in which mineralizing solutions deposited the ores. From the areas immediately adjacent to the larger late Tertiary intrusive centers in the western San Juan region there has been derived about 80 percent of the total value of base and precious metals. Most of this mineral production has come from deposits in the volcanic rocks themselves , A small part of the late Tertiary ores mined, however, were formed in che underlying basement rocks beneath the Telluride erosion surface or its equivalent elsewhere in the region. Probably not over one percent of the total worth of late Tertiary ores has come from older rocks beneath the lavas, but this low ratio may not be representative of the potential value to be found in these deeper rocks; exploration has not in gen- eral been carried to this depth except where erosion has re- vealed the underlying deposits. It is not to be expected, how- ever, that conditions in the sedimentary basement rocks during late Tertiary time have favored the blanket type of ore bodies formed in sedimentary rocks about the early Tertiary laccolith - ic centers. The late Tertiary fissuring in general produced through channels for the mineralizing solutions that extended to the surface of the volcanic plateau. The blanketing effects of the shale beds that were most effective at the time of for- mation of the early Tertiary ore deposits became greatly re- duced in later Tertiary time because of partial destruction of the late Mesozoic rocks by erosion and also because such rocks became indurated and more readily susceptible to open fractur- ing. RICO DISTRICT - DOLORES COUNTY The Rico mining district is in a small group of mountains which are isolated from the main San Juan Mountains to the east and northeast. The town of Rico is in the valley of the Dolores River at an altitude of about 8,700 feet. The mount- ains rise to an altitude of about 12 , 500 feet -181- Rocks range in age from Cambrian to Jurassic. The schist, quartzite, and diorite of pre-Cambrian age are overlain success- ively by the Ignacio quartzite of Cambrian age; the Ouray and Leadville limestones of Devonian and Mississippian ages, re- spectively, and shales, sandstones, and thin limestones belong- ing to the Hermosa formation of Pennsylvania age; sandstone and sandy shale belonging to the Rico formation of Permian (?) age; and red shale, sandstone, and conglomerate of Triassic and Jurassic age on the flanks of the dome. All of these rock units have been intruded by numerous sills of hornblende- monzonite porphyry and by a stock of quartz monzonite of Tertiary (?) age. The Tertiary intrusions of porphyry sills and the quartz monzonite stock were accompanied by the formation of a low structural dome which is roughly circular in shape and about 15 miles across. Later faulting produced the present complex structure in the central part of the dome. ORE DEPOSITS The principal ore occurrences are a combination of vein- type and replacement-type ore deposits. Some of the veins occupy faults, some occupy fissures parallel to and close by faults, and some trend at various angles to the main faults. Most of the veins are too small to be mined profitably by them- selves, but many widen and form large irregular bodies of ore where they intersect limestone beds, gypsum beds, or brecciated zones within shales of the Hermosa formation. A large part of the production of the district has come from blanket deposits in the lower part of the Hermosa forma- tion on Newman Hill southeast of the town. At this place a bed of sedimentary gypsum, originally 15 to 30 feet thick, in a series of shales, sandstones, and limestones, had previously been dissolved out, probably by the ore solutions, to leave a brecciated zone ideally fitted as a site for the deposition of ores. The ore solutions were admitted through a series of northeastward and northwestward trending fissures that traverse the rocks below the blanket. The northeasterly fissures were themselves productive, as lode deposits, to depths of 150 feet -182- below the blanket, below which they contained little in addition to the worthless quartz and pyrite gangue . USGS COMMENTS ON OUTLOOK Tracing of the ore-bearing beds in the Hermosa and Rico formations across faults which bound the main blocks within the dome calls for careful interpretation of all available geologic data. Unfortunately, the geologic information is too often very meager because landslides and timber cover much of the ground surface. However, with further study, the prospects of discov- ering additional ore, now hidden by surface cover or lying in limestone beds not yet explored, are good in several parts of the district. PRODUCING MINES The Rico Argentine Mining Company owns or controls a large portion of the Rico district and have sustained mining and milling operations for many years. Production averages about fifty tons per day, but recently development work has been in- creased and production will probably increase in 1964. The average grade of ores presently mined is about 1 oz . Ag and 17% combined Pb-Zn. The company owns and operates a 150 T/D selective flotation mill for treatment of lead-zinc ores, and also an acid plant for the manufacture of sulphuric acid from iron pyrites. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Robert E. Williams and Lew Williams did exploration and development work in 1963 at the California Mine on Expectation Mountain west of Rico. An old tunnel 250' long was enlarged and rehabilitated, and 150' of new drift was driven along a vein in Hermosa limestone. Replacement type ore deposits have been encountered in the drift, and will be further developed in 1964. Ores presently stockpiled reportedly contain 25 oz. Ag and 5% Cu, although lead was showing up in the drift just before operations ceased for the winter. -183- An unsuccessful project to recover known gold values from the St. Lewis tunnel dump and vein outcrop near Rico was con- ducted in 1962. A fissure vein averaging 3' in width and con- taining high gold values plus about 30% combined lead-zinc has been developed by a 600' tunnel. Additional exploration and development work is planned for 1964, and if a method can be devised to recover the gold values, the property could become a significant producer of base and precious metals. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Union Carbonate Forest Rice Wedge Payroll Tunnel Aztec RICO DISTRICT - DOLORES COUNTY The Rico district will probably continue to produce rela- tively small tonnages of lead-zinc-silver ores during the next twenty years if base metal prices maintain present or higher levels. Rico Argentine's present mining operations in the Silver Creek area are dependent on the continuing discovery of small ore bodies ranging in size from a few tons to a maximum of 50,000 tons. As development work progresses, it can be reasonably expected that the discovery rate will be adequate to sustain a production of 50 to 150 tons per day. The ore deposits occur in a range of over 4,000 feet vertically, and the company owns considerable undeveloped ground within areas that are geologically favorable for the finding of new reserves. Although ores presently mined average about 16% combined Pb-Zn and contain very little silver, the district has produced rich silver ores in the past and new development work might result in the discovery of small deposits of rich silver ores similar to those produced from the Newman Hill area southwest of Rico in the late 1800' s. Other operations such as the Williams operation on Expec- tation Mountain could probably supply a small and intermittant amount of ore from the Rico district. The Expectation Mountain -184- operation is in a virgin area that is undeveloped except for a few small surface workings. The same Hermosa limestones that are productive in the eastern portion of the district are present in this area and could contain similar type deposits. LAKE CITY DISTRICT - HINSDALE COUNTY The Lake City district actually comprises the Galena dis- trict along Henson Creek and the Lake district southwest of Burrows Park. Most of the volcanic rocks of the Lake City mining area belong to the Silverton volcanic series, which occupies a steep- walled basin or caldera marked by an oval-shaped down-faulted block between Henson Creek and the Lake Fork. A large part of the central block consists at the surface of rhyolite in flows and intrusive bodies. Except around its borders the central area of the subsided caldera has been relatively unproductive. Pre-Cambrian granite is exposed along the south side of the caldera and on the west near Whitecross in Burrows Park. The granite, except where in fault contact with the volcanic rocks, is overlain directly by San Juan tuff or rocks of the Silverton volcanic series and seems to have formed a ridgelike divide on the Telluride erosion surface between the Silverton and Lake City regions. This granite apparently underlies the volcanic rocks throughout much if not all of the Lake City mining area. The structural control of ore deposition appears related to marginal structures of the caldera. This relation between the veins and the fault block compares somewhat with conditions in the Silvertor area, although the surrounding veins do not extend as far from the margins as in the districts of the Silverton caldera. ORE DEPOSITS The ore deposits are almost entirely veins, both fissure filling and replacement contributing to the formation of the ore. Mineralogically, the veins show similarities with those of the Silverton area, and three principal groups of veins have been distinguished by Irving and Bancroft, based upon relative abundance of the common minerals. These include the quartz- sphalerite-galena group, the tetrahedrite-rhodochrosite group, -185- and the telluride group. The quartz-sphalerite-galena group contain dominant base metal sulfides with considerable pyrite and some chalcopyrite. Silver is an important constituent, more particularly where the veins are enriched near the surface. The tetrahedrite-rhodochrosite group are dominantly galena and argentiferous tetrahedrite with some of the other base metal sulfides in a gangue of quartz, rhodochrosite, and barite. Lead and silver are the important products, and where appreciable tetrahedrite is present the primary ores contain considerable silver. USGS COMMENTS ON OUTLOOK The zone of weakness along the margins of the basin or caldera in which the Silverton volcanic series was erupted is believed to have been the principal structural control of ore localization. The final collapse of the interior of the caldera produced ring faults that partly encircle the central area. Adjustments of the rocks outside these faults to the subsiding block, or along concealed faults in the basement rocks beneath the volcanic cover, presumably caused the final fractures and fissures in which the ore shoots were formed by mineralizing solutions that came up along the marginal zone. There are several sectors around the center in which structural and ore- forming conditions vary from place to place. The south margin has been relatively unproductive. The veins in the Galena and Lake districts along the north and east sides are confined mainly to a belt about two miles wide. Within this belt individual vein fissures are commonly short and tend to split or fray out both laterally and vertically. This habit of the fissures to- gether with the local overlapping relationships seen at the surface may be considered indicative that the general fissure pattern continues in depth as well as laterally. However, the main valleys follow the caldera margins and thus present a drainage problem adverse to low-cost exploration in depth for additional sources of ore. The narrowness of many higher-grade veins and the unenriched primary base metal ore do not offer sufficient incentive for extensive exploration and development below drainage levels. Despite these unfavorable features the districts may be expected to yield a small output from known veins for many years as there is much low-grade ore. If, as inferred, the pattern of fissuring is repeated in depth, it -186- also follows that possibilities of new discoveries of blind ore shoots above drainage levels are not exhausted. On the west side of the caldera the pattern of faults and veins extends continuously to the Silverton center, a total dis- tance of more than six miles. East of the Hinsdale County line the vertical extent of mineralized ground above drainage levels is as much as 2,000 to 3,000 feet. The area is therefore a potentially large source of low-grade ores, and the records of such veins as the Frank Hough, Golconda, Isolde, Palmetto, Wyoming, and others indicate that small bodies of high-grade ore may also be expected. The operators are presently milling dump ores from the Belle of the West mine five miles southeast from Lake City. Ores are milled at the Lake Park (formerly Pellican) mill near Lake City. About 20,000 tons is estimated in three dumps. The operators propose to run a drift beneath the old mine workings in order to develop new reserves. Ores will reportedly average .2 oz. Au, 16 oz. Ag, 2% Cu, 10% Pb and 4% Zn. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The Ajax Syndicate owns several properties in Lake City which are listed separately below. The Syndicate has negotiated joint venture arrangements with several lessees to continue ex- ploratory and development investigations of these properties, and to develop sufficient milling facilities for long-term operations. All of the Ajax properties are on known vein structures which were mined during the late 1800 ' s and early 1900' s. Considerable tonnages of low grade milling ores can be reasonably inferred to remain in many of these old mines, and in extensions both horizontally and vertically of the known vein structures. Highland Chief Group Empire Group Road work and mine rehabilitation work was done in 1959 and 1963 at the Highland Chief and Empire Groups in the rugged Gravel Mountain area on the south fork of Henson Creek. A road was built to the Highland Chief mine which should facilitate future development operations. Long-range development plans -187- include the mining of inferred ore shoots from the Empire Chief #4 tunnel and rehabilitation of the Ute-Ulay mill near Lake City. The operators estimate measured reserves in excess of 100,000 tons and indicated and inferred reserves of several million tons. Road work and mine rehabilitation work has been done by Ajax and Pitts during the period 1959 - 1963, at the Moro Group about 12 miles west of Lake City. Development plans include the eventual mining of inferred ores between lower level drifts and the surface outcrop of the Moro vein. No recent work has been done at the Chicago Tunnel about 15 miles west of Lake City. This is a cross cut tunnel to intersect the Ruby and Pearl claims. Sampling of the upper levels of the Ruby vein indicates the presence of high grade gold-silver-lead-zinc ores. Ajax proposes to lease the property to an operating company. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 The main tunnel of the Golconda mine in Hurricane Basin was reopened and sampled in 1963. This high altitude mine produced high grade ores in past years. The Ajax Syndicate built a road in 1962 to the Edna claims on Henson Creek west of Lake City. Part-time exploration work was reported in 1962 for the Silver Jack and Conklin mines near the head of the east fork of Big Cimmeron Creek. Ores from properties in this area were milled at the nearby Ute-Ulay mill on Henson Creek about seven miles west of Lake City. Ores reportedly averaged about 3 oz . Ag and 2% combined lead-zinc. 12,000 tons of ore averaging 20 oz . Ag, 2% Cu, 2% Pb and 1% Zn are reported to be blocked out on the Hidden Treasure claim. Newmont Mining Company did exploration and development work at the Hidden Treasure in 1954 - 1955 including the sinking of a 400' shaft below the main haulage level and 500' of drifting on the vein. -188- Development work at the Black Crook mine included 165' of tunnel advance and 35' of stoping in 1958 - 1960. This property is about four miles south of Lake City, and is just north of the Golden Fleece mine which was a big producer in past years. The operator proposes to reopen the property if economic condi- tions improve, and estimates a productive potential of about 10 tons per day of ore averaging 1 oz Au, 19 oz . Ag, 4% Pb and 2% Zn. Minor development and production was reported in 1960 for the Gold Quartz mine south of Lake City. A fifteen- ton shipment at that time reportedly netted $800.00. The vein is reportedly about 12' wide and contains milling ores which are estimated by the operator to average .25 oz . Au, 17 oz . Ag, 5% Cu and 5% Zn. The operator built a road to the Independence mine near Lake City in 1963. The operator pumped the shaft and examined the Pride of America mine near Lake City in 1963. Future plans include the driving of a 300' drift to undercut old mine workings. Princi- pal values are lead and silver. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT AND PRODUCTION FROM 1950 TO 1963 Pelican Rodney #1 Never Sweat Yellow Medicine Yankee Boy OUTLOOK The outlook for the Lake City district is somewhat encour- aging, yet subject to considerable doubt. Although a few high- grade deposits have been exploited in the past, and other small high-grade possibilities undoubtedly remain, the future of the Lake City district depends primarily on large scale, low-cost- per-ton exploitation of the large tonnages of low-grade ores that are known to be present in the district. However, the generally narrow veins, the tendency of the veins to feather -189- out at depth, and the rugged topography of much of the district create problems that can be resolved only by large capital out- lays for additional development work. Milling facilities for the district are inadequate, and the two mills on Henson Creek may have to be moved because of insuf- ficient tailings disposal area. The Denver Equipment Company recently purchased a possible site for a mill south of Lake City. The area deserves and will undoubtedly receive additional investigative efforts. The present exploration and development activity should result in an ever- increasing production from the district if economic conditions continue to improve. LA PLATA DISTRICT - LA PLATA COUNTY The LaPlata district lies within the rugged La Plata moun- tains west of Durango. The La Plata Mountains were carved from a domal uplift of sedimentary rocks that were invaded by numerous stocks, dikes and sills of igneous rock. The sedimentaries that are exposed within the district include formations of Pennsylvanian through Cretaceous age. All the igneous rocks are of Tertiary age and all are in- trusive. They vary widely in composition and in form, but two general types are recognized-porphyritic and nonporphyritic . The porphyry, most of which is intermediate between diorite and monzonite in composition, is more abundant than any other igneous rock type and forms more or less contemporaneous stocks, sills, and dikes. The nonporphyritic rocks, which are in general some- what younger than the porphyries, form irregular stocks and associated dikes. They consist of syenite, monzonite, and diorite. The porphyry bodies were intruded forcibly between the layers of sedimentary rock and were thus a major factor in the formation of the La Plata dome, but the later nonporphyritic rocks replaced or assimilated the country rocks during invasion Numerous short, discontinuous faults of small displacement were formed during the doming process. Many of them trend east- west, but a few radiate from the center of the dome. After the emplacement of the stocks of nonporphyritic rocks, some of these -190- faults were reopened and new ones were formed, and these then became the loci of many ore deposits. ORE DEPOSITS The district is best known for its veins and replacement deposits of gold and silver-bearing telluride ores, from which the greater part of the output has come. In addition to these, however, it includes a surprising variety of types of deposits within a small area. These include disseminated deposits of platinum-bearing chalcopyrite, gold-bearing contact-metamorphic bodies, veins, replacement and breccia boddies of pyrite gold ore, veins of mixed base-metal sulfides with silver or native gold, chalcocite veins, and veins of ruby-silver ore. Relations between the different types of deposit are far from clear, but it seems certain that they were formed through a wide range of temperature and possibly of pressure. Some evi- dence of zoning is to be found, and several lines of evidence point to the conclusion that all the deposits were formed during one general period of hydrothermal activity. USGS COMMENTS ON OUTLOOK The favorability of both structural features and rocks toward formation of ore shoots depends almost entirely on the extent to which they were able to produce or maintain open spaces along fractures. Ore shoots can only be expected in places where one or more favorable structural features combine with rocks that were either originally favorable to ore deposition or were made so by areal or local (wall-rock) alteration. Total output of the district has been about $6,000,000, most of which has been gold and silver. Over half of this total has come from the May Day and the Idaho north of Hesperus. It is believed that new deposits will yet be found, and output in the future may well equal, if not exceed, that of the past. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 to 1963 A fifty-foot exploration and development tunnel was driven in 1963 at the Blackhawk mine in La Plata Canyon. Pb-Ag ores occur in fissure veins in quartzite and limestone. -191- The operator has done intermittent exploration and develop- ment work at the Farmer Boy mine in La Plata Canyon. A tunnel has been driven over 200 feet towards the probable extension of an ore shoot which crops out on the surface. The principal values are gold. A fairly extensive but apparently unsuccessful exploration project for disseminated copper and possible other metal deposits was undertaken in 1957 - 1961 on properties near the Copper Age mine west of La Plata Canyon by Bear Creek Mining Company. Intermittent exploratory, development and mining operations have been reported during the past decade from the Red Arrow mine in the western part of the district, from the Neglected and the Bessie G mines at the head of Junction Creek. Other mines, as listed below, have also been active during this period. Jenny Lind Eleanora Brauner Tunnel Muldoon Muldoon Lode Lady Eleanor OUTLOOK The outlook for base metal production from the La Plata district is not good. Improved economic conditions might re- vitalize a few small gold-silver or lead-silver operations, but the productive potential of the district for base metal concen- trates or shipping ores is insignificant. CREEDE DISTRICT - MINERAL COUNTY The rocks of the Creede area are part of the great volcanic complex of the San Juan Mountains and consist of rhyolites and quartz latites of Miocene age. Many separate periods of volcanic activity and associated faulting have been recognized and are genetically related to intermittent caldera subsidence near the town of Creede. -192- ORE DEPOSITS Mineralization appears to have taken place during the latter stages of volcanic activity and associated faulting, and most of the ore mined from the district has come from veins along these faults. Much of the Creede area is covered with soil, glacial till, or landslides which makes the task of exploration for the min- eralized faults extremely difficult. Also, the complexity of the Tertiary history of vulcanism and faulting has obscured the geologic relationship which ordinarily aid the prospector „ How- ever, recent work by Thomas A. Steven of the U. S. Geological Survey has resulted in the identification and differentiation of the many .different periods of volcanic activity and the asso- ciated extrusive rocks. Major faults have thus been identified by observation of effects of the various volcanic rocks and the timing relationships of faulting and mineralization have been determined. An example of the practical effects of such work is the postulation of the Bulldog Mountain fault zone northwest of Creede which is now being explored by Homestake Mining Com- pany. The chief production from the district has come from the Amethyst and OH veins along a major northwesterly trending fault zone north of Creede. Other producing faults are the Alpha-Corsair and the Solomon-Holy Moses. The ore minerals include zinc blende, silver-bearing galena, gold, pyrite, and chalcopyrite in a gangue of quartz and chlorite. Secondary enrichment is pronounced locally, but is not significant in much of the district. The Amethyst fault system has been pro- ductive for over 2 miles in length and about a thousand feet vertically. PRODUCING MINES The principal operator in the Creede district is the Emperius Mining Company which has produced approximately 40,000 tons per year since 1936 from the Amethyst and OH veins north of Creede. The company owns and operates a 140 T/D selective flotation mill at Creede. Main production is from the Amethyst and OH veins, the northern limits of which have not yet been delineated. Although portions of the veins contain high grade 193- silver ores, the over-all average of ores produced is about .02 oz. Au, 5 oz. Ag, . 5% Cu, 5% Pb and 5% Zn. DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The King Solomon Mining Corporation and the Colorado Imperial Mining Company are exploring several properties along the Solomon-Holy Moses fault zone northeast of Creede. The mines along this zone have had a small and intermittent record of production from 1922 to 1955. The present exploration pro- gram consists of 3,500 feet of drifting on the vein and 225 feet of sinking and 500 feet of raising. The operators estimate that they could presently supply from 50 to 100 tons per day, and that future production could reach 200 tons per day if metal prices, smelting costs and haulage rates were favorable. Mrs. Stella Dysart of Albuquerque, New Mexico, owns or controls several properties along the Alpha-Corsair fault zone west of Creede. Glassmire Associates of Santa Fe, New Mexico, are in charge of exploration and development work at the property, This work continued until December 1963 and may be resumed in the spring of 1964. The operators are presently doing exploration and develop- ment work at the Monon Hill mine west of Creede. A drift is being driven to intersect the Bulldog Mountain fault which could be the locus of vein type ore deposits similar to those being mined by Emperius. Replacement type ores have been mined in past years from the base of the Creede formation (volcanic sediments) in this area. A considerable tonnage of milling ores have been exposed by the development drifts which will reportedly assay about 20 oz . Ag, 1% Pb and 2% Zn. Homestake Mining Company is planning an exploration program at the Bulldog Mountain area northwest of Creede. Previous core drilling attempts by Humphries Engineering Corporation to find a vein along the Bulldog fault system were discouraging but inconclusive. Homestake proposes to drive a 4,000-foot exploratory cross-cut drift in an effort to intersect the fault. -194- OUTLOOK The outlook for the Creede District is very good. Emperius Mining Company estimates that they will continue a yearly pro- duction of about 40,000 tons if metal prices remain at present or higher levels. The persistance of the known vein structures and relative- ly high grade of the ore bodies are conducive to continued ex- ploration and development efforts in the future. Publication of the results of the U. S. Geological Survey investigations in and around the Creede District should stimulate exploration activity. The fact that one fault system contains veins that have produced over $60,000,000 in lead-zinc-silver ores should certainly encourage responsible operators to make systematic exploration efforts in this general area. However, the complex geology and the fact that very few of the mineralized veins crop out on the surface make the Creede District an inviting but illusive target. BONANZA DISTRICT - SAGUACHE COUNTY The only significant base metal district in Saguache County is the Bonanza or Kerber Creek District which is situ- ated in the extreme northeastern part of the San Juan volcanic region, about 20 miles southwest from Salida. Tertiary volcanic rocks cover most of the district and rest upon a basement of pre-Cambrian rocks within which are infolded and faulted synclines of the Paleozoic sedimentary formations. ORE DEPOSITS All of the known metallic ore deposits are veins formed either along fault fissures bounding fault blocks or in subsid- iary tension fissures formed in the walls of large faults. The extreme fracturing of the rocks in the district created condi- tions that were not favorable to the formation of long continu- ous veins, and many ore shoots end against cross faults which may or may not be appreciably mineralized. ■195' The deposits of the district are chiefly complex base metal ores containing pyrite, spalerite, galena, chalcopyrite, bornite, energite, tennantite, and stromeyerite in a gangue of quartz, calcite, rhodochrosite, and barite. Two principal classes of ore may be distinguished — (1) quartz veins of relatively high sulfide content containing lead, zinc, copper, silver and a little gold, found chiefly in the northern part of the district, and (2) quartz-rhodochrosite-fluorite veins with only minor quantities of sulfides valuable mainly for their silver content, found in the southern part of the dis- trict. A few veins in the northern part of the district con- tain tellurides of silver and gold in sufficient quantity to have made these metals of dominant value in small shoots. USGS COMMENTS ON OUTLOOK Small production may be expected from the district for many years, and possibly other ore shoots as productive as the Rawley may be found eventually. Exploration of the ground be- neath the Whale and other nearby veins south of the Paragon fault from the level of the Rawley drainage tunnel is one of the more outstanding speculative possibilities in the district. The complexity of the structure and the comparative shortness of most ore shoots are unfavorable, however, to sustained large scale production from many of the mineralized fissures in the volcanic rocks. BONANZA DISTRICT - SAGUACHE COUNTY The Antero Mining and Milling Company has recently con- structed a gravity concentration mill using jigs near Bonanza. This mill has a capacity of about 100 tons per 8 hours, and up- grades on a ratio of 4 or 5 to 1 . Ores for this mill will come from claims near the Sosthens mine and from some old mine dumps in the district. The Johnston brothers of Salida built and operate the mill and are presently mining the Foster Group of claims and the upper levels of the Rawley mine. Reid Johnston, partner, stated that the mill will be available to custom shippers from the district, and that he hopes to even- tually operate the mill at capacity. Initial tests indicate that this will treat crude ores having an average grade of 4-10 oz . Ag, 6-10% Pb and 8-15% Zn, and will produce a concen- trate averaging 20 oz . Ag, 25% Pb and 25-30% Zn. Tailings losses will be about 30% of the metals in the crude. -196- DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Intermittent development work has been reported in recent years for the Warwick mine near Bonanza. Superior Mines Division of National Minerals Corporation acquired the Rawley and other properties in the district prior to 1956, and constructed a new 150 tons per day flotation mill near Bonanza. This mill operated intermittently during the period 1957 - 1959, and has been maintained on standby since that time. This mill processed about 7,000 tons of ore from the Rawley Mine, having an average grade of 6% Pb, 10% Zn, and 2.75 oz . Ag. About 100 tons of custom ore were also processed at the Superior Mill plus about 4,000 tons from the Antero Mine . ADDITIONAL MINES WITH RECORD OF PRODUCTION FROM 1950 TO 1963 Wheel of Fortune Cocomongo - Navajo Whale Copper Head Mountain Lion Claim Alaska-Yukon Bell OUTLOOK The outlook for sustained small scale production from the Bonanza district during the next 20 years is reasonably good. Several known ore deposits of medium size and grade can be ex- ploited if the problems of concentration of crude ores can be resolved. The recent construction of a gravity type concentration mill by the Johnston Brothers could stimulate activity by several small operators if mill recoveries are reasonable and if other economic conditions are favorable. The operators state that the availability of an Imperial type smelter in a central Colorado location would result in considerable savings in marketing a gravity-type bulk concentrate . •197- The availability of the Superior Mines flotation mill at Bonanza for custom or captive ores is subject to considerable doubt at this time. Operations during the period 1957 - 1959 were not profitable, and a shortage of water at the present mill site further complicates the problem of resumed operations. UNCOMPAHGRE DISTRICT - CURAY COUNTY The main part of the district covers about 15 square miles in the vicinity of the town of Ouray. The commercial development of the mining district has been controlled to a very large extent by the physical features of Uncompahgre canyon, which cuts through the heart of the mineral- ized area. This canyon and its tributaries are carved through the volcanic rocks deeply into the ore-bearing sedimentary for- mations, thus exposing the ores and their associated structural features which would otherwise have been effectively concealed. As the rocks through a vertical range of nearly 6,000 feet are thus exposed within an area only a few miles across, many structural features of San Juan geology spanning the period from the pre-Cambrian to late Tertiary are strikingly revealed. At the canyon bottom crosscutting intrusive bodies and dikes penetrate the Carboniferous sedimentary rocks and 2,000 feet above spread out in laccoliths and sheets at the base of the Mancos shale. The mineralizing solutions rose beneath the lacco- lithic dome along the crosscutting dikes or along fissures and then spread laterally along favorable open or porous sedimen- tary beds or along fissures where these cut rocks that were readily susceptible to fracturing. ORE DEPOSITS Most of the mining of the older, more productive deposits has been confined to the canyon walls within a radius of 3^ miles from the town of Ouray. The ore deposits have great diversity of fonn, ranging from typical fissure veins to flat- lying bedding- plane replacement deposits. The veins not un- commonly flatten and offset horizontally at certain favorable horizons in the gently dipping sedimentary rocks forming rolls along which high-grade ore may be localized. At some distance above and also below such rolls a vein may contain comparatively little ore, and this condition coupled with the evidence -198- showing lateral injection of the clastic dikes indicates that the ore solutions locally tended in some veins to follow up the bedding of the rocks along these favorable rolls. Thus in the most productive part of the district north of the mam in- trusive zone, the solutions moved up along the beds and along fissures from east to west. The source of the solutions responsible for the greater part of the productive ore bodies was therefore east of the valley and deep beneath the Telluride erosion surface, which is now covered here by as much as several thousand feet of Tertiary volcanic rocks. Along the intrusive zone the lower Paleozoic limestones lie two thousand feet or more beneath the valley bottom, so that prospecting at depth or laterally for additional ore shoots is blind and much more hazardous than is the case with the younger Tertiary veins . The silver-lead production has come chiefly from veins and bedding deposits in rocks ranging from the base of the Dolores formation to the top of the Dakota quartzite. Bedding deposits or deposits in rolls along the veins occur at a large number of horizons in the Jurassic strata and in the Dakota quartzite, chiefly at places where the rocks change from sandstone tc shale. One of the principal zones is the limestone and shale beds (Pony Express) in the sandstone^ at the base of the Jurassic formations. The Dakota quartzite, however, has been the source of the highest grade silver-lead ores. Some silver- lead ore has been produced from narrow bedding or manto de- posits at the top of the Leadville limestone and in the overly- ing Molas formation in the southern part of the district south of the Ouray fault where these formations are up-turned along the ancestral San Juan uplife. USGS COMMENTS ON OUTLOOK The early Tertiary vein deposits of the district in com- parison with those of the later Tertiary in other districts offer complications adverse to most efficient mining. As the better ore shoots tend to follow certain favorable horizons in the bedded sedimentary rocks, which dip northward of eastward and away from the Uncompahgre canyon, lateral developments to deeper levels require either long transportation tunnels or in- clines to service them. Even with this handicap, however, the district may be expected to remain a small contributor of low- -199- grade ores already with in reach of mine workings and to yield additional bodies of high-grade gold and silver ores. The possibility of future developments at much deeper levels be- low the valley floor in the Leadville and Ouray limestones and farther east or northeast beneath the Telluride erosion surface involve risks and expenditures that are not likely to be under- taken without the incentive of very much higher metal prices or through subsidizing of exploratory operations. A D.M.E.A. exploration and development program in the early 1950 ' s at the Bachelor mine north of Ouray resulted in the delineation of about 10,000 tons of ore having an average grade of .07 oz . Au, 15 oz . Ag, .55% Cu, 14.6% Pb and 11.7% Zn. Carl Dismant, owner, is presently doing rehabilitation and de- velopment work at the property, and reports that a substantial amount of milling ores is being developed in the mine. A por- tion of the mine is presently leased to two contractors who are producing about one ton per day of shipping ore averaging about .12 oz. Au, 25 oz. Ag, .75% Cu, 40% Pb and 17% Zn. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The Blowout is an area of igneous intrusives one mile north of Ouray. Bear Creek Exploration Company, subsidiary of Kennecott Copper Corporation, recently acquired several proper- ties in this area and is conducting geophysical, drilling and other exploratory type programs to evaluate the possibilities of disseminated porphyry copper or other metal deposits at depth . Although the major period of production at the American Nettie was the late 1880' s, the mine has a record of inter- mittent production until 1947, and minor production in 1961. The present operator has done intermittent clean up and rehab- ilitation work during the past few years and reports that over 70,000 tons of gold-silver-copper ores are broken and available in the old stopes. Exploration and development work was done in 1963 at the Senoirita mine north of Ouray. Access roads were built or im- proved and some old mine workings were rehabilitated. High grade silver ores are reportedly present in the mine, and addi- tional work is scheduled for 1964. -200- MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 D.M.E.A. exploration and minor production were reported for the Mineral Farms mine at Canyon Creek southwest of Ouray in the 1950 ' s and in 1962. Paleozoic sediments are exposed along Canyon Creek and the ore deposits are a combination of replacement type ore shoots in the limestones below the Molas formation and fissure type shoots along quartz ite-slate con- tacts in the underlying pre-Cambrian formations. Burbank re- ports that the ore shoots in this area show evidence of zoning, and that higher gold and copper values may be discovered at greater depths. The mine is presently operated as a tourist mine . Development work was reported in 1956 for the Pony Ex- press mine north of Ouray. Attempts have been made in past years to treat dump ores with a small concentrator, but have not been too successful. The mine workings connect with the Bachelor mine. OUTLOOK The outlook for small' and intermittent production from the Uncompahgre area is fairly good if metal prices maintain present or higher levels. Most future production will probably come from the Gold Hill area (Bachelor, Senoirita, American Nettie, etc.) which has been extensively mined in past years. However, ore deposits occur within a vertical range of over 1,000 feet and along veins that have been traced over a mile laterally, ana within these limits is a considerable area of undeveloped and untested ground. If adequate milling facilities can be provided - either from existing mills or new mills - the district could sustain several small operations. TELLURIDE - SNEFFELS DISTRICT - OURAY AND SAN MIGUEL COUNTIES The Telluride and Sneffels District covers about 30 square miles and comprises the northwest swarm of veins and dikes be- tween the margin of the Silverton caldera northwest of Red Mountain Creek and the intrusive stocks of the Mt . Sneffels and -201- Stony Mountain center. The mines are developed from portals in the volcanic rocks within the high glacial basins of several creeks tributary to the main valleys and are interconnected by tunnels that penetrate the mountain divide between the two counties . In the valley of the San Miguel River at Telluride the Paleozoic and Mesozoic sedimentary rocks beneath the Telluride conglomerate are exposed generally below 10,000 feet altitude. They include the strata from the Cutler formation to the Dakota sandstone. In the Sneffels district to the northeast, also, the Paleozoic and Mesozoic rocks are exposed in Canyon Creek below 9,500 feet altitude. The Telluride conglomerate and San Juan tuff overlie the sediments, and are capped by Silverton volcanics on the highest ridges. Structurally, the veins of the area fall into three prin- cipal types though there also are some other local types. The vein swarm is characterized by curving fractures that coverge at their northwest ends about the Mt. Sneffels intrusion and at their southwest ends they terminate against or interlace with the bounding faults and fractures of the Silverton caldera. In point of origin the oldest fissures are those occupied by dikes, and they generally follow curving courses. Some dikes do not reach the surface. A number of important veins such as the Smuggler Union and the Argentine and Montana veins of the Tomboy group follow the walls of these dikes and form one of the main productive classes. Some of these veins in favorable places have yielded a good grade of ore down into the sedi ^ntary strata beneath the volcanic rocks. Another set of vein fissures, somewhat later in origin have a more uniform- ly straight northwest course, at places cutting diagonally across or terminating against the curved fissures and dikes. These vein fissures commonly dip outward away from the center of the fissure swarm at lower angles of dip than the others; they are termed "flat veins", although their dips are not gen- erally less than 50 degrees. They also tend to steepen upward and flatten somewhat in depth. They are believed to have orig- inated by tensional rupture chiefly of the San Juan tuff, and consequently may not be expected to yield much ore below the base of this formation or of the Telluride conglomerate. A few veins follow the walls of dikes that are concentric to or which spiral outward from the volcanic center. They strike northerly -202- or northeasterly across the other fissures and may be considered to form a third class, but other than the Camp Bird which is a fault fissure, the production from them has been small. ORE DEPOSITS The production of the area has come principally from veins within the San Juan tuff, although the uppermost levels of a number of mines were within the Silverton volcanic series which in this part of the region, ranges between 200 and 800 feet in thickness. The mineralogy of the ores is comparatively simple, a few of the common sulfides, pyrite, sphalerite, galena and chalco- pyrite forming the bulk of the veins in a gangue of quartz with some rhodonite, rhodocrosite and calcite. Some of the stronger veins contain ore grade material in a vertical range of several thousand feet, a horizontal range of several miles and an average thickness of up to six feet. USGS COMMENTS ON OUTLOOK The mines of these two districts have been productive for many years and, with deeper transportation tunnels now either being driven or under consideration near and below the base of the volcanic series, the districts may be expected to produce for many years in the future. The following comments were written by W. S. Burbank of the u.S.G.S. in 1941, but subsequent developments by Idarado Mining Company tend to confirm his predictions: As the Telluride and Sneffels districts are fairly well developed by underground workings, some freedom may be allowed in estimating the proportion of undeveloped ground remaining beneath ore shoots that have already produced appreciably in excess of $1,000,000. Assuming the Telluride erosion surface as the bottom, undeveloped ground beneath the principal ore shoots amounts to about 40 percent of total ground from the tops of the mined ore shoots to the Telluride erosion surface. This means roughly 60 percent depletion of the most favorable ground. But if partly developed and possibly favorable ground -203- is added to this, the depletion of the districts is nearer 50 percent. Furthermore, as less than 20 percent of the total vein length of the stronger veins is actually developed at all and as some ore shoots are known to extend below the Telluride erosion surface, there remains also some opportunity for dis- covery of ore shoots not indicated either by underground or surface developments. The tonnages in undepleted favorable ground would amount to 20 or 30 million tons, not allowing for selective mining. While these figures do not by any means represent an exhaustive consideration of individual ore bodies and the economic factors involved in their development, they give from the geologic viewpoint a rough estimate of the future of the district as compared to its past. PRODUCING MINES Properties owned by Idarado include the Black Bear, Argentine, Smuggler Union, Liberty Bell and others between Telluride and Red Mountain. These properties are mined from the Treasury Tunnel which extends westward from Red Mountain along the Black Bear vein, and from the Mill Level tunnel which extends eastward from Telluride and is 1,700 feet below the level of the Treasury Tunnel. Most of the present production comes from the Argentine claim in a zone between the two tunnels Veins widths vary, but average about six feet. A shrink- age stoping and slusher drift system of mining is employed. Production during the past few years has averaged about 400,000 tons of gold-silver-lead-zinc-copper ores which contain about .06 oz. Au, 2 oz . Ag, .7% Cu, 2 . 8% Pb and 4.2% Zn. The ores are milled at a 1,600 T/D company-owned selective flota- tion mill near Telluride. Reserves at the Idarado properties have been maintained at about 3,500,000 tons for the past several years ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Jim Del Paz has done intermittent exploration and develop- ment work on several claims northeast of Telluride on the Pandora and other veins. The Pandora vein is about 10 feet wide and reportedly contains ore shoots with average values of 5% Pb, 5% Zn and gold and silver worth $50/ton. A recent 8-ton shipment from a small gold-bearing vein near the main Pandora -204- vein reportedly grossed $250/ton. The operator plans to con- tinue development operations in 1964. The Camp Bird mine southwest of Cur ay was operated by the King lease from 1926 to 1956. The owners, Camp Bird of Colorado, Inc., then took over the property and reportedly spent over two million dollars on a mine development and mill construction program. The mill was operated from October, 1960 through 1962. The operation was shut down in early 1963 and later sold to Federal Resources. The present operators acquired the adjacent Revenue prop- erties as part of the Camp Bird purchase, and are presently re- opening and rehabilitating the Revenue Tunnel. The immediate goal is to expose the Cumberland and Virginius veins which re- portedly contain significant reserves of ores which should average .03 oz . Au, 12 oz . Ag, .4% Cu, 6% Pb and 4% Zn. The long range goal of the project is to develop sufficient reserves to justify the operation of the company 600 T/D mill — possibly by mid 1965. A thirty-man crew is presently working in the Revenue Tunnel. Future work will probably include development of parts of the Camp Bird mine. Indicated and inferred re- serves in both properties are in excess of three million tons. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 The property comprises about 110 acres east of Telluride and covers portions of the Pandora, Cimmaron, Bradley, Eighty- Five and Morning Star veins. Fairly extensive exploration and development work was done in 1955 - 1956 at the Bradley mine east of Telluride. Utaco Uranium Company mined about 60 T/D for two months in 1956 and milled the ores at the Silver Shield Mill at Ouray. The Bradley vein reportedly contains about 1% Pb, 1% Zn and a few ounces of silver. Average width of the vein is about 5 feet. The operator is investigating possibil- ities of setting up old Lackawana flotation mill (moved from Silverton) near Ouray. Mill capacity would be about 100 T/D. The Hidden Treasure group near the Camp Bird in Imogene Basin includes the Amity, Mountain King, Evalyn, Hidden Treasure and U. S. Depository claims which are owned by heirs of Thomas Walsh and by the Creel Estate of Grand Junction. Susquehanna -205- Western, Inc., of Denver conducted sampling and other develop- ment investigations at these properties in 1962, but has since relinquished their leasehold interests. These mines are at an elevation of 11,500 feet to 13,000 feet, and the veins are gen- erally persistant but narrow, ranging in width from a few inches to four feet. However, a significant tonnage of ore is reportedly in sight which will average .02 5 oz . Au, 6 oz . Ag, .3% Cu, 5.8% Pb, 7.17% Zn. The Little Balm mine is actually east of the main Tellu- ride - Sneffels district, but is included herein for conven- ience and also because of the fissure type veins in volcanics are typical of the district. Minor exploration and development work and production was reported in 1960 for this mine which is four miles south of Ouray. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 North Slope Torpedo Eclipse - Ruby Trust - Francis #2 Mountain Monarch Queen Anne Telluride Lode OUTLOOK The outlook for continued large scale production from the Telluride-Snef fels district is very good. Although the pub- lished reserves for the Idarado mines would indicate a nine year productive period at present production rates, it should be noted that the reserve figure of three and a half million tons has been maintained for several years. The possibilities for development of new reserves and for the exploitation of other veins from the present haulage tunnels would seem to justify an assumption of continued operation for at least twenty years. The present development program at the Camp Bird-Revenue Tunnel area should result in a sustained production of at least 500 tons per day within two years. Other smaller properties in the Telluride area would probably resume operations if economic conditions remain favorable. -206- The proven continuity of vein systems in the district, the fairly consistent widths of the mineralized portions of the veins and the combination of base and precious metal values are all conducive to large scale mining methods. ALTA-IRON SPRINGS, MT . WILSON DISTRICT - SAN MIGUEL COUNTY The Alta-Iron Springs District is in the extreme western portion of San Miguel County. Paleozoic and Mesozoic sedimentary rocks are exposed in the bottom of the main westward-draining valley and are succes- sively overlain, on the higher slopes, by the Telluride con- glomerate, San Juan tuff, and volcanic formations of the Sil- verton volcanic series. The influence of wall rock upon the veins of this mining district has been largely in the physical response of the rocks to the stresses which produced the initial fractures and in the degree of their permeability to ore-bearing solutions. As a rule, the veins are more sharply defined within the massive San Juan tuff and overlying andesite than within the higher, more thinly laminated rhyolitic flows. The veins also vary in width among different types of intrusive rocks at the west end of the valley. Veins within the sedimentary series are more continu- ous than might be expected because of induration of the rocks by thermal metamorphism. Replacement deposits are rare and of small extent in this district. ORE DEPOSITS The main system of veins extends along the sides of the valley westward through the intrusions at the mouth of the valley and on toward the Mt. Wilson stock. In general, this system of overlapping veins trends westward, and the individual veins dip steeply into the north and south sides of the valley. The principal values of these veins are in gold, silver and lead. Pyrite, galena, sphalerite, chalcopyrite and gray copper are the more common sulfide minerals. Hematite and magnetite are not uncommon. The gangue material of these veins is largely quartz with considerable amounts of calcite, manganif- erous iron carbonate and barite. Lesser amounts of fluorite and anhydrite have been noted in some veins. The vein matter -207- forms a typical fissure filling with well defined walls, al- though along strongly shattered parts of the fissures the vein fillings show braided or "linked" structure. USGS COMMENTS ON OUTLOOK Although the area is rugged, timber, grass and landslides obscure many veins so that a geological interpretation of the vein system is here a very necessary guide to intelligent prospecting . The ore reserves of the district have not been depleted, and could be profitably exploited with the use of modern geo- logical and engineering practices. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The Silver Hat Mining Company has conducted exploration and development operations at the San Bernardo mine near Matter- horn since 1958. This famous old mine last produced in the 1920 ' s and estimates of past production are about 90,000 tons which averaged .02 oz . Au, 6.8 oz . Ag, .14% Cu, 1.59% Pb and 1% Zn. The vein is in a fault fissure 1 ' -17 ' wide in Mancos shale. The present operator has extended the Garibaldi tunnel to undercut the old stopes about 300 feet below the old workings . A 175 T/D selective flotation mill is now being construc- ted at Matterhorn. Present plans are to commence production and milling in the spring of 1964 on a 100 T/D basis. Cres for the initial mill operation will come from the San Bernardo mine, but additional exploratory and development operations are planned at the other company properties near Ophir in 1964. Future projection of company operations indicates an eventual enlargement of the mill up to 400 T/D if development work at the San Bernardo and the other properties results in the dis- covery and delineation of sufficient additional reserves. Intermittent but substantial exploration and development work, including diamond drilling, was done by the East Ridge Company from the later 1940 ' s to the present. -208- The operators cleaned out the tunnel of the Slide mine east of old Ophir in 1963. The New Dominion mine near Ophir has a record of minor and intermittent production and development for over 50 years. The present operators started a cross cut tunnel in 1963 and are drifting about 300 feet to intersect a vein. The Sulphurettes and Waterfall Groups will be developed later if economic conditions remain favorable. The operator re- ports that the New Dominion, Sulphurettes and Waterfall Groups each have a productive potential of about 4 tons per day of shipping ores containing 12 to 30 ounces silver with substantial base metal values. The Butterfly mine south of Ophir produced from 1,000 to 20,000 tons per year from 1916 to 1952. The upper workings of the Butterfly connect with the Silver Bell mine. Although the mine has been inactive in recent years, the operators report reserves greatly in excess of a million tons. An exploration and development program is planned for 1964. Exploration and development work has been done at the Favorite Group near Ophir since 1961. During August through November, 1963, the present operator dropped 100 feet below the old mine workings and drove a crosscut tunnel which inter- sected the Favorite vein at 160 feet. They drifted 150 feet along the vein and report good ore showings for most of the distance . Operations will be resumed in the spring. Mr. White, gen- eral manager, reports that the company hopes to produce about 20 tons per day to start and that production will be increased as development progresses. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 The Montonati brothers have done intermittent exploration and development work since 1960 at the Comstock properties south of Matterhorn. Work included four diamond drill explora- tory holes at the Clara and over 600 feet of crosscut tunnel and drifts at the Comstock. A thin shoot of high-grade Pb-Ag -209- ore has been discovered at the Clara, but further development work must be done before production can be commenced. A vein 12" - 30" has been exposed at the Comstock, but ore values thus far exposed are marginal. Exploration and development work was reported by the oper- ator in 1961 and 1962 at the intersection of the Missing Link and Lizzie Sheridan veins in La Junta Basin south of Telluride. A 10 T/D mill was set up at the portal for test purposes. The operator reopened the old Black Hawk tunnel in 1963 in order to evaluate the mine. Exploration and development work at the Alta-St. Louis group is projected for the future if economic conditions improve and if capital can be obtained. The operators report that the property has reserves and resour- ces totaling several million tons, and a productive potential of 500 tons per day of ores containing about .17 oz . Au, 7 oz. Ag, .4% Cu, 2% Pb and 1% Zn. Development work was reported in 1956 for the Silver Pick group in Bear Creek Canyon south of Mount Wilson. The princi- pal values in this mine are gold and silver. Silver Bell Mines of Denver produced 275 tons in 1951, 5,756 tons in 1952, and 14,146 tons in 195 3 from the Silver Bell group near Ophir Loop. Ores were milled at a company- owned selective flotation mill at Ophir. Minor development and exploration work was also done by the company at the Badger mine near Ophir during the period 1954-1959. The veins are narrow but high grade. Future plans for the Silver Bell mines are presently uncertain. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT AND PRODUCTION FROM 1950 TO 1963 Lead Cliff Morning Star Caribue Gold King -210- OUTLOOK The outlook for the Alta-Iron Springs, Mt. Wilson district is somewhat encouraging, yet subject to considerable doubt. Significant reserves and resources undoubtedly remain in the district, but future production is dependent on general econom- ic conditions plus well planned and executed exploration and development programs by responsible operators. Two selective flotation mills are available for the dis- trict, and could probably supply the milling requirements of all operators if suitable custom milling arrangements could be worked out. The average size of veins and ore shoots near Ophir and Matterhorn is small as compared to the Telluride-Snef fels dis- trict, but offer ample incentive for small or medium size operations. The Alta area has produced metals worth over $4,000,000, and possibilities for large scale production of low grade ores should be investigated. RED MOUNTAIN, CEMENT CREEK AND MINERAL CREEK DISTRICT - OURAY AND SAN JUAN COUNTIES The Red Mountain, Cement Creek and Mineral Creek District extends from Ironton Park to Silverton along the upper drainage areas of the Uncompahgre River in Ouray County and of Cement Creek and Mineral Creek in San Juan County. Rock formation include pre-Cambrian quartzites which crop out at Ironton Park and overlying Paleozoic limestones and elastics which crop out at Ironton Park and along the west side of Mineral Creek valley above Silverton. Most of the district is covered by the San Juan tuff which overlies the sediments and by the Silverton volcanic series which thickens abruptly where the rocks fill the basin-like depression of the Silverton caldera. Faults along the west side of the Silverton caldera re- sulted in displacement of the pre-Cambrian and Paleozoic forma- tions, and their position under the San Juan tuff in the more productive parts of the district cannot be determined. -211- ORE DEPOSITS Ore deposits occur in relatively short fissure veins and as chimney type deposits near breccia pipes or volcanic plugs. These plugs and pipes range from a few tens of feet to more than 2,000 feet across. Fracturing in and around these volcanic pipes is locally intense and many slightly mineralized fissures abound in the area. In places large bodies of rock are impregnated with finely divided pyrite and alteration products generally typical of ore-forming solutions. Much of the rock is highly altered throughout to an aggregate of clay minerals, diaspore, alunite, kaolin minerals and quartz. This weathers to a bright red color that has resulted in the popular name of the mountains. Despite the strong and widespread activity of hydrothermal solutions on the rocks, only a comparatively few ore bodies have had an appreciably large production. USGS COMMENTS ON OUTLOOK The future of the district appears to be dependent upon economical methods of developing and treating fairly large bodies of rock that contain irregularly distributed ore and also in devising some method of prospecting for hidden ore chimneys of which a considerable number may remain. The dis- covery of the Lark pipe on the Cement Creek side of Red Moun- tain has served to focus attention on the weakness of surface indications above some ore bodies. Because of the small diam- eter of many higher-grade ore bodies, some scarcely more than a few tens of feet across, and because of the widespread gen- eral alteration of the rocks some geochemical methods of prospecting may possibly prove applicable. Intermittent development work and production was reported from 1931 - 1941 and from 1958 to the present at the Brooklyn mine south of Chattanooga. An O.M.E. exploration project is presently underway at the mine which involves extending a drift 600' on the Brooklyn vein and 400' on a cross vein to intersect a chimney type deposit at depth. This deposit, known as the Growler chimney, was mined near the surface in the early 1900 ' s and reportedly contains high values in both base and precious metals. -212- The mine is along the margin of the Silver ton caldera, and contains vein deposits as well as chimneys. Veins are about 4' wide and contain average values of .5 oz . Au, 4 oz . Ag, 1% Cu, 4% Pb and 5% Zn. The operators report that the mine has a productive potential of 100 T/D for nine months a year for the next 20 years. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The discovery of a high grade chimney type deposit in 1957 as a result of a road excavation project near Red Mountain Pass created considerable renewed interest in the area. Halliburton Oil Producing Company acquired several properties near the Pass, and has done intermittent exploration and development work dur- ing recent years. They recently discovered an outcrop on the Red Star claim which contains high grade copper-silver ores. The properties have good possibilities for the development of substantial tonnages of milling ores from low level haulage tunnels from the Silver Ledge area north of Chattanooga. Production was reported in the early 1950 ' s from the Delano - Jer Bar Group near Gladstone. Rehabilitation work was done in 1962 . Intermittent exploration and development work has been re- ported since 1950 for the Blackhawk mine near Gladstone. A 3,000 foot tunnel has been driven and some drifts are being run along veins. Intermittent exploration, development and production was reported during the early 1950 ' s at the Silver Ledge mine north of Chattanooga. Ore occurs in a wide north trending fault zone along the west rim of the Silverton caldera. The zone is 150' wide in places, and ore occurs as irregular pipes and fissures within the broken and crushed faulted area. The mine produced in excess of 100,000 tons prior to 1917, and estimates of re- serves range from 10,000 to 50,000 tons, containing values of .03 oz. Au, 2.2 oz . Ag. . 1% Cu, 7 . 5% Pb and 12.5% Zn. There are both underground and open pit workings at the property. Minor exploration and development work has been reported since 1956 for the Silver Cloud mine west of Chattanooga. Ore occurs in 6" - 2 1 wide fissure veins in volcanics. -213- Intermittent exploration and development work has been reported since 1954 for the Edna group near Ironton Park. Exploration and development work has been done during the summer months since 1954 at the Kansas City mine near Gladstone., The mine is at an elevation of about 12,000 feet, and the operators are running a cross-cut to inter- sect a fissure vein. Minor development work was reported in 1955 - 1956 for the Norma Jean mine south of Chattanooga. Intermittent exploration, development and production have been reported for the Lark mine west of Gladstone. This mine is of special interest because of the discovery in about 1947 of a base metal chimney type deposit which had no prominent outcrop. Intermittent development and production has been reported for the Rouville mine near Red Mountain from the early 1920' s to the present. Minor development work was reported in 1957 for the Jomack mine near Brown Mountain east of Ironton. Intermittent development and production was reported from 1940 to 1950 and in 1955 for the Beaver Belfast mine near Ironton. Ore occurs in narrow fissure veins. Intermittent exploration and development was reported in the early 1950' s for the Patsie - Lost Day group east of Ironton on Brown Mountain. Lead carbonates and sulfides are exposed in an open pit. OUTLOOK The outlook for the Red Mountain district is good if the economic situation continues to improve. Inferred re- serves and resources of vein type and chimney type deposits are undoubtedly large, and may be conducive in places to large scale production of low grade ores from low level haulage tunnels. However, considerable capital outlays for -214- exploration and development are required to determine the feasibility of such operations, and the future of the district is dependent on the availability of venture capital for such investigations. Intermittent production of high grade shipping ores can be expected from high grade but spotty zones in chimney type deposits. The Brooklyn mine could produce from 50 to 100 tons per day if adequate milling facilities can be arranged. Some of these ores contain tale and require special mill- ing procedures. MINERAL POINT, POUGHKEEPSIE AND UPPER UNCOMPAHGRE DISTRICT - OURAY, HINSDALE AND SAN JUAN COUNTIES The Mineral Point, Poughkeepsie, and Upper Uncompahgre districts adjoin one another in San Juan and Ouray Counties at the headwaters of the Animas and Uncompahgre Rivers. A small but productive part of the Engineer Mountain area at the extreme northeast lies across the divide in Hinsdale County at the head of Henson Creek in the Gunnison River drainage basin, and hence is tributary to the Galena dis- trict of the Lake City region. The Poughkeepsie district includes the main branch of the Uncompahgre River known as Poughkeepsie Gulch, which extends from near the San Juan County line south nearly to Hurricane Peak. The area north of this including Hayden Mountain and mountain slopes east of the Uncompahgre River is generally referred to as the Upper Uncompahgre district. At the northwest the deep canyon of the Uncompahgre River exposes pre-Cambrian quartzite and slate, which are deformed into relatively tight and faulted folds of westerly trend. West of the river is a tapering wedge of westward- dipping Paleozoic and Mesozoic sedimentary rocks interposed between the pre-Cambrian rocks and the base of the volcanic series. Most of the mountain slopes facing the main canyon above the base of the volcanic rocks are composed of the San Juan tuff, but in Poughkeepsie Gulch and Mineral Point areas the predominant rocks are the latitic and rhyolitic flows, tuffs, and breccias of the Silverton volcanic series. The -215- San Juan tuff with a thickness of 2,500 feet under Hayden Mountain thins to less than half of this where it underlies the Silverton rocks in Poughkeepsie Gulch, although its re- occurrence farther to the east across the Continental Divide in Hinsdale County may indicate continuity beneath the Miner- al Point area. Most of the productive veins of the area are within the Silverton volcanic series, but several more im- portant veins and deposits of the Uncompahgre Canyon and lower Poughkeepsie Gulch areas are in the San Juan tuff or in the pre-Cambrian quartzite just below the base of the tuff. Only a very small production has been made from deposits in the limestones, sandstones, and shales of the Paleozoic and Mesozoic formations, but for the most part these formations are buried beneath San Juan tuff on Hayden Mountain, an area which except for a few strong veins of easterly strike was subject only to relatively weak fissur- ing and mineralization. These several districts include swarms of veins ex- tending outward from the northern border of the Silverton caldera. In all more than 125 miles of vein outcrops have been mapped in the area. ORE DEPOSITS Three forms of ore deposits are recognized, fissure and cavity fillings, breccia chimney and dike deposits, and replacement deposits. Typical fissure veins are the common form and consist dominantly of quartz with more or less pyrite, sphalerite, galena, chalcopyrite, rhodochrosite, and barite. The gold and silver-bearing parts of the veins are commonly separate from the base metal shoots and consist of a gray quartz with argentiferous tetrahedrite, and spar- ingly contain richer silver minerals, such as ruby and brittle silvers and native gold. Some deposits cropping out near the older high erosion surfaces have been oxidized at the surface and moderately enriched below with argentite, native silver, and gold. In veins at the head of Pough- keepsie Gulch and locally elsewhere sulfobismuthites of lead and silver form rich high-grade pockets of primary ore. -216- USGS COMMENTS ON OUTLOOK Because of relatively poor access to parts of the area there has been little large-scale exploration that would per- mit an accurate estimate of the average value and continuity of ore shoots. Mine workings are relatively shallow so that the area is essentially virgin for deep development to the base of the volcanic series. Throughout much of the high country adjacent to the Mineral Point and Engineer Mountain area, the depth to the base of the volcanic series is esti- mated to be as much as 3,000 feet. Also, since the volcanic rocks are probably underlain by pre-Cambrian rocks favorable to fissuring and mineralization, potentially productive ground is not necessarily limited to rocks above the Tellu- ride erosion surface. Among the more productive mines of the area are in- cluded the Alaska, Forest and Old Lout in Poughkeepsie Gulch, the Bill Young and San Juan Chief near Mineral Point, the Polar Star and Frank Hough near Engineer Mountain, and the Michael Breen, Mountain Monarch, and the Silver Link in the Upper Uncompahgre district. The area as a whole deserves more recognition as a potential source of low-grade base and precious metal ores than would be indicated by the past production relative to other parts of the Silverton volcanic center. ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The Skyline Mining Company controls claims covering several hundred acres in the Engineer Mountain area north- east of Silverton. Some of the properties, including the Frank Hough claim, are also known as the Joe B. Brown group. The present operators built several roads and did consider- able surface exploration work in the summer of 1963, and shipped about 500 tons from a surface pit which averaged .1 oz. Au, 26 oz. Ag, 11% Cu, 2h% Pb and 3% Zn. Additional exploration and development will be done in the summer of 1964, and, if warranted, a lower level tunnel will be driven 5,000' from the San Juan Chief to undercut eight of the veins exposed on the surface. Long range plans include construc- tion of a several, hundred T/D flotation mill if sufficient -217- reserves can be blocked out by the present development program. Principal stockholders of the Skyline Mining Company include the Murchison Brothers of Dallas, Texas. Warren Kuykendall, owner, and John Crim, lessee, are developing and producing on a small scale at the Wewissa mine on Engineer Mountain. This mine was last worked in 1916 and has a reported production of about $2,000,000. The present operators have drifted 500 feet on the main vein and have developed several small but high grade ore shoots. The width of the vein ranges from 30 to 40 feet and contains intermittent ore shoots from 4 inches to 2 feet wide. One hundred eighty tons were shipped in 1963 that averaged 47 oz . Ag, 20% Pb, 3% Zn, 2% Cu and .04 oz . Au. The property is at a high elevation and will prob- ably continue to be a small scale and intermittent producer of high grade shipping ores. The London mine one mile north of Animas Forks re- ported minor development and production from 1948 to 19 56. Sulfide veins are from 6" to 2' thick. The Lucky Jack mine was a small producer in the 1930' s and 1940' s and reported minor development work in 1955 and 1956. Minor development and production was reported from 1947 to 1952 from the Burrows mine which is located two miles west of Animal Forks. Fissure veins up to 6' wide occur in a lode which is 20 to 30 feet wide. V. C. Kelley states that this is one of the better showings of base metal ore in the area. Standard Metals conducted extensive surface and geo- physical investigations at the Mickey Breen and other properties in the district in 196.1. Results were dis- couraging from the point of view of a large tonnage operation. Minor and intermittent development and production was reported in 1947 - 1951 from the Little Ida mine in Cali- fornia Gulch west of Animas Forks Rehabilitation and development work was done in 1960. -218- OUTLOOK The outlook for significant future production from the Mineral Point, Poughkeepsie and Upper Uncompahgre district is not encouraging. The positive aspects of the district such as the large number and persistence of known vein structures, widespread mineralization and favorable host rocks are offset by the problems of rugged terrain and the general spotty occurrence of high grade ore shoots. The aggregate reserves of low grade ores could be enormous, but to date the investigations of some of the more favorable vein structures at depth by low elevation tunnels and by geophysical prospecting have not resulted in significant discoveries. However, the vertical range of ores in the district is at least 4,000 feet, and in many instances the rocks underlying the relatively shallow surface workings are as favorable as the surface formations as host rocks for ore deposits. The district deserves and will undoubtedly receive additional investigative efforts. Except for the mile long Frisco Tunnel near Animas Forks, which intersected a few veins in the south Mineral Point area at about 11,500 feet, the possibilities of large low grade deposits at lower levels remain untested. Extension of the Frisco Tunnel, or the driving of tunnels from Ironton, Poughkeepsie Gulch, or extension of the American Tunnel near Gladstone are all possibilities for eventual exploitation of the district. The present exploration and development efforts of the Skyline Mining Company in the Engineer Mountain area should be watched with considerable interest. If this program results in the delineation of significant reserves from the proposed lower level tunnel from the San Juan Chief, the entire district would have to be re-evaluated. Minor but increased production from small high grade ore shoots can be expected. Another possibility for significant future production from the district is the installation of heavy media concen- tration mills at the mine sites. Some o* the wider fault -219- zones may be highly enough mineralized so that a low cost large tonnage open pit type operation combined with pre- liminary crushing and concentration would be profitable. SOUTH SILVERTON AND ANIMAS DISTRICT - SAN JUAN COUNTY The South Silverton district includes the area south and southeast of Silverton roughly parallel to the southern rim of the Silverton caldera. For purposes of this report, the Sulton Mountain and Ice Lake areas south and southwest of Silverton are also included in this district. Pre-Cambrian rocks are exposed in the south part of the district, and inclusions of sedimentary limestone are found in the volcanics in Cunningham Gulch. Pre-Cambrian through Permian sediments crop out on the east side of Cunningham Gulch. Volcanic units cover most of the dis- trict and include rocks of the Silverton series and the San Juan tuff. The veins of the district are within primarily volcanic rock units and are associated with concentric faults along the southern rim of the caldera. Some of these veins, such as the main system of the Shenandoah-Dives mine and the Nevada-Silver Lake vein are radial to the caldera rim and are accompanied over part of their extent by dikes of andesitic or latitic composi- tion. Another set of fractures trending more or less concentric to the caldera intersect the radial system at high angles. These are commonly filled with dike material and in places are mineralized, as at the Titusville mine. A series of step-like granite-porphyry dikes extends in a wide arc around the apparent southern limit of the radial vein system. ORE DEPOSITS The veins on Sultan Mountain, immediately to the southwest of Silverton, are within a large stock of quartz monzonite. The main product of these veins has been silver -220- derived from galena and gray copper. The sulfide minerals occur in a gangue of quartz, siderite, and barite. Hubnerite is also present in small quantities. Gold-bearing pyrite and chalcopyrite in quartz are locally found as bands with- in the lead-silver veins or in separate fractures. The largest veins of the area are in Arrastre Gulch, Silver Lake basin, and Cunningham Gulch. The main value of these northwest- trending veins is in silver and lead, but some portions of the veins contain appreciable amounts of gold accompanied by pyrite and chalcopyrite. Close to the Animas Valley system of faults the northwesterly fis- sures contain some specularite and locally considerable amount s of f luorite. Among the principal producers of the northwesterly system are the Shenandoah-Dives vein, among the largest of the region, the Aspen, and the Silver-Lake- Nevada and its related branches. In the Shenandoah-Dives workings the mineralized zone is wide and consists of several parallel and braided veins. Farther to the southeast the vein system splits. The strongest branch continues to the southeast nearly to Mountaineer Creek and is worked by the Highland Mary mine. The lodes also trend northwest in Cunningham Gulch, a deep valley to the east of and parallel to Arrastre Gulch, The main veins in the upper part of the valley are the Pride of the West and Green Mountain which carry galena, sphalerite, and chalcopyrite in a gangue of quartz and some calcite. Near the mouth of Cunningham Gulch, in the vicinity of a quartz monzonite stock, the ores change character and consist predominantly of siliceous and pyritic gold-bearing ores with lesser amounts of base metal sulfides. This area of gold mineralization extends eastward from the Old Hundred on Galena Mountain through the Buffalo Boy and Ridgway mines and northeastward to Minnie Gulch. In the vicinity of Minnie Gulch the N. 60° - 70 E. veins, such as the Caledonia and Kittimac contain mostly lead-silver-copper ores, with minor amounts of gold. -221- ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Jerry Dalla, owner and operator, has done intermittent development work at the Louis Lynn group southeast of Howards- ville since 1958. Eleven hundred feet of cross cut tunnel has been driven in an attempt to intersect an extension of the Old Hundred vein. Operations will be resumed in the spring of 1964. The Silver Wing Mining Company has done intermittent development work since 1960 at the Silver Wing mine north- east from Eureka. Some test shipments of Ag-Cu ores were concentrated at the Pride Mill in 1963, and the company plans to renew operations in the spring of 1964. Exploration and development work was done during the summer of 1963 at the Big Jake Group on Stony Pass south- east of Silverton. A surface outcrop of a vein showing good gold-silver values has been exposed, and the operator proposes to ship from the property in 1964. Standard Metals Corporation pulled broken ore in 1963 from the stopes of the old Shenandoah - Dives mines southeast of Silverton. Although this mine produced several million tons during the past few decades, the base and precious metal values are low, and the company has no present plans for future development. The Gary Owen and Old Hundred mines report inter- mittent development and production since the early 1900' s. The Marcy-Shenandoah Corporation, successors to Shenandoah Dives and predecessor to Standard Metals Corporation, operated the property in 1958. The present operators are planning possible development and production operations in 1964. The famous old Highland Mary mine was last operated in the early 1950' s. The now defunct Pride Company operated the Osceola mine in Cunningham Gulch from 1956 to 1961. Production ranged from 500 to 1,000 tons per month in 1956 - 1958. Development core drilling by the Green Mountain Mining 222- and Milling Company in 1961 indicated the presence of a replacement type zone of mineralization and ore in lime- stone which is about 150 feet long, 30 feet wide and 10 feet thick which should average 15% combined Pb-Zn, .05 oz. Au, and 1 oz. Ag. Projections of known vein struc- tures indicate inferred reserves of approximately 100,000 tons. The Pride of the West and Green Mountain mines have had an intermittent but substantial record of development and production since the early 1900' s. The mines produced 50 to 100 tons per day for many years during the 1940' s and 1950' s. Some development and rehabilitation work was re- ported in 1958. Vein thicknesses range from 1 to 8 feet. Intermittent and minor development and production was reported in 1961 and 1962 from the Copper Queen open pit mine along Highway 585 south of Silverton. Copper-silver ores occur near the base of Paleozoic limestones as small bedded deposits. The Silverton Mining Company has done minor and inter- mittent development work since 1951 at the Mighty Monarch on Kendell Mountain. The operators did exploration and development work in 1961 and 1962 at the Clear Lake and Cory properties west of Silverton. Development work was reported in 1957 at the Hematite mine on Galena Mountain. The Little Dora mine, about one mile south of Silver- ton, reported development and production operations from 1958 to 1960 by the Fall River Exploration Company. Approxi- mately 1200 tons with a gross value of about $80 per ton were mined and sold during this period. The mine is pres- ently being operated as a tourist mine during the summer months . Intermittent development and production was reported from the Kittimac mine west of Eureka from 1945 to 1951. Development work in 1961 and 1962 included surface geo- chemical investigations and three underground diamond drill -223- holes and two surface diamond drill holes. Ore occurs in veins two to six feet thick in quartz latites of the Silver- ton volcanic series and reportedly contains about .1 oz. Au, 4 oz. Ag, 4% Cu, 4% Pb and 6% Zn. Exploration and development operations were reported in 1957 - 1960 at the Auburn mine 6^ miles northeast of Silverton. Development work was reported in 1960 at the Katy mine on King Solomon Mountain south of Howardsville. A new tunnel was started on the outcrop of a fissure vein about 40 feet below old workings. Principal values are copper and silver. Minor development and production was reported in 1960 from the Little Giant mine in Arastra Gulch. Minor development and production was reported from the Little Nation mine in 1948 - 1953. Principal values are copper and silver - OUTLOOK The outlook for small and intermittent production from the South Silverton and Animas district is fair. Although the Shenandoah - Dives and Pride of the West mine were con- sistent and large producers from the 1930' s to the mid 1950' s, it is doubtful if additional development expenditures can be justified at these properties. Several properties in the Galena Mountain area includ- ing the Old Hundred, Gary Owen, Stony Pass, Silver Wing, Great Western, Kittimac, Caladonia and others are all poten- tial small producers if economic conditions continue to improve and if custom milling facilities are available. The Pride mill could probably handle much of this produc- tion. -224- EUREKA AND ANIMAS FORKS DISTRICT - SAN JUAN COUNTY The Eureka and Animas Forks district includes the drainage basin of the headwaters of the Animas River, and for purposes of this report also includes an area of extensive faulting east of Animas Forks to the Hinsdale County line between the Silverton and Lake City calderas. The rocks of the Eureka and Animas Forks district are all volcanics of the Silverton series. The area lies immediately north and northeast of the Silverton caldera and is structurally associated with the radial step fault- ing along the margin of the caldera. Some of the faults have displacements of more than 1,000 feet in the Sunny- side Mine area and along the graben to the northwest. ORE DEPOSITS The Sunnyside and nearby vein systems have been the most productive in the district, but significant minerali- zation continues easterly to the Treasure Mountain area. The mineralogy of the veins in the Sunnyside mine is typical of many of the veins from which most of the out- put has been made. C. D. Hulin has distinguished three main successive stages of reopening of the fissures and mineral filling. The first stage is represented by essentially barren vein matter consisting of quartz and pyrite, the second stage by the main base metal sulfides that formed the ore shoots, and the third state by manganiferous veins and ribs consisting mainly of rhodonite. Quartz containing free gold has been found cutting either or both the base metal and rhodonite bodies, indicating that, as in the Sneffels and Telluride districts, gold is a late mineral forming in places a valuable fourth stage of mineralization. As elsewhere in the Silverton area base metal sulfides occur in all vein stages, but their great- est concentration is in the second or base metal state. The later rhodonite veins as represented at the Sunnyside and nearby veins contain in addition to rhodonite other silicates of manganese. -225- USGS COMMENTS ON OUTLOOK The depth of mining development on the area, with the exception of that at the Sunnyside mine, is shallow compared to the depth of the Telluride erosion surface. In the early mining activity most work was confined to small shoots of relatively high-grade gold and silver, such as were found in the Sound Democrat, Golden Fleece, and San Juan Queen in Placer Gulch and on Treasure Mountain, It appears from the geology of the surrounding country that the volcanics here rest on pre-Cambrian granite or schist, the estimated depth to this basement ranging from as little as 1,000 feet below the lower valley bottoms to over 4,000 feet below the higher vein outcrops. Hence only a small percentage of the veins have been thoroughly explored both laterally and vertically. Between 1916 and 1927 a little over 1,800,000 tons of ore mined, coming chiefly from the Sunnyside, yielded by recovery an average of 0.06 oz . gold, 2.6 oz. silver, 1.15% copper, 3.1% lead, and 3.32% zinc. This included some dry and siliceous ore from the Gold King mine in Cement Creek but gives a fair indication of total recoverable metal in complex ores of this area, as afforded by metallurgical practice during that period. The average widths of the larger veins are considerably greater than at Telluride, and stopes 50 feet wide were carried in parts of the Sunnyside mine. PRODUCING MINES Standard Metals Corporation acquired a lease on the Sunnyside mine north of Silverton in 1959 from Marcy- Shenandoah Corp. and is presently developing and mining from the American Tunnel at Gladstone. This haulage level tunnel is at an elevation of 10,500 feet, and not only drained the old Sunnyside workings, but enables the opera- tors to develop the Sunnyside and associated veins from levels several hundred feet below the upper workings. The company is presently producing about 550 tons per day from the American Tunnel and plans to increase daily production to 600 or more tons as development progresses and additional working areas are opened. Average ore values are .01 oz. Au, 1 oz . Ag, .2% Cu, 3% Pb, 4% Zn. Ores are con- centrated at a company-owned selective flotation mill near Silverton. -226- ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 The upper levels and surface workings of the Mogul mine are sub-leased to Grant G. Gifford of Silverton. Production from the mine and also from the old dumps was reported in 1955 and 1956. Development work in 1963 included rehabilitation of a 3,000 foot tunnel. Additional development and production is planned for 1964. The lower levels of the Mogul mine are leased to Standard Metals and will probably be developed in due course as the development drifts from the American Tunnel are ex- tended to the west. The Silver Queen group includes the Silver Queen and South Democrat properties east of Treasure Mountain which are presently owned or leased by the Moreno Uranium Corpora- tion. Exploration and development work was done in 1951 and 1952; a cross cut was driven to intersect the Silver Queen vein and some drifting was done along the vein. The operators report that development and production activities may be commenced in the spring of 1964. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 The owner reports that minor exploration and develop- ment work was done at the Silent Friend group near Cinnamon Pass. The Treasure Mountain Group includes the Treasure Mountain, San Juan Queen, Santiago Tunnel, Golden Fleece and other properties on Treasure Mountain. Intermittent but sub- stantial exploration and development work was done at these properties from 1936 to 1941 and from 1947 to the mid 1950' s The Great Eastern mine is one of the great old pro- ducers of the Eureka District. Shipments totaling about 2,300 tons in 1952 contained about .01 oz . Au, 7 oz . Ag, .05% Cu, 14% Pb, and 2% Zn. -227- Intermittent clean-up and development work was re- ported in 1956 - 1959 for the Gold King mine near Gladstone. Intermittent development work and production has been reported since 19 30 for the Lead Carbonate mine north of Silverton. Access to the mine is through the American Tunnel and from a winze below the haulage level. The operator re- ports that the mine has a productive potential of about 50 T/D of ores containing about .2 oz. Au, 20 oz . Ag, 2% Cu, 4% Pb and 7% Zn. ADDITIONAL MINES WITH R ECORD OF PRODUCTION FROM 1950 to 196 3 Galena Queen Thelma Valley Forge OUTLOOK The outlook for the Eureka and Animas Forks district is encouraging. Standard Metal Corporation has embarded on an extensive and long range program of exploration and development which should result in a sustained production of 600 or more tons per day from the lower levels of the Sunnyside and adjoining properties. Measured, indicated and inferred reserves should assure production at this rate for at least ten years, and any improvement in metal prices, haulage rates or smelter schedules will markedly increase present reserves by allowing for increased mining widths in many of the stopes where marginal ore grades presently limit the exploitation of potential resources. Present metal prices and other economic factors limit ore reserves to rocks containing at least 1% combined Pb-Zn and 1-2 oz Ag. Intermittent but substantial exploration and develop- ment efforts have been made during the past decade in the Treasure Mountain area. If the general economic picture continues to improve, this area can reasonably be expected to produce small to medium tonnages of base metal ores. -228- The faults in the graben area east of Animas Forks offer an interesting geologic possibility for the dis- covery of new ore bodies. Geophysical and surface explora- tion of this area will undoubtedly be undertaken during the next two decades, and the area should be considered as a possible source of future ore reserves. -229- MISCELLANEOUS DISTRICTS ASPEN DISTRICT - PITKEN COUNTY The Aspen district is centered around the town of Aspen which is 42 miles southeast of Glenwood Springs. Paleozoic sedimentary formations are present to the north, west and south of Aspen, and overlie pre-Cambrian granites and schists which form the Sawatch Range to the east. The Castle Creek fault, trending generally north- south through the district, displaces sedimentary forma- tions as much as 5,000 feet. Related folding and faulting was important in controlling later localization of ore bodies . ORE DEPOSITS Silver-lead-zinc sulphide ores occur as replacement deposits in several Paleozoic stratigraphic horizons. The contacts of the Leadville dolomite and the overlying Weber shale, the Leadville limestone and the Leadville dolomite, and Weber shale and a porphyry sill are the principal ore horizons . ACTIVE DE VELOPMENT PRESENTLY UNDERWAY OR PROPO SED FOR 1964 An O.M.E. exploration and development project costing in excess of $300,000 is presently underway at the Midnight mine south of Aspen. The project includes driving the High- land Tunnel 5,000' to undercut the old Midnight mine, and 10,000 feet of drilling to explore for and delineate possi- ble ore deposits. The mine produced high grade lead and zinc bearing silver ores from 1929 to 1951. Ore occurs as replacement type deposits in limestone and is related to faulting and other structural features that apparently controlled the course of ore bearing solu- tions. The operators believe these structural, conditions -230- are favorable for the finding of substantial ore bodies from the Highland Tunnel level. A 12-man crew is presently working at the project. MINES WITH RECORD OF DEV ELOPMENT OR PRODUCTION FROM 1950 TO 1963 Antimony Montezuma Big Duck Mary Nos . 1, 2 , 3 Egg Nest - Wichita Molly Gibson Dump Henry Clay Group McLean Mine OUTLOOK The outlook for the Aspen district is encouraging if metal prices maintain present or higher levels. Past pro- duction records of the Midnight mine indicate that if ore deposits are discovered by the present Highland Tunnel project they will probably contain values in excess of 20 ounces of silver and about 7% combined lead-zinc. Because of the exploratory nature of the project, and because of the present lack of mill facilities, no attempt is made here to estimate a productive potential for the district. However, the district has produced base and precious metals valued in excess of $100,000,000 and could produce from fifty to one hundred tons per day if the present tunnel project is successful. Anaconda Copper Company made detailed investigations of the Aspen district in the early 1950' s, but reportedly decided that the potential reserves were not sufficient for a large company operation. -231- CRESTED BUTTE, ELK MOUNTAIN, TAYLOR PARK DISTRICT - GUNNISON COUNTY This district is actually a combination of geological- ly dissimilar but geographically related areas in the north central portion of Gunnison County. Surface rocks include Cretaceous and Tertiary sand- stones and shales near Crested Butte, Cambrian through Cretaceous sediments in the Elk Mountain area, and pre- Cambrian granites in the Taylor Park area. ORE DEPOSITS The principal ore deposits occur as small irregular veins in the Mancos shale near Gothic, as small replace- ment type deposits in limestone near Marble and near Spring Creek northeast of Almont, as veins in granite in Taylor ParK, and aj veins in Mesa Verde sandstone and Mancos shale northeast and northwest of Crested Butte. Intermittent but substantial development and produc- tion has been reported from 1949 to the present for the Keystone mine west of Crested Butte. The mine was operated from 1949 to 1957 by Park City Mines and American Smelting & Refining Company and was reopened in May, 1963 by the present operator. Silver-lead- zinc ores occur in veins in the Mesa Verde sandstone. Present production averages about 2 30 tons per day of ores having an average grade of about 7 oz . Ag, 3% Pb, A^f/o Zn and ,8% Cu. Ores are concentrated at a company- leased selective flotation mill near the mine. ACTIVE D EVELOPMENT PRESENTLY UNDERWAY ..OR PROPOSED FOR 1964 The operator recently completed an 0. M. E„ explora- tion drilling program at the Forest Hill group in Taylor Park. The purpose of the drilling was to explore for possible extensions of known veins in granite. Ores re- portedly contain an average of. .1 oz. Au, 10 oz . Ag, 6% Pb, -232- 8% Zn and .8% Cu. Another project is presently being planned to further explore the property by driving a cross cut tunnel and drifting along the veins. Road building and exploration work was reported in 1963 for the Levicy-A, High Point and Enterprise mines in the north Taylor Park area near Dorchester. Dr. Carpenter proposes to produce high grade shipping ores from the Enterprise in 1964. Silver-lead ores occur in fissure veins in granite. Intermittent but substantial development and produc- tion was reported from 1951 to 1960 for the Micawber mine northwest of Crested Butte. Standard Metals Company operated the property from 1957 to I960, but then closed the mine and sold and transferred the mill to Wellington Mines Associates. The present operators did rehabilitation work in 1963 and propose to commence mining operations in the spring of 1964. Initial production is estimated to be 2,000 tons of concentrates per year. The company owns a 100 T/D mill at Crested Butte. Intermittent rehabilitation and production was re- ported from 1947 to 1963 for the Forest Queen mine north- west of Crested Butte. About 250,000 tons production was reported prior to 1916. The present operators have developed new reserves below the old mine workings and propose to complete development and commence production in 1964. A 25 T/D mill will be used to treat initial ores produced from the mine. Silver- lead-zinc ores occur in 2-6 foot wide vertical veins. Development work has been reported from 1958 to the present for the Silver Spruce and Lead King mines about 20 miles north of Crested Butte. The operator reports that the Silver Spruce mine will commence production in the Spring of high grade Au-Ag-Pb ores, and that the Lead King has a potential of several hundred tons per day of Ag-Cu-Pb- Zn milling ores. Intermittent exploration, development and production was reported prior to 1920 at the Doctor mine about 10 miles northeast of Almont. Ores occur as narrow replacement type silver bearing lead and zinc carbonates in Mississippian -233- dolomite. The present operator does intermittent explora- tion and development work during the summers. Minor development and production was reported in 1954-1957 from the Little Darling mine near Marble. A former lessee reports that 4,400 tons of ore having an average gross value of $60 is in sight. Intermittent exploration and development including 1,700 tons production in 1952 was reported in 1951 - 1957 for the Daisy mine in Redwell Basin north of Crested Butte Ores occur as fissure veins and as replacement deposits. Intermittent development work was reported in 1963 for the Bull Domingo mine on Italian Mountain near Taylor Park The property has not yet been fully evaluated, but small quantities of high grade lead-silver ores are known to exist. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Baxter & Skyline #1 Sandra Domingo Undine #1 OUTLOOK The outlook for continued medium scale production from the Crested Butte, Elk Mountain, Taylor Park district is good if metal prices maintain present or higher levels. Present reserves at the Keystone mine indicate about six productive years at the present rate of production. How- ever, the veins have not been delineated either vertically or laterally, and continued development can reasonably be expected to result in the discovery of additional reserves. The reported plans for development and production at the Micawber and Forest Queen properties northwest of Crested Butte and continuation of development programs in the Taylor Park area should result in additional produc- tion. The relatively high silver content of many of the -234- small replacement type and irregular vein type deposits in these areas should stimulate activity by small operators. A custom flotation mill near Gunnison to serve this dis- trict plus other small districts in the Garfield area would undoubtedly stimulate activity in the general region. GARFIELD, MONARCH, TOMICHI , TIN CUP, GOLD BRICK, CHALK CREEK DISTRICT - CHAFFEE AND GUNNISON COUNTIES The above-listed districts comprise a geographical unit located between Gunnison and Salida. Pre-Cambrian granites, gneisses and schists are exposed from the Monarch Pass area to the south, west and northwest. Paleozoic sediments overlie portions of the pre-Cambrian in the vicinity of Monarch, Tin Cup and Pitken. Tertiary intru- sives including the Mt . Princeton batholith and later Tertiary extrusives are prominently exposed north of Monarch Pass. The structure of the area is moderately complex with folds faults and fractures of diverse trends. Laramide faulting formed channels into which economically important ores were deposited. ORE DEPOSITS Ore deposits include both replacement bodies in sedimen- tary limestones and dolomites and fissure veins in quartz mon- zonite. Except for the Madonna mine near Monarch Pass and the Gold Cup mine near Tin Cup, the replacement type deposits are fairly small. USGS COMMENTS ON OUTLOOK Several areas appear promising for discovery of valuable metals. The favorable areas must be delineated by purely geo- logic considerations rather than by extensions from known or indicated ore bodies, because most of the mines are inaccess- ible and the records are generally poor. Geologically favor- able areas for exploration include possible extensions of known faults beneath areas covered by glacial debris north of the Madonna mine and in Cree Creek Valley. -235- ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Mining properties owned and operated by Dr. Carpenter in- clude the Silent Friend, June Bug, Oracles and Edna Drain groups near Pitken and the Wanderer and Senator near Tincup. Road work and mine rehabilitation work was done in the summer of 196 3, and additional work is proposed in 1964. High grade silver ores are reportedly present at these properties and will be shipped directly to smelters. Harold F. Kane, Poncha Springs, is presently leasing the June Bug and Jack McLain, Gunnison, is leasing the Silent Friend. About 250,000 tons of broken milling ore is reportedly available in the old workings of the Silent Friend. Ores occur as replacement deposits in the Manitou dolomite. Intermittent exploration and development was reported since 195 3 for the Hot Rock group near Tin Cup. Exploration for lead-silver replacement type deposits will be continued in 1964. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Development work and minor production was reported in the late 1950 ' s for the Lilley mine near Monarch Pass. Cres occur as silver bearing lead and zinc carbonates and sulfides along a fault contact between pre-Cambrian granite and Paleozoic sed- iments, and contain an average of 10 oz . Ag and 2 5-30% combined Pb-Zn. Ore shoots are controlled by minor variations in the strike of the vein which probably resulted in the formation of fracture zones along areas of tensional stress during the per- iod of Laramide faulting. A development program at the Garf ield-Lilley properties is being projected for 1964 wherein development of probable exten- sions of known ore shoots at depth will be undertaken by the driving of low level drifts. Inferred reserves of between 100,000 and 200,000 tons might be blocked out by such a program, The Madonna mine was rehabilitated in the 1940 ' s and a winze was driven to develop possible extensions of the Madonna fault and associated replacement type ore shoots. Although considerable exploratory work was done and some ore produced, -236- the mine was shut down in 1953. Production from the upper workings in the late 1800 ' s and early 1900 ' s had a gross value of approximately $6,000,000 and was primarily oxidized lead- silver ores. Sulfide ores are known to be present at depth, but exploitation of these deposits is complicated by water. Significant quantities of zinc carbonate and oxide ores are reported to have been left in the upper workings of the mine . The Carter mine near Ohio City was operated intermittent- ly until 1942 and then again in the 1950' s until 1962. Pro- duction is from fissure veins ranging from one to five feet thick in gneiss and granite. Values are mainly gold, but some lead and silver is also present. Ores were concentrated at a 12 5 T/D company-owned gravity, flotation mill near Ohio City. Intermittent and minor development and production has been reported since 1943 for the Star group near Tin Cup. Ore occurs as vein deposits and small replacement deposits in Leadville limestone. The Akron mine was operated by the Callahan Zinc-Lead Com- pany from 1937 to 1953. Total production since 1900 has been in excess of 100,000 tons, and ore grades since 192 5 averaged 6 oz . Ag, 11% Pb and 15% Zn. Ores occur along a fault as fissure veins and as replacement deposits along favorable hori- zons. Oxidized ores may be present in the upper levels of the mine . ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Monte Carlo Raymond Napoleon Endner Pyrite Stonewall Gold Eagle Josephine Lode Mary Murphy Sitting Bull -237- OUTLOOK The outlook for large scale production from the district is not good at this time. Relative to other mining districts, the size and grade of most known ore occurrences are not suff- icient to justify significant exploratory and developmental efforts . A few individual properties such as the Garf ield-Lilley and the Madonna probably deserve additional exploratory efforts, and other small properties could possibly supply some high grade shipping ores to a Colorado smelter. A custom flotation mill near Gunnison to serve this dis- trict plus other small districts northeast and northwest of Crested Butte would undoubtedly stimulate activity in the general area. The possibility of significant quantities of oxidized or carbonate zinc ores in the upper levels of the Madonna and Akron and possibly other mines should be carefully checked out. Such ores could possibly be shipped directly to a Colo- rado smelter, whereas previously the problems of concentration plus high freight costs have discouraged the exploitation of such ores. SILVER CLIFF, WESTCLIFFE DISTRICT - CUSTER COUNTY The Silver Cliff, Westcliffe District is near the town of Westcliffe about 25 miles south of Canon City, Colorado. The basic host rock near the Silver Cliff mines is an altered rhyolite lava on the flank of a volcanic crater. The volcanics overlie pre-Cambrian granite. Faulting and volcanic activity in the area is associated with the Laramide uplifting of the Wet Mountains. ORE DEPOSITS Ore occurs in fissure veins which transact altered rhyolite near Westcliffe. The chief values are gold and silver, but copper, lead and zinc are also present. At the Bull Domingo mine, ore occurs in an agglomerate or breccia pipe in pre- Cambrian rock. -2 38- ACTIVE DEVELOPMENT PRESENTLY UNDERWAY OR PROPOSED FOR 1964 Exploration and development work is presently underway at the Passiflora and FranKlin mines near Westcliffe. A 14-man crew is working at the Passiflora group on a long range program involving both development drifting on known veins and explora- tory drilling. Ores occur in fissure veins in volcanics and average about 15 oz , Ag and 8% combined Pb-Zn. A 4-man crew is presently doing development work at the Lady Franklin mine near Westcliffe. The immediate goal of the operators is to block out 40,000 tons of milling grade ore at these properties. Over 10,000 tons is presently proven, and prospects for developing addition- al ores are good. MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Minor exploration and development was reported in 1963 for the Copper Reef prospect near Westcliffe. Ores are Ag and Pb Carbonates. ADDITIONAL MINES WITH RECORD OF DEVELOPMENT OR PRODUCTION FROM 1950 TO 1963 Lodge Pole #1 & #2 Maxine Elliott Custer City Defender and Blue Eagle Navajo Revely Clarabell OUTLOOK The outlook for relatively small but steady production from the Silver Cliff, Westcliffe District is very encouraging. The Cotter Corporation of Canon City has embarked on a long range exploration and development program with the overall goal of developing sufficient reserves to guarantee operation of a 150 T/D flotation mill at Canon City. The grinding facilities ■239- In O en en < U X. o H > o K w | a 1 w ID e> CO 2; < J a J H H S 2 O a fc CO > H P Eh w a. « W H H < < ft B 63 J O < >* O Eh 3 w a. o X! 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