The Aggregate Potential

General

Golden Queen Mining Co., Inc. proposes an aggregate and construction materials business that will be developed once the heap leach operation is in full production, based on the location of the Project in southern California with close proximity to major highways and railway lines.

The California Department of Transportation projects aggregate demand of approximately 13 million tons per year for the area surrounding Palmdale, Lancaster, and Rosamond and less than 27% of this demand can be met from existing permitted resources. Similarly, estimates suggests that demand from the area surrounding Bakersfield is approximately 5 million tons per year for the next 50 years, and less than 46% of this demand can be met from existing permitted resources.

Former Governor Schwarzenegger recognized the need for local sources of aggregate in California and signed Senate Bill 420 in 2006. Senate Bill 420 requires the California Department of Transportation (“Caltrans”) to use recycled aggregates in State paving projects where economical. In this instance, the waste rock from the Project would constitute a recycled waste product consistent with Senate Bill 420.

Aggregate Production from Waste Rock

The company expects that 19.0 million tons of quality waste rocks can be processed to produce 15.0 million tons of saleable aggregate and construction materials, which can be sold at the rate of 500,000 tons per year to the regional markets with sales of approximately 15.0 million tons over 30 years and these are the numbers included in the supplemental Environmental Impact Report. The waste rock can be classified into a range of products such as riprap, crushed stone, and sand with little further processing. 

The source of raw materials will be quality waste rock stockpiled on a level pad east of the East Pit. The downslope portion of the pad will be reclaimed by spreading stockpiled growth media and seeding the area as soon as construction of the pad has been completed.

The company has identified a company with experience in the aggregate and construction materials markets of the southwestern United States as a sub-contractor for developing the aggregate and construction materials business. 

The sub-contractor will locate a portable crushing and screening plant, a weighscale and support facilities such as an office on a portion of the level pad approximately 15 acres in size. Waste rock will be crushed and screened to produce a number of finished products and these will be stored in stockpiles for loading into trucks. The planned average rate at which waste rock will be processed to produce a saleable product is 2,000 tons in ten hours per day and 5 days per week. 

Every effort will be made to proceed with processing of the waste rock as early in the life of the mine as possible.

Closing reclamation of the facilities required for the processing of waste rock and this includes the storage pad, will remain the company’s responsibility.

Note that E.L. Yeager Construction Company mined aggregate on the property in 2001/2 to obtain rip-rap for the Mojave bypass and approximately 10,000 tons was shipped. 

Depending on the success of the operation, additional waste rock could be made available to extend the aggregate operation beyond 19 million tons. 

Leached And Rinsed Residues

The use of the leached and rinsed residues as a source of aggregate was investigated in the 1990s and is being confirmed by ongoing studies. It is expected that up to 53.3 million tons of ore will be mined, crushed and stacked on the heap leach pads for leaching. The leached residues will be rinsed and neutralized and this would therefore be an excellent source of aggregate.

The following are seven alternatives uses for saleable products from the leached and rinsed residues that have been identified and that could be implemented at the same time:

Leached and rinsed residues as a source of sub-base for road construction:

Golder Associates Inc. prepared a Technical Memorandum that shows that the leached and rinsed residues fall generally within the range of the California Department of Transportation material specifications for standard Class 2 and Class 3 aggregate sub-base for road construction. An inland source of sand would represent large savings in shipping costs as compared to other potential sources. In addition, the leached and rinsed residues would be a recycled waste product, and thus their use might be consistent with Senate Bill 420.

Leached and rinsed residues as a source of sand for ready-mix bulk concrete:

The use of leached and rinsed residues as a source of sand for the production of ready-mix bulk concrete is a second major use.

Leached and rinsed residues as a source of aggregate for a producer of asphalt:

The use of leached and rinsed residues as a source of sand for the production of asphalt for paving projects is a third major use.

Leached and rinsed residues as a source of silica for cement producers:

The ore will be crushed for leaching and is high in silica. The leached and rinsed residues may find a ready market with cement producers because of their high silica content. This could therefore provide local employment on a small scale for what would be essentially for an unlimited period.

Up to half of the historical tailings (approximately 300,000 tons) from the Gold Fields mining and milling operation on site were sold to cement producers as a source of silica in the past, and the company had an order from cement producers in the area to purchase additional tailings. This therefore provides a proof of concept.

The following comment appeared in an article that addressed high mercury content in mined materials in December 2010:

“The Tehachapi Lehigh plant stopped mining high-mercury silicate in its own quarry several years ago, significantly reducing the mercury emissions in its processing. It now buys silicate from a source in Nevada”.

Leached and rinsed residues as a source of sand for producing bulk concrete products:

Sand produced from the leached and rinsed residues would be ideal for producing bulk concrete products such as pipe and other similar products. Mojave would be an ideal location for such a project. This would be done with an experienced partner.

Leached and rinsed residues as a source of frac sand:

The use of leached and rinsed residues as a source of frac sand is being investigated.

Miscellaneous uses for rinsed and leached residues:

The Mojave Rosamond Sanitary Landfill is in the early planning stages and a Notice of Preparation has been issued by Kern County with a Draft EIR in progress.

The landfill is planned to be a 500-acre regional facility that would accept waste over a 100-year period. The site is adjacent to the current Mojave Landfill and therefore very close to the Soledad Mountain Project (~3-4 miles). Current plans in the Master Development Plan include use of either a geocomposite or 9-inches of gravel for the leachate collection system that is located directly above the composite liner system. Should the leachate collection system be constructed using gravel sources, approximately 850,000 tons of gravel would be required over the life of the facility. 

All indications are that gravel produced from the leached and rinsed residue would be an excellent source of gravel for this project.

It is further expected that numerous similar projects will arise that are best served by a local source of aggregate.

An Economic Advantage

There are three key elements that should create advantages for the company as an aggregate producer as set out below:

The run-of-mine waste rock and sand will be produced as a byproduct from a mining operation. This should give the Project an economic advantage as an aggregate producer by comparison to producers that have to mine rock or obtain sand from an alluvial deposit to produce aggregate.

Available infrastructure on site will have an important impact on the cost of producing aggregate and shipping aggregate or final products to market.

It has become difficult to obtain permits for new quarry developments in southern California. The Project will have permits in place and this should be a distinct advantage for an aggregate producer that wishes to work with the company as a sub-contractor on site or as partner in a bulk concrete products facility on site.

It is important to note that no contributions from the sale of aggregate products will be included in the cash flow projections until long term contracts for the sales of products are secured. 

Closure and Reclamation

Any leached and rinsed residues that are not used as aggregate must be reclaimed on the lined heap leach pads in accordance with an approved Surface Mining and Reclamation Plan and the Waste Discharge Requirements. This will remain the company’s responsibility.