Colorado

By Burnell, J; Carroll, C; Widmann, B L

The value of mineral and mineral fuel production in Colorado in 2006 was a approximately $11.61 billion. This was a 5-percent decrease from the 2005 revised value of $12.17 billion. The largest share of this was from natural gas production. The value of nonfuel minerals produced in Colorado in 2006 was estimated to be $1.762 billion, a 2-percent decline from the revised 2005 value of $1.789 billion, which was the highest ever.

Colorado coal production in 2006 decreased from 34.3 Mt (37.8 million st) in 2005 to 32.2 Mt (35.49 million st) in 2006. due primarily to production shortfalls at three coal mines. There was no uranium or vanadium produced in 2006 in Colorado.

The estimated production values are based partially on preliminary estimates by the U.S. Geological Survey (USGS) Minerals Information Team, the U.S. Energy Information Agency (EIA) and several Colorado state agencies. Much additional information was obtained from mine operators, news articles, corporate press releases, and annual reports of public companies.

According to the USGS, Colorado is currently ranked first in the nation in molybdenum production, fourth in gold, seventh in coal and ninth in construction sand and gravel. The large increase in nonfuel production value in 2004 was due mainly to increased production of molybdenum along with sharply higher prices for that metal.

Metal mining

Molybdenum. The price of molybdenum backed off from an all-time high of $40/lb in 2005 to a still-healthy $26.50/lb in 2006. The sustained high price rise is attributed to demand from China and a tight global supply. Because of the high price and increased production, molybdenum is now the largest segment of Colorado’s nonfuel minerals industry in terms of production value.

Henderson Mine, Clear Creek County. The Henderson Mine in the Front Range west of Idaho Springs is an underground block-cave mine. The mine is operated by Climax Molybdenum, a subsidiary of Phelps Dodge. Henderson produced more than 16 kt (37 million lbs) of molybdenum metal contained in concentrates. This was a 15-percent increase from the 14 kt (32 million lbs) produced in 2005. The estimated production value was more than $982 million. Phelps Dodge reported that it received an average of $26.50/lb for molybdenum produced in 2006. Reserves are estimated at more than 136 Mt (150 million st) of ore containing 227 kt (500 million lbs) of recoverable molybdenum.

Ore from the mine is transported to the mill in Grand County by a conveyor belt through a 13-km (8-mile)-long tunnel under the Continental Divide. At the mill, ore is processed to molybdenite concentrate. The sulfide concentrator at the Henderson Mill is capable of treating 29 kt/d (32.000 stpd) of ore. The mine ships most of its high-purity, chemical grade molybdenite concentrate to Fort Madison, IA for further processing. Henderson continued to be North America’s largest primary producer of molybdenum.

The Climax Mine, also owned by Phelps Dodge, was the first major molybdenum mine in the U.S. Located on the Continental Divide at Fremont Pass between Leadville and Copper Mountain, the mine has been on care-and-maintenance status since 1995. Phelps Dodge reported that at year-end 2006, Climax still contained millable reserves of 142 Mt (156 million st) of ore grading 0.19 percent molybdenum. High molybdenum prices and projections have prompted Phelps Dodge to evaluate the economic viability of starting up mining operations at Climax for short- and mid-term production.

Precious metals

Cripple Creek & Victor Mine, Teller County. AngloGold (Colorado), a subsidiary of South Africa-based AngloGold Ashanti, operates the largest precious metal mine in Colorado. The Cripple Creek & Victor (CC&V) Mine is also one of the most productive gold mines in the US. It produced 8.8 t (283,484 oz) of gold in 2006. down 14 percent from the 2005 production of 10.2 t (329,625 oz). Based on AngloGold’s realized sales prices of gold produced at the CC&V Mine, the value of gold produced at the mine in 2005 was $185 million with an average spot gold price of $17.80/g ($610/oz). Mining proceeded at a rate of 149 kt/d ( 164.000 stpd) of ore moved and 21 Mt (23 million st) of ore were crushed.

The company’s stated ore reserve was 129 Mt (142.2 million st) containing 72.5 t (2.33 million oz) of recoverable gold. Nearly 3.981 ( 128.000 oz) of silver, valued at approximately $1.48 million, wore also produced at CC&V.

Golden Wonder Mine, Hinsdale County. LKA International owns the Golden Wonder, a small, high-grade underground gold mine near Lake City in the San Juan Mountains. Since beginning operations in 1998, the mine has produced more than 3.7 t (120,000 oz) of gold. Since 2000, the mine has produced an average of 676 kg/a (21.750 oz/year) of gold with an average grade of 556 g/t (16.23 oz/st). The second quarter production in 2006 was 339 t (373.6 st) of ore with an average grade of 959.9 g/t (28 oz/st). yielding 325 kg (10,466 oz) gold. Further exploration drilling has been performed to extend the reserves of the mine and significantly increase its production potential. High-grade crushed ore from the mine is trucked in “super sacks” to a milling facility in Nevada.

Cash and Rex mines. Boulder County. Global Minerals, of Vancouver, British Columbia, through its Colorado subsidiary Mount Royale Ventures, continued development of its gold project in the Gold Hill district west of Boulder and began production in March of 2007. The first shipment occurred on March 19, 2007. The project area is composed of 106 patented and unpatented mineral claims over an area of some 194 hm^sup 2^ (480 acres).

Uranium

The steep rise in uranium prices since 2003 accelerated in 2006 as the gap between supply and demand widened. The spot price of uranium oxide (U^sub 3^O^sub 8^) reached a high of $65/lb by the end of 2006 ( and $91/lb by March 2007). The closure of four mines by the Cotter in 2005 left the state with no remaining producers of this resource until early 2007 when Denison Mines opened the Sunday Mine complex in the Uravan District of southwestern Colorado.

The uranium business strategy in Colorado has been one of active and aggressive maneuvering by companies to obtain properties with potential, characterized by acquisitions, takeovers and joint ventures. Most of the recent activity has been on properties with historic production, many of which still have proven reserves that can once again be profitable. Companies reporting activity in Colorado include Anglo-Canadian Uranium, Blue Rock Resources, Cotter, Denison Mines, Energy Fuels, Energy Metals, Homeland Energy, Laramide Resources, Powertech Uranium, sxr Uranium One, the Uranium Core and Uranium Power.

Metal exploration news

Mineral exploration development activity increased in 2006. especially for uranium. The number of active, unpatented mining claims on public lands in Colorado had been declining since 1994. but the number of claims filed with the U.S. Bureau of Land Management Colorado Slate office for 2006 increased significantly. While identification of the mineral commodity is not required for filing, 60 percent of claims filed in 2006 (3,404 of 5,693) were located in counties for which the claims were almost certainly for uranium. Those counties are Dolores, Mesa, Moffat, Montezuma, Montrose, Rio Blanco and San Miguel.

Cashin deposit, Montrose County (copper). The Cashin deposit is a sandstone-hosted copper prospect near the Colorado-Utah border that is held by Constellation Copper. If it is developed, Cashin would be a satellite operation to Constellation’s Lisbon Valley Mine, located 24 km (15 miles) southwest in San Juan County, UT. The Lisbon Valley Mine and processing facilities began copper production in 2006. The Cashin deposit could add several years of copper production to the Lisbon Valley operation. According to a company spokesman, “Constellation is evaluating the technical and economic merits of various options for exploiting the Cashin deposit. Our intention is to transport any ore to our existing Lisbon Valley operation in Utah…We are comfortable with our technical understanding of the insitu grade, mining and metallurgical aspects of the deposit. Transportation options, which will have a major impact on costs, and hence ultimate extraction, require additional trade-off studies.”

Using a conservative copper price of $1.25/lb, Constellation’s consultants have estimated that Cashin contains 5.2 Mt (5.7 million st) of proven and probable ore grading 0.547 percent copper and containing 28 kt (62.4 million lbs) of copper.

Bates-Hunter Mine, Gilpin County (gold). Wits Basin Precious Metals, of Minneapolis, MN. continued exploration and development work on the Bates-Hunter Mine in Central City. The company controls the mine and mill at the site and possesses active mining and water discharge permits to cover an operation of up to 63.5 kt/a (70,000 stpy) of ore. The company believes that the property contains nine mineralized veins. The mine was previously worked to the 244-m (800- ft) level, while many mines in the area were productive to levels greater than 609 m (2,000 ft). The company has continued to dewater the mine and will initiate a\n underground drilling program designed to characterize the ore to greater depths when dewatering is finished.

Old Idaho and Mayday Mine, La Plata County (gold). Wildcat Mining of San Diego, CA applied for a permit for a small mine and mill on the site of the Old Idaho Mine in the old California Mining District northwest of Durango. The plan is to refurbish and re-equip the Idaho mill and use that for ore removed from the Mayday and Old Idaho mines.

Lucky Jack Mine, Gunnison County (molybdenum). The Lucky Jack property consists of some 25 patented mining claims and 520 unpatented claims comprising some 2,185 hnr (5,400 acres) located S km (5 miles) west of Crested Butte in Gunnison County. The property, formerly known as the Mount Emmons prospect, was initially discovered by Amax in 1974 on leases owned by US. Energy Amax delineated a large orebody at the site reportedly containing approximately 141 Mt ( 155 million st) of mineralization averaging 0.44 percent molybdenite.

In 2007 the company will be working on operations plans for all aspects of the mine. According to a company spokesman the current plan involves mining with a paced backfill system using longhole sloping (working a steplike part of a mine where lhe ore is being extracted). The goal is to have the plan of operations complete sometime in late summer 2007, a feasibility study for late 2008 and an environmental impact statement by late 2010.

Soda ash and sodium bicarbonate

Natural Soda AALA, Rio Blanco County. Natural Soda produces sodium bicarbonate (baking soda) derived from nahcolite that is solution mined in the Piceance Basin in northwestern Colorado. In 2006, the plant produced more than 89 kt (98,000 st) of sodium bicarbonate, a 17-percent increase from the 76 kt (84.000 st) produced in 2005. The facility has a permitted production capacity of 113 kt/a (125,000 stpy). High-grade nahcolite (>80 percent) is recovered from the Boise Bed of the Green River Formation. Dissolution of the nahcolite is through horizontal drillholes along the base of the Boise Bed. Both food-grade and industrial-grade products are marketed.

Construction sand, gravel and crushed stone. Colorado produced nearly 57.7 Mt (63.6 million st) of aggregate in 2006 and ranked 9th in the nation for sand and gravel production. The total value of Colorado aggregate produced was nearly $389 million. This is an increase of 5 percent above the 2005 value of $369 million. Sand and gravel represented 77 percent of Colorado’s total aggregate production in 2006 with production of 44 Mt (48.6 million st), down 1.4 percent from last year’s production. Crushed stone production increased 2.6 percent from the revised figure for 2005 of 12.9 to 13.3 Mt (14.3 to 14.7 million st). Average unit value for crushed stone was $7.39/1 ($6.71/st). Forty new sand, gravel and crushed stone mining permits were issued in Colorado during 2006.

The principle uses for sand and gravel are concrete aggregate, road hase and coverings, construction fill and asphaltic concrete aggregate. Although the use of sand and gravel predominates in Colorado, nationally, the use of crushed stone as an alternative Io sand and gravel has been gaining momentum since the mid-1980s. Crushed stone quarries typically operate within a smaller footprint and can be located further from high-density urban areas and scenic and environmentally contentious river valleys. This makes it easier to obtain a permit. Although higher operating costs equate to higher prices for crushed aggregate, the cost differential is slowly decreasing due to escalating conflict about environmental and land use issues associated with sand and gravel operations.

Industrial sand and gravel

Colorado’s leading industrial sand company is the Ohio-based Oglcbay Norton. The local division office, Oglebay Norton Industrial Sands (ONIS), is located in Colorado Springs. ONIS markets “Colorado Silica Sand.” specialty industrial sand that is used primarily as filter media for water purification plants and as a construction material, largely for stucco. Some of the smaller markets include hydraulic fracturing material for oil and gas drilling, gravel packs around water wells and other applications where roundness, permeability and strength are important parameters. Additionally, the sand is used as a landscaping material. The majority of product is exported outside of Colorado. Previously. ONlS extracted (essentially recycled) its silica sand from waste material cut from new developments where much of the surface cover is removed or scraped off before construction begins.

Dimension stone

Decorative stone has become a more important part of the Colorado minerals industry in recent years. Both crushed rock and whole boulders are used. Granite, gneiss, sandstone, volcanic rock, obsidian, marble and quartz pegmatite are some of the rock types currently being mined in the state for decorative use. Natural boulders that have a covering of lichen on them are commonly known as “moss rock” in the landscaping industry. Usually, the larger the percentage of the rock covered with the colorful lichen, the more valuable it is. Numerous small decorative stone mines and quarries are located throughout Colorado. No specific production ligures are available for statewide decorative stone production.

Yule Quarry, Gunnison County, Colorado Stone Quarries, a subsidiary of Polycor of Quebec. Canada, owns and operates the Yule marble quarry. Polycor operates a number of marble and granite quarries in North America, has a number of fabricating facilities and has a substantial presence in international stone markets. Some Yule marble is used for sculpting, although the majority of stone is now being made into slab and tile for international sales. Production data for 2006 were not available at the time of this report. Approximately 99 percent of production is exported outside of Colorado, with destinations including Italy, Indonesia, China, India, Quebec and Georgia.

Arkins Park Stone, Larimer County, Arkins Park Stone employs about 40 people and operates three quarries near the town of Masonville. Annual production typically averages more than 7.25 kt (8,000 st). The company produces buff (light pinkish-brown) sandstone as well as “Berthoud Pink” and “Berthoud Sunset” sandstone from the Permian Lyons Sandstone. About 80 percent of the product is sold or used in Colorado. Much of the stone is used as flagstone and facing in the construction of buildings. Recently, the company also began producing rip-rap for commercial uses such as riverbed linings, dams and bridge abutments.

BB Stoneworks, Larimer County. BB Stoneworks was incorporated in 1999 and now does business as Lyons Sandstone – after the Permian- age sandstone that is mined at the quarry. The quarry operates year- round as weather permits and employs up to 45 workers during the warmer months. The Lyons operation is primarily a flagstone and dimension stone quarry, hut some crushed stone and rip rap material is also produced. The Lyons Sandstone is one of the hardest sandstones in the world and has a very low absorption. The stone is quarried by hand using steel wedges, sledge hammers and pry bars. In 2006, about 10 kt (11.000 st) were sold.

Gypsum

American Gypsum, Eagle County. The American Gypsum Mine and wallboard plant, located near the town of Gypsum, produced 555 kt (612,000 st) of gypsum in 2006. Approximately 55.7 million m^sup 2^ (600 million sq ft) of wallboard are manufactured annually at the plant. About 50 percent of the wallboard goes to the Colorado construction industry. The remainder is marketed throughout the U.S. The gypsum is excavated from evaporite deposits in the Pennsylvanian Eagle Valley Formation using a surface (or pavement) grinder. The company is in the process of developing a new mining area northeast of the current site. During a span of a few years, mining will shift to the new site as reserves are depleted at the original site. The future mining area ensures that the wallboard plant can operate for at least another 20 years. The mine and plant employ approximately 125 people.

Colorado Lien, Larimer County. Colorado Lien, subsidiary of Pete Lien & Sons of South Dakota, produces gypsum from the Munroe Quarry north of Fort Collins near Livermore. Gypsum is extracted from the Permian Lykins Formation using a portable crusher. Annual production averages about 45.3 kt (50,000 st). The majority of the material quarried is sold within the state to the cement industry

Cement

Holcim (US), Fremont County. The Portland Plant near Florence is operated by Holcim (US). In 2006. the plant employed about 180 people and produced about 1.6 Mt (1.8 million st) of cement. The majority of its product is used in the metropolitan Denver area and throughout Colorado, although some cement is also distributed to New Mexico. Wyoming. Kansas and Nebraska. Limestone from the Fort Hays Member of the Niobrara Formation of Upper Cretaceous age is mined by Holcim as the principle raw ingredient for its cement. The Codell Sandstone, also Upper Cretaceous age, is mined for use as a silica additive. Most of the company’s gypsum is imported from Oklahoma. Some gypsum is produced as a byproduct of Holcim’s lime calcining plant.

Cemex. Boulder County. Portland and masonry cement are produced at the Cemex Mine and processing plant near Lyons. The plant uses the dry processing method and employs about 100 people. Cement production in 2006 was 417 kt (459,595 st). most of which was used in the Front Range urban corridor. Cement ingredients (limestone and shale) are mined locally from the Niobrara Formation and the overlying Pierre Shale.

GCC Rio Grande, Pueblo County. GCC Rio Grande, a subsidiary of Grupo Cementos de Chihuahua, has been planning and permitting a new cement plant in Pueblo during the past several years. Construction of the plant and mining facilities began in mid-2005 and is continuing at a \good pace. The raw materials storage building and structural framework for the limestone storage dome and pre-heater tower (about 91 m or 300 ft high) have been built. Nearly 100 administrative and plant employees have been hired and are currently undergoing training. No official startup date has been set. The mine and processing plant is expected to produce about 907 kt/a (1 million stpy) of cement. The Fort Hays Member of the Niobrara Formation will be mined for the main cement ingredients.

Coal

During the past five years, coal mines in Colorado have produced more coal than at any time in the state’s history. The Colorado coal industry had its fourth best production year in 2006 as the 10 active coal mines produced a combined 32.2 Mt (35.5 million st) of coal. Employment and sales increased due to rising demand for electrical “steam” coal. Yet, in terms of overall production, the industry has dropped 11 percent since the record high of nearly 36.3 Mt (40 million st) in 2004. This was due to temporary reductions at three mines in the Somerset coal field near Paonia early in 2006 because of difficult mining conditions. These problems have been resolved and now coal production is 40 percent ahead of 2005′s pace. Colorado ranks seventh in coal production nationally.

The average federal mineral lease rate per ton ranged from $25.60 to $27.44 in 2006. Discounting spot price sales (up to $46/t or $42/ st), the estimated value of Colorado coal produced in 2006 was $974 million.

Although slowed early in the year. Colorado coal mines produced an average of 2.7 Mt/m (3 million stpm) after March 2006. Of the total 32.2 Mt (35.5 million st) produced in 2006. 24 Mt (26.6 million st) came from seven underground mines, while 8.1 Mt (8.9 million st) came from three surface mines. Most of the coal mined in Colorado is bituminous (79 percent of production). Only two mines produced subbituminous coal (Trapper and Colowyo mines).

Four Colorado mines set new monthly and/or yearly records in 2006. The Bowie #3 Mine set its annual coal production record in 2006 by producing 4 Mt (4.42 million st). Rio Tinto’s Colowyo Mine in Moffat County set its all-time monthly coal production record in March 2006 by producing 529,126 t (594.275 st). Oxbow Minerals’ Elk Creek Mine in Somerset also set a monthly production record in April 2006 by producing 657.383 t (724,629 st). King Coal in La Plata County also set an all-time monthly coal production record with 45 kt (50,085 st) produced in September 2006, and a new annual production record with 443 kt (487,808 st), King Coal has been mining continuously for more than 71 years and has increased production substantially in the last three years to supply cement plants in the southwestern U.S.

With the prices of coal remaining at a stable but relatively high level, coal exploration was active in 2006. Most of the activity is at existing coal mines drilling in new development areas. Nine exploration permits were filed in 2006 with the Colorado Division of Reclamation, Mining and Safety. Central Appalachian Mining (now Rhino Energy, McClane Canyon Mine) drilled for geotechnical information, Arch-Mountain Coal (West Elk Mine) drilled the Deer Creek shaft exploration project and Bowie Resources conducted the Terror Creek 2-D seismic survey. Oxbow Mining (Elk Creek Mine) filed for a new license to explore the North Elk Creek area. In northwest Colorado, Juniper Coal, a subsidiary of Peabody Energy, continued exploration at the Big Elk property south of Hayden. Colowyo Mine geologists finished their reserve definition drilling program in the Collom lease area.

Reclamation and re-activation work at the New Elk Mine (formerly the Alien Mine) facilities continued in early 2007. New Elk Coal owns the property and dewatered the old mine workings in an attempt to re-open the remaining economic parts of the mine. The company wants to extract additional reserves from the Alien. Apache or Maxwell seams in the Raton Formation.

The Lorencito Canyon Mine, near the New Elk Mine, has been in reclamation status since its closure in 2002. The surface property is owned by several large landowners and operators. They opened discussions in 2006 with the Division of Reclamation. Mining and Safety about reopening the mine, but officially no new applications have been submitted. The high-Btu coal and coking coal of the Raton Mesa coal region is a valuable market commodity that is undervalued in today’s steam coal marketplace.

Peabody Energy, the nation’s largest coal producing company, owns coal reserves south of Hayden (Big Elk lease area) and near Craig (Empire Mines). These reserves will help supply the Hayden power plant after the Twenty mile Mine is depleted in about 10 years. Bowie Resources requested a permit revision for adding 240 hm^sup 2^ (592 acres) at its property as the northern extension of the B-seam mine plan. Arch Coal’s Arc-Land Co. has applied for an exploration notice of intent to explore in the Book Cliffs region.

A conditional-use permit was approved in late February 2007 by the Fremonl County commissioners for the proposed new Northfield coal mine. This underground mine will be located south of Florence near the old Energy Fuels’ Southtield Mine. The mine is proposed to be between 91 and 244 m (300 and 800 ft) deep in a 1.2-to 1.8- (4- to 6-ft-) thick coal bed. Northfield Partners will have to get state approval and permits from the Division of Reclamation, Mining and Safety to explore the Northfield site. The mine will extract coal from the Ocean Wave seam of the Vermejo Formation.

In southwest Colorado, a new portal will be developed 3 km (2 miles) west of the existing King Coal Mine as the new King II Mine. The same upper Menefee coal beds as in the existing King Coal Mine will be mined. The bed thickness varies from 2.4 to 3 m (8 to 10 ft).

Coal distribution

The main transportation method for coal in the West is by rail. The Union Pacific (UP) and the Burlington Northern/Santa Fe (BNSF) railroads transport coal through Colorado.The UP moves most of the coal out of western Colorado through the Moffat Tunnel to customers in the Midwest. BNSF transports Wyoming coal to the Rawhide power plant north of Fort Collins. to power plants along the Front Range and through Denver, Colorado Springs and Pueblo to customers in Texas and the southeastern U.S.

More than 77 percent of all rail shipments originating in Colorado are coal products. More than 51 percent of the rail shipments terminating in Colorado are coal, the single most important rail commodity in the state. Coal rail freight growth is expected to increase nationally. The Colorado railroad infrastructure, while currently supplying mines that are under producing, is inadequate for future growth.

Rail infrastructure in Colorado is a limiting factor for coal production in the stale. In 2006, more than 14 Mt (15.5 million st) of coal was moved from the Somerset coal field to the Denver Front Range metropolitan area and to power plants east of Colorado. Stockpiles at the three North Fork mines were eased by slowdowns at the mines, but in early 2007 stockpiles began increasing again. This is related to the number of coal trains that can move in and out of the one-way valley on the UP Railway. In 2006, more than 25.4 Mt (28 million st) of coal were transported through the Moffat Tunnel between Winter Park and Denver.

In 2006, about one-third of the coal produced in-state was actually consumed in Colorado. Colorado power planls and industrial plants consume coal from Colorado, Wyoming and, to a lesser extent, Pennsylvania. Colorado consumes about half (17.2 Mt or 19 million st average) as much as it produces (34.5 Mt or 38 million st average). As an exporter of compliance coal, Colorado is seen as one of the major important coal suppliers for the country.

Employment

Based on the Colorado Division of Reclamation. Mining and Safety’s monthly listing of coal mining data, the 9 percent increase in employment from December 2005 to December 2006 indicates a growing demand for coal miners in western Colorado. The number of employees at Colorado coal mines is more than 2,200, of which 1,991 are miners.

Coal is the biggest component of Colorado’s mining industry today. This increase in employment comes despite the closing of two mines (Seneca Mines) in 2005 and a production decline in 2006. In 2006, the number of non-union miners in Colorado has increased compared with the number of union miners.

View of the Henderson Mine, Clear Creek County. The headframe for the main shaft is housed in the tall tower in the lower left part of the photo. Red Mountain rises behind the mine. The large “glory hole” ( a sinkhole-like feature above the production area) is to the right of the summit of Red Mountain. (Photo by Jim Cappa, CGS.)

Precambrien metamorphic and granitic rocks are quarried at Aggregate Industries crushed stone operation near the town of Morrison. View is to south (photo courtesy of Aggregate Industries).

J. BURNELL, C. CARROLL and B.L. WIDMANN, member SME, Colorado Geological Survey

Copyright Society for Mining, Metallurgy, and Exploration, Inc. May 2007

(c) 2007 Mining Engineering. Provided by ProQuest Information and Learning. All rights Reserved.