REDDING, CA — Newly reorganized and emerging from bankruptcy, a historic gold mine near French Gulch is once again hiring miners.
Now known as Shasta Gold Corp., the firm that operates the old Washington Mine is based in French Gulch, a small Gold Rush town west of Redding.
Fifteen miners already are working the mine and in a year there will likely be 40, said Tim Callaway, president and CEO of the company. That’s a third of the nearly 120 who worked at the mine in 2007, when the company running it was called Bullion River Gold Corp. and based in Reno.
“We are not doing anything bigger,” Callaway said. “We’re actually doing things smaller.”
Callaway, who was Bullion River’s acting chief operating officer in August 2007, said the reorganized company will try to haul 100 tons of ore per day out of the Washington Mine.
Bullion River had explored the mine only for quartz veins, which hold gold, he said. Since the operation never reached full production, Callaway said, he didn’t have an ore-per-day amount with which to compare what it will soon produce.
Bullion River filed for Chapter 11 bankruptcy protection in January 2009.
Callaway said the company has been completely reorganized and a federal court confirmed Shasta Gold Corp. as a company in February.
First mined in the 1850s, the Washington Mine still has the potential to produce three-quarters of an ounce of gold per ton of ore, Callaway said. Gold is going for $1,115 per ounce. At that price the mine could generate about $85,000 a day.
While the company was in bankruptcy court, work was stopped in the mine. Callaway said nine full-time workers stayed at the mine to work on “care and maintenance,” but no gold was mined. As the company rebuilds its workforce, he said, it will look to rehire workers who were laid off.
But first the company is focused on revising its environmental permits to start mining again, he said.
Chief among those permits is a plan being reviewed by the Regional Water Quality Control Board for a $300,000 water treatment plant that will be built over the next three months, Callaway said.
While the mining was on hold, groundwater filled many shafts in the Washington Mine, said Phil Woodward, senior engineering geologist in the control board’s Redding office.
“When it was closed it got flooded in there,” he said.
As the mine is drained, the treatment plant will pump 300 gallons of water out of the mine per minute, he said. The water will be diverted into French Gulch Creek, which joins with Clear Creek and flows into Whiskeytown Lake.
Once the water is drained the plant will still need to pump about 20 to 30 gallons per minute to clear groundwater seeping into the mine.
The treatment plant will remove arsenic from the water. If the plant weren’t in place, Woodward said, the water would likely seep out of old mine vents and into the creek.
“By pumping that water and treating it, the water quality will actually improve,” Woodward said.
I am trying to figure this out too. So Bullion River Resources filed for BK in Feb 2009 and Shasta Corp is a private company that may want to go public with the reorg amendments back in March 2010. From what I see the O/S is 3.5 million, is that correct?
Bullion River definitely has some decent assest for sure:
French Gulch gold mine awaits permission to reorganize By David Benda Record Searchlight Posted December 20, 2009 at 10:51 p.m
With gold prices hovering around record levels at $1,100 an ounce, the bankrupt French Gulch Mine remains stagnant as its parent company awaits court approval to reorganize.
The mine remains in a care-and-maintenance state with a skeleton crew of about 11 employees.
Bullion River Gold Corp. and its subsidiaries filed for Chapter 11 bankruptcy protection in February, claiming it was necessary because creditors were threatening to shut down its operations.
The company declared $30.1 million in assets and $10.56 million in liabilities.
Bullion River Gold would reorganize by attaining $1.3 million new equity financing, hiring a new engineering and geology team, and locating its administrative office at the French Gulch Mine, court papers show.
A bankruptcy court status conference is scheduled Tuesday.
Redding attorney Dennis Cowan represents I-5 Rentals, which at $247,813 is the largest north state firm holding an unsecured claim in the case. Cowan said the judge on Tuesday could approve Bullion River's financial disclosure statement. Should that happen, the reorganization could be approved within a month, Cowan said.
"It looks like there is a proposal for the unsecured creditors to get a small amount of the newly issued stock, about 25 percent, so it's not much," Cowan said.
When Bullion River Gold started mining in French Gulch in 2006, gold was trading at $600 an ounce. The company had mined about 1,280 ounces of gold and 359 ounces of silver, generating roughly $800,000 in revenue in French Gulch by the end of 2006. However, Bullion River Gold still claimed it needed additional capital to continue operations, according to court papers.
At one point, French Gulch had nearly 125 employees and mining continued through June 2008 but at a reduced rate "due to financial constraints," according to court papers.
In November 2008, the board of directors determined the high cost of compliance under the security laws made it impossible for Bullion River Gold to remain a public company.
By January, the work force at French Gulch had been slashed to 11 employees. A month later, Bullion River Gold filed for bankruptcy.
All told, Bullion River Gold extracted about 11,000 ounces of gold from 2006 to December 2008 in what court documents call "a failed attempt to achieve commercial production" in French Gulch.
News 
Market Data 
Discover 
