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Core drilling At Fire Creek Silverio Lara knocks ore core out into a tray at American Drilling’s underground platform at Klondex Mines Ltd.’s Fire Creek Project.
Ross Andreson/Mining Quarterly
— INSIDE — BALD MOUNTAIN Looking at future growth — Page 2 ROBINSON MINE Breaking production records — Page 12
PHOENIX MINE Plans to leach copper — Page 22
JERRITT CANYON Mining at SSX-Steer — Page 32
MINING ROCKS Showing Goldstrike to students — Page 51
Employment
Find the job you want — Pages 85-87
MINING QUARTERLY John Pfeifer. . . . . . . . . . . . . . . . . . . . . . . Publisher Adella Harding. . . . . . . . . . . . . . . . . . . . Editor To advertise, call 775-738-3118 Mining Quarterly is published in March,June, September and December by the Elko Daily Free Press (USPS No. 173-4320) at 3720 Idaho Street, Elko, Nevada 89801, by Lee Publications Inc., a subsidiary of Lee Enterprises. Periodical postage paid at the Elko Post Office. For change of address write 3720 Idaho St., Elko NV 89801
Booming industry struggles to find skilled employees ELKO — Mining and drilling compa- recruit workers. The available jobs are attracting nies in Nevada’s gold country continue to search for workers, and mining opera- people from out of the area and out of tions in other states are advertising in the state, so there continues to be a Nevada in hopes of enticing experienced housing shortage in the mining commupeople away from the state in the current nities of Nevada. The price of gold and those jobs attract news coverage from boom. The job openings are a contradiction to out of state, as well. National Public Radio aired a podcast much of the rest of the nation, where in November in which Elko was there are far fewer jobs than described as a “town rolling in people looking for them. money.” Many urban Nevada resiThe reporters also said they dents, however, still don’t grasp found an undercurrent of anxthe significance of jobs in an iety in Elko as the busy miners economic downturn. Instead, feared their jobs wouldn’t last they look at gold mines as the due to the boom-and-bust golden tax egg and hope the nature of mining. mines fork up more tax dollars Mining companies are planfor cash-strapped Nevada. ning, however, to be in Nevada Adella The mining industry says it years to come, especially pays plenty and doesn’t want to Harding for with the price of gold continbe singled out, but the Progressive Leadership Alliance of Nevada uing to shine. For instance, Newmont’s Phoenix plans to push the Nevada Legislature — and then voters — to approve a constitu- Mine’s Copper Leach Project is schedtional change that would do away with uled to have a long life. Barrick’s Bald the 5 percent net proceeds law and let the Mountain Mine is looking at more expansion, and Round Mountain Gold Legislature decide how to tax mining. Corp. is developing Gold Hill and eyeing More on the tax debate is inside. The mining industry also is fighting a a new long-term mining project. Also, Yukon-Nevada Gold Corp.’s proposal at the national level from the Congressional Super Committee. The Jerritt Canyon Mine started mining SSX“Dirt Tax” would be based on the tons of Steer, continues mill improvements and material displaced during mining opera- plans to do open-pit mining at old sites, along with starting a new underground tions. The tax would start at 7.8 cents per ton mine at Starvation Canyon. Quadra FNX Mining is looking at but could be increased later, according to going into the Liberty Pit to extend the the National Mining Association. “It would be devastating,” said Laura life of that mine near Ely, and Klondex Skaer, executive director of the North- Mining’s new Fire Creek underground project could provide years of gold west Mining Association. For those who don’t have the skills yet mining. Nevada Copper is expecting to begin for the mining jobs and students looking at what they want to do when they grad- sinking a shaft soon at its Pumpkin uate, Great Basin College offers courses Hollow Project on the outskirts of Yerto meet the demands of the mines, and ington. Moving away from the traditional mining companies contribute scholarmetals, American Vanadium is planning ships to make it happen An article on one of GBC’s “Mining a vanadium mine in Eureka County that Rocks” tours appears inside this edition. would be one of the first in the world. Stories on these operations also are in Employment agencies also are busy providing temporary help to the mines, this Mining Quarterly. and the Mining Quarterly takes a look at ——————— what they have to say in an article inside Adella Harding is editor of the Mining that follows one appearing a year ago. Quarterly and mining editor for the Elko Another article looks at what Barrick Daily Free Press. Mining news is on the Gold of North America, Newmont elkodaily.com website. Her email Mining Corp. and others are doing to address is aharding@elkodaily.com.
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A 240-ton Komatsu haul truck in the foreground awaits its turn for a load in the Top IBX Pit at Barrick Gold Corp.’s Bald Mountain Mine as a P&H electric shovel scoops material and two haul trucks wait on each side for a load. Ross Andreson Mining Quarterly
Bald looks ahead to new expansion By ADELLA HARDING Mining Quarterly Editor
ELKO — Now that Barrick Gold Corp.’s Bald Mountain Mine is in full swing with completion of a major expansion project, Barrick is planning for the next expansion that will boost Bald’s mine life. This one calls for mining again at Alligator Ridge and Yankee, mines that have been long closed, as well as the closed Casino/Winrock Mine and at assorted pits throughout the 250square-mile property south of Elko in White Pine County. “With the new plan of operations will be another expansion. Almost all of it will be expansion of existing pits and rebuilding infrastructure,” said Bald
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Mountain General Manager Dave McClure. “Bald Mountain will have 20-plus years,” he said. The current expansion that was completed at the end of September and led to a doubling of the workforce and will lead to expected gold production of roughly 200,000 ounces a year will keep Bald Mountain busy for some time. “We’ve pretty much grown to the level we will stay until we’re permitted for the next expansion,” McClure said. And Bald did grow. “We are at 360 employees, about double two years ago,” McClure said. “Production capacity is about two and a half times what it was a year or two ago.” See BARRICK, page 3
Ross Andreson/Mining Quarterly
Bald Mountain Mine General Manager Dave McClure checks out the new process plant at Mooney Basin. One track of tanks is to the left over his head.
Barrick ... Continued from page 2 Barrick reported Bald Mountain produced 26,000 ounces in the third quarter, more than double the 12,000 ounces of production in the third quarter of 2010, and total cash costs were down to $535 per ounce from $704 last year. McClure said production will continue to increase over the next two or
three years and stabilize at roughly 200,000 ounces a year. Next expansion plans Bald Mountain filed the plan of operations for the next expansion with the U.S. Bureau of Land Management’s Ely See BARRICK, page 4
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Barrick ... Continued from page 3 District on Oct. 5, according to Miles Kreidler, mining engineer and mining geologist for the BLM’s Egan Field Office at Ely. The expansion will require an environmental impact statement. “There are two plans, one for the south and one for the north, but it will be one EIS,” Kreidler said. The BLM is estimating the permitting process will be completed with a record of decision in June 2014, he said. The south expansion will include the current Alligator Ridge and Yankee pits that are in reclamation now, as well as the addition of new pits. The north expansion includes Casino/Winrock 10 miles south of the Ruby Marshes and a new pit called Duke. Then there is Red Bird, which is closer to present operations. “Really, there will be 16 deposits mined,” McClure said. A transportation corridor is planned between the north and south areas, but McClure said those working at Alligator Ridge will access that area closer to Ely. That area will have a leach pad, waste dumps, shop, office space and a process plant. “It will be administered as one large mine complex, but operationally it will be almost a separate entity,” he said. USMX Inc. mined Alligator Ridge and Casino/Winrock, but they closed in the early 1990s. Placer Dome acquired the sites to consolidate Bald Mountain. Alligator Ridge is about 12 miles south of the new process plant at Mooney Basin and about 20 miles from the administration offices at Bald. Bald Mountain is a little different than a number of mines that are focused on one large open pit or open pits within a short distance of each other. The many pits are scattered and vary in size from small to quite large. Top Pit, where the action is now and will continue, will be the largest. “Top will be nearly as big in time as Betze-Post,” McClure said, referring to the giant open pit at Barrick’s Goldstrike Mine north of Carlin. “There will be 70 to 80 percent of ore coming from Top for 17 to 18 years,” he said. Mining at Top Pit Now, mining is focused on Top Pit, and McClure said operators are mining See BARRICK, page 10
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ABOVE: Joey Mortensen, a metallurgist at Barrick Gold Corp.’s Bald Mountain Mine, holds a handful of carbon in the new process plant. The big sacks contain carbon. A P&H electric shovel dumps a load of material into a 240-ton Komatsu haul truck in the Phase I area at the Top Pit at Barrick Gold Corp.’s Bald Mountain Mine in November as another truck waits for a load. Ross Andreson Mining Quarterly
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McClure enjoys managing Bald Mountain Mine By ADELLA HARDING Mining Quarterly Editor
ELKO — “This is the best job in the world,” said Dave McClure about his work as general manager of Barrick Gold Corp.’s Bald Mountain Mine south of Elko in White Pine County, a position he has held for the past six years of his 37-year mining career. McClure has been the general manager at Bald during a major expansion project and is on the ground floor of another expansion project that will continue to add mine life to Bald, a plan to mine again at older mines on the property. He also was chosen as the Nevada Mining Association’s general manager of the year and received that honor during the safety awards presentations at the September convention. McClure said he is happy with his present job and prefers the stability to so much travel when he worked as a geologist and later on the corporate side for Barrick. He said he started in the mining field as an exploration geologist in the mid-1970s, working in Washington, Idaho, Montana, Oregon,
California and Nevada. “I actually did that for 10 years before moving to the mine side.” The Idaho native said his first job out of school was uranium exploration “prior to Three Mile Island. Other than the two or three years in uranium, I was in precious metals, working the grassroots stuff to drill rigs, the whole gambit.” McClure said he went to the mine side because he had a young family at the time and wanted to be home more and have more stability. “It was absolutely the right decision,” McClure recalled. His first mining job was with Homestake Mining Co. at the McLaughlin Mine in California beginning in 1985 when the mine was “just starting up.” He stayed there three years. “Then I took a job at the Colosseum Mine operated by Bond International Gold,” McClure said. That mine southwest of Las Vegas in California changed ownership when Lac Minerals Ltd.
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See MCCLURE, page 8
Ross Andreson/Mining Quarterly
Bald Mountain Mine General Manager Dave McClure smiles as he talks about his memories of 37 years in the mining industry.
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McClure ... Continued from page 6 acquired Bond International, and the mine closed in 1993. Bullfrog Mine McClure said he transferred in about 1990 to Lac’s Bullfrog Mine, “where I transitioned from the technical side to the management side.” The Bullfrog Mine near Beatty in southern Nevada started out as a surface mine, but Bullfrog developed an underground mine in about 1995. Barrick acquired Lac Minerals in about 1994, including Bullfrog. “I started out as chief geologist, then mine superintendent, then general manager,” said McClure, who stayed there until the mine’s closure. Mine closures are hard but part of the business, he said. “And then I spent four years in corporation positions with Barrick,” he said, in the procurement and supply chain and then as director of safety and health, working about half that time in Salt Lake City and half in Toronto. He traveled to Barrick operations in South America, Australia and Africa.
“Then, I was very, very glad to get back to the operating side,” McClure said. He went to Barrick’s Goldstrike operations north of Carlin as the underground manager at the Meikle Mine from 2003 to 2006 and was then the open pit manager for a short time until Barrick acquired the Bald Mountain Mine in its acquisition of Placer Dome Inc. “As soon as that occurred, I came here,” McClure said during an interview at the mine. He said Bald Mountain was just adding reserves when he arrived and had just started planning the expansion that started in February 2010, after 42-43 months of a permitting process with the U.S. Bureau of Land Management. “I’ve enjoyed every aspect of my career, but Bullfrog and Bald Mountain are the two places that stand out,” he said. Changes over years McClure has seen a lot of changes in the mining industry in his years in the business, and he said one of those significant changes has been the heightened awareness of safety and health in the workplace.
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“It is really a self awareness of the hazards. Certainly I think you need the basic health and safety systems, but empowering the people to make safety a priority” makes the difference in the long run, McClure said. “Historically, people weren’t encouraged to work safely.” Now, companies make safety a part of their incentive programs, and that helps, he said. “Bald Mountain is like a lot of mines in Nevada that over the course of the last six to eight years have seen a significant progression in safety and health performance,” McClure said. He said similar changes have happened on the environmental stewardship side. “We do things correctly from the environmental standpoint,” McClure said. He said miners don’t want to damage the environment and do more on a daily basis than most do to improve the environment, but it would be better to put the word “pragmatic” in front of environmentalist for miners. The application of technology in the industry has been another change, but he said the industry lagged behind until the last 10 to 15 years when the effort increased to apply advancements to mining, “not just to make it safer but more economical.”
The technology has made a difference for geologists too. “Technology is so much different now when applied to the science of geology. I would have to go retrain. I haven’t lost my love for geology, but it’s just not an area of focus right now,” McClure said. The size of the equipment also has continued to grow. McClure said a big truck was a 100-ton one or 150-ton, certainly not the 400-ton trucks of today. And trucks didn’t have dispatch systems, just radios. Mining also has come under a much higher degree of scrutiny over the years, and the number of stakeholders has increased significantly, “but that’s OK. That’s part of the business now,” he said. The price of gold also has run the gamut over the years McClure has been in mining. He was working in the industry when the price was as low as $250 an ounce and has seen it hit the highs this year of $1,800 an ounce. On the home front, McClure said he first came to Elko to live in 1987, and he enjoys playing golf with his wife, Marcia, and spending time with his daughter and two grandchildren. He also likes to read, especially history, and he said he collects frog figurines as a result of his years at Bullfrog.
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Barrick ... Continued from page 4 roughly 6 million tons a month of ore and waste rock. The ore is placed on a leach pad seven miles from the pit, and the solution from the pad goes to the process plant. The new process plant at Mooney Basin was built as an automated carbonin-column operation that has two carbon trains, although one of them wasn’t yet in use in November. “It can run 10,000 gallons per minute, but is running about 4,000 gpm. We’re building water inventory now,” said metallurgist Joey Mortensen. The current expansion permit includes mining the Numbers pits “probably in 18 months to two years and then Sago. We will just stage the smaller pits to coincide with mining at Top,” McClure said. Bald is at high elevations, with Top at 8,000 feet and the administrative offices, truck shop, assay laboratory and refinery at 6,000 feet, McClure said in November. The mine also is low grade, with an average of 0.02 ounces per ton of gold. “We will see very similar grades at Alligator Ridge. It will be low-grade, run-of-mine heap leach,” he said. “Low-grade deposits are sensitive to the gold price. That’s just the way it is. The cost of mining is to some degree fixed so we have to recover so much gold to cover those costs and investment and make a profit,” McClure said. The gold price is high now, running in the range of $1,600 to $1,800 an ounce. The project completed at the end of September included construction of a new truck shop, expansion of the assay laboratory, construction of the process plant at Mooney Basin and a new fleet. Bald Mountain has 20 new, 240-ton Komatsu haul trucks, as well as older 240-ton Komatsu trucks and 190-ton and 140-ton Caterpillar for a 29-truck fleet. Barrick growth in Nevada Toronto-based Barrick also highlighted future growth in Nevada during its third-quarter earnings report with the Red Hill and Goldrush discoveries near Horse Canyon at the Cortez Mine and extensive exploration at the Turquoise Ridge Mine. Barrick has extended the strike length and intersected ore grades that support an underground mine at Red Hill, the more advanced of the two sites, according to Rob Krcmarov, senior vice
president of global exploration. “It’s looking increasingly like the deposits will merge,” he said of Red Hill and Goldrush. Krcmarov said Barrick continues drilling at the two deposits, and drilling results at Red Hill extended mineralization by 2,000 feet. Results from Goldrush also are positive. Barrick reported 264,000 feet of drilling were planned for this year at Red Hill and Goldrush, and the drilling is 80 percent complete. Barrick will “scope out the extent of the entire system,” Krcmarov said. He said the feasibility study process may begin in 2013, and there will still be an extensive permitting process before Red Hill and Goldrush can become mines. At Turquoise Ridge, drilling is expanding resources, and underground drilling has expanded new high-grade zones, Krcmarov said, with nine drilling rigs in operation on the surface and underground. Barrick is planning a large open pit at Turquoise Ridge, which is 75 percent owned by Barrick and 25 percent by Newmont Mining Corp. Barrick production Barrick’s companywide gold production dipped slightly to 1.93 million ounces in the third quarter, produced at total cash costs of $453 per ounce, compared with 2.06 million ounces in the 2010 quarter at a total cash cost of $403 per ounce, according to the earnings report. “The North American region continued to perform well and on plan,” Barrick President and Chief Executive Officer Aaron Regent said. He reported, however, that both Cortez Hills and Goldstrike in Nevada are in higher strip phases at their open pits, which means lower production. Nevada’s production in the third quarter was 836,000 ounces of gold, down from 929,000 ounces in the 2010 quarter. Cortez in Lander County produced 353,000 ounces of gold in the 2011 quarter at a total cash cost of $230 per ounce, compared with 366,000 ounces in the 2010 quarter at a total cash cost of $210 per ounce. The Goldstrike Mine north of Carlin produced 257,000 ounces in the third quarter at a total cash cost of $516 per ounce, compared with 377,000 ounces at $433 per ounce in the 2010 quarter.
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Ross Andreson/Mining Quarterly
A 240-ton Caterpillar haul truck pauses for a dash of lime on its way to the leach pad in Mooney Basin at Bald Mountain Mine.
Ross Andreson/Mining Quarterly
An Atlas Copco drill works in November on a bench of the Top Pit at the Barrick Gold Corp.’s Bald Mountain Mine in White Pine County. The Round Mountain Mine in Nye County produced 51,000 ounces for Barrick’s 50 percent ownership at a total cash cost of $574 per ounce, compared
with 49,000 ounces at a total cash cost of $686 per ounce last year. Kinross Gold Corp. owns the other 50 percent of Round Mountain and is the operator. Turquoise Ridge produced 35,000 ounces for Barrick’s 75 percent of the operation at a total cash cost of $619 per ounce, compared with 23,000 ounces at a total cash cost of $817 per ounce in the 2010 quarter. Newmont Mining Corp. owns 25 percent. Marigold Mine in Humboldt County produced 13,000 ounces for Barrick’s one-third share at a total cash cost of $716 per ounce, compared with 8,000 ounces at $614 per ounce last year. Goldcorp Inc. owns two-thirds of Marigold and is the operator. Ruby Hill Mine in Eureka County produced 28,000 ounces at a total cash cost of $419 per ounce, compared with 23,000 ounces at $699 per ounce last year. Copper production totaled 140 million pounds in the third quarter at a cash cost of $1.91 per pound, with the addition of 75 million pounds from Lumwana Mine in Zambia, compared with 84 million pounds in the 2010 quarter. Barrick reported the company remains on track for gold production of between 7.6 million and 7.8 million ounces for this year at a cost of between $460 and $475 per ounce. Copper production will be between 450 million and 460 million pounds this year, however, down a bit from the original forecast of 455 million to 475 million pounds at a cash cost of between $1.60 and $1.70 per pound.
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Robinson breaks production records By ADELLA HARDING Mining Quarterly Editor
RUTH — Quadra FNX Mining Ltd.’s new general manager of the Robinson Mine just outside the historic town of Ruth and near Ely is enthusiastic about the mining records at the copper mine and production rates at the mill. “We set production records in September of 284,000 tons in a 24-hour period in the Ruth Pit and the mill, 48,500 tons per day,” said Cary Brunson. “In October, we set another production record of 302,000 tons in a 24-hour period.” The record was broken again in early November, with 312,000 tons mined on Nov. 4 and 400,000 tons on Nov. 5. “In the past two and a half months we’ve just ramped up from averaging under 200,000 tons,” said Brunson, who took over as general manager in late August when Joe Landon retired. Currently, Robinson crews are mining in the Ruth Pit and starting the East Ruth Pit, which will share a high wall with Ruth, but Quadra FNX also is looking to mine again at the Liberty Pit. “We’ve done extensive exploration at Liberty. We’re hoping to see an addition to the mine life with it. Our goal is to extend the life past 2021. It’s now at 2016,” said Brunson, who has been back at Robinson since July 2004 after earlier working for Magma Copper and then BHP at Robinson from 1995 to 1999. Quadra FNX reported in November in its third-quarter earnings report that a new Liberty resource estimate is expected by the end of this year. Liberty is located between the TrippVeteran Pit that Robinson finished mining last year and the Ruth Pit. All of the pits have been mined in the past on the site where Kennecott started large-scale mining, for the times, in 1908. Brunson attributed about 20 percent of the recent higher mining rate to the addition of five 240-ton Komatsu haul trucks that had been at Quadra FNX’s Carlota copper mine in Arizona. Mud removal at the bottom of the Ruth Pit also helped, as did completion of a secondary ramp out of the pit. Better utilization of mining equipment to shorten waiting times for trucks at the shovels also makes a difference, Brunson said. Wait times have been trimmed from See ROBINSON, page 14
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ABOVE: Loaded Caterpillar haul trucks climb the grade leaving the Ruth Pit in November at Quadra FNX Mining Ltd.’s Robinson Mine in White Pine County. LEFT: Cary Brunson, left, general manager of the Robinson Nevada Mining Co., talks in November with dispatcher Michael Barragan in the mill. Ross Andreson Mining Quarterly
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Robinson ... Continued from page 12 seven minutes to two minutes, on average. The trucks also are taking tighter turns to boost efficiency, according to production analyst Latham Hendrix, who has been at Robinson since 2007, when he changed careers from retail management. “It’s the little things you don’t think will make a difference,” he said on a tour of the Ruth area, where he said his grandfather, Jack Hendrix, once mined underground. The Robinson Mine also had to work through slope stability issues earlier this year, which affected mining rates. Dewatering helped with the stability, Brunson said. Robinson dewaters about 14,000 gallons per minute to keep Ruth dry and uses most of the water on site. “To sum it all up, it’s success through team work,” Brunson said. “We expect it to be better next year, absolutely.” Production totals Vancouver-based Quadra FNX reported Robinson produced 26.7 million Ross Andreson/Mining Quarterly
Kristyna Fairley of Ely puts a sample tray in the oven in November in the metallurgy laboratory at Quadra FNX Mining Ltd.’s Robinson Mine.
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See ROBINSON, page 15
Robinson ... Robert Thompson drops a cup of slurry into a bucket in November to check density in the mill at Quadra FNX Mining Ltd.’s Robinson copper mine. Ross Andreson Mining Quarterly
Continued from page 14 pounds of copper and 9,200 ounces of gold in the third quarter, compared with 25.4 million pounds of copper and 15,300 ounces of gold in the 2010 quarter. Production rose as Robinson crews mined higher grades at the bottom of Ruth, according to Quadra FNX. The cash cost per pound of copper produced was $2.13 in the 2011 quarter, up from $1.66 in the 2010 quarter, according to the earnings report. Brunson said Robinson expects to produce 35,000 ounces of gold for the year and 100 million pounds of copper. Robinson also produces molybdenum as a byproduct, and Brunson said Robinson expects to produce 745,000 pounds of molybdenum this year. “We’re actually doing pretty well on moly,” he said. “Moly flows with copper. If it is 0.2 percent or higher we separate it,” said Tom Bender, the mill manager at Robinson. Arlo Lott Trucking hauls the copper concentrate to Quadra FNX’s railport in Wendover, Utah, where it is put on train cars for shipment to Vancouver, Wash. There it goes on ships to be smelted overseas. Brunson said roughly two dozen truckloads of concentrate leave Robinson a day, operating 24 hours a day seven days a week. Ten-12 people work for Quadra FNX See ROBINSON, page 16
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Robinson ... Continued from page 15 at Wendover, where they load each unit train with 12,000 tons of copper. Robinson employment Quadra FNX employs 600 people at Robinson, and there are roughly 100 contractors on site, Brunson said. Robinson faces the same dilemma as most other mines in the West, however. “It’s hard to find seasoned mining engineers, metallurgists and geologists,” Brunson said. “We have several openings on the professional side and for maintenance people.” The housing shortage in Nevada mining communities is also a problem for Robinson. “When we try to bring people in, and they start looking, it’s discouraging,” Brunson said. Quadra FNX is building four modular houses in Ruth now and has 10-12 studio apartments in Ely, he said, and plans to build a daycare center in Ely that will be free to employees as an added incentive. Ross Andreson/Mining Quarterly
The SAG mill at right and ball mills are turning at Quadra FNX Mining Ltd.’s Robinson Mine mill near Ely.
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See ROBINSON, page 17
Robinson ... Continued from page 16 The Robinson fleet now includes 29 haul trucks, including 18 240-ton Caterpillar and five 240-ton Komatsu haul trucks and six 150-ton Caterpillar trucks, a Bucyrus electric shovel, two LeTourneau loaders and a P&H electric shovel that is being rebuilt. “It will be back in operation before the first of December,” Hendrix said. Exploration continues on the Robinson site, and Brunson said corporate geologists believe there may be potential for a super pit since all the deposits are basically in a line. Two exploration drilling rigs were on site in November. Safety is a sharpened focus at Robinson after the U.S. Mine Safety and Health Administration did a special impact inspection in September that resulted in 34 citations. “One of my biggest objectives is to change the way we think of safety. We want to be proactive. We’re going to do it because it is the right thing to do. We
Greg Adams, who came to Quadra FNX Mining Ltd.’s Robinson Mine from the company’s Carlota Mine in Arizona, stands next to a LeTourneau loader in the truck shop. He said he works on Komatsu electric-drive trucks. Ross Andreson Mining Quarterly
See ROBINSON, page 18
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Robinson ... Continued from page 17 want to take care of employees, not because MSHA gives us citations. If MSHA gives a citation, we deserve it,” Brunson said. He said Robinson corrected all the areas cited in the inspection. “We want to be seen as the safest mine in Nevada,” Brunson said. Quadra FNX focus Robinson is one of Quadra FNX’s major copper producers, and Quadra FNX’s president and chief executive officer, Paul Blythe, said in the thirdquarter earnings report that the company will be focusing on Robinson and the Morrison operations in Canada. He said the company decided the best way to profit maximum net asset value and free cash flow is to optimize opportunities at the two flagship operations that together contribute 85 percent of operating income. “We have reviewed our other assets and have concluded that, on a risk Ross Andreson/Mining Quarterly
See ROBINSON, page 19
A Bucyrus electric shovel loads a 240-ton Caterpillar haul truck in the new East Ruth Pit in November at the Robinson Mine.
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Robinson ... Continued from page 18 adjusted basis, we should wind down Carlota and Podolsky. We have also made significant changes to the mine plan for Franke, which will be focused on the China Pit that is expected to have lower acid consumption rates,� Blythe said in the earnings report. Quadra FNX said in the earnings report that due to limited exploration success at Podolsky in Ontario this year, production is expected to cease once the 2000 Deposit is depleted in late 2012. At Carlota at Globe Miami, Ariz., the new life-of-mine plan will focus on mining readily available oxide copper ore followed by residual leaching, according to the report. The company will continue to evaluate the leaching of sulfide ore and the Edgar Deposit, however. The company reported Carlota continued with staff reductions and additional measures to reduce costs during the third quarter in line with the new plan to keep a positive cash flow over the next several years. The five haul trucks that came to Robinson from Arizona were part of downsizing at Carlota, and some em-
ployees from there transferred to Robinson. Quadra FNX earnings Also in the quarterly report, Quadra FNX provided an update in its thirdquarter earnings report on the outlook for the copper market, stating that it believes the copper market fundamentals will remain strong because of future demand and short supplies, but there may be short-term price drops because of the slower economies in Europe and parts of China. Prices fell 25 percent in September to a 15-month low of roughly $3 per pound due mainly to uncertainty in the European markets, but the price for the quarter averaged $4.07 per pound. The copper price was heading back up after the quarter ended, with the average price at $3.40-$3.50 per pound in midNovember. Quadra FNX reported net earnings were up more than 600 percent to $142.8 million in the third quarter while adjusted earnings totaled $52 million, or See ROBINSON, page 20
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LEFT: Latham Hendrix of Lund, production analyst, talks about mining in the Ruth Pit and the new Ruth East Pit. RIGHT: Sarah Roman-Marquez of Ely checks the controls at the operating station for the filter plant in the mill at the Robinson Mine. The plant takes the moisture out of the copper concentrate to 6-9 percent. “This is the very end of the process,� said Tom Bender, the mill manager. Ross Andreson Mining Quarterly
Robinson ... Continued from page 19 27 cents per share, in the quarter, compared with $35 million, or 18 cents per share, in the 2010 quarter. Vancouver-based Quadra FNX reported the earnings of $143 million, or 75 cents per share, compared with $19.5
million, or 10 cents per share, last year mainly due to non-cash adjustments for Sierra Gorda in Chile, Carlota and Podolsky. The adjusted earnings of $52 million included a $293 million gain on a joint venture with Sumitomo for the Sierra
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Gorda Project, partially offset by $238 in impairments and inventory adjustments. Revenue was up 26 percent to $326 million in the third quarter, according to the report. Total production in the quarter included 60 million pounds of copper
and 27,000 ounces of precious metals, compared with 57 million pounds of copper and 31,800 ounces of precious metals in the third quarter of last year. The company also produced 3 million pounds of nickel in the third quarter at its Canadian operations.
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PHOENIX Mine busy with new projects By ADELLA HARDING Mining Quarterly Editor
Ross Andreson/Mining Quarterly
Don Anderson dispatches haul trucks at Newmont Mining Corp.’s Phoenix Mine near Battle Mountain from a control room in the administration building. Phoenix uses the MineStar dispatch system. The yellow spot on the top screen at left is the shovel also shown on camera at bottom left in the Glory Hill Pit.
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BATTLE MOUNTAIN — Turning what had been waste rock into copper production is just down the road for Newmont Mining Corp.’s Phoenix Mine south of Battle Mountain. “Turning waste into ore provides additional jobs in Lander County,” said Phoenix General Manager Joel Lenz. The U.S. Bureau of Land Management’s Battle Mountain District recently released the draft supplemental environmental impact statement for the Copper Leach Project and is taking public comment through Dec. 12. “I’m confident we will gain regulatory approval. The project is designed to the highest standards. This is a great project,” Lenz said. “We will begin construction as soon as we have the record of decision, sometime in 2012, hopefully sooner rather than later,” he said. Actually, construction of the leach pad for the project is under way under an earlier permit for a leach pad, but See PHOENIX, page 23
Phoenix ... Continued from page 22 Phoenix can’t put ore on the pad until BLM approval. The first 20-foot lift for the leach pad had BLM approval back in 2002, said Dave Davis, team leader for the Phoenix Project for the BLM. Starting the pad work in the late summer allowed Phoenix to take advantage of the weather, Lenz said. Construction of a processing plant for the leached copper also has to wait. Plans call for the processing plant to be completed and in production in 2013. “It will be a relatively small plant, about the size of a football field,” Lenz said. The liner work that was nearing completion in November for the pad covers 9 million square feet, but the next two phases will more than double that size, he said. Ames Construction is the lead contractor for the leach pad. Lenz said engineering for the project was nearing completion in November, See PHOENIX, page 24
Ross Andreson/Mining Quarterly
Mining equipment keeps busy in the F5 phase of the Fortitude Pit in November at Newmont Mining Corp.’s Phoenix Mine in Lander County.
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Phoenix ... Continued from page 23 and Newmont is placing orders for equipment for the project. The Copper Leach Project had been on the drawing board for some time, and Lenz said release of the draft EIS was a milestone.
Ross Andreson/Mining Quarterly
Joe Lenz, general manager of Newmont Mining Corp.’s Phoenix Mine near Battle Mountain, explains what Newmont plans at the new copper leach area on the mine site.
Workforce of 250 Once construction begins, there will be a peak workforce of 250 contractors, and the project will create 50 permanent jobs to add to the 450 employees now working at the gold and copper mine that has a mine life of more than 20 years, he said in a November interview. “We’re in our fifth year of operation and continue to extend the mine life and replace reserves,” he said. Lander County Commissioners voted in November to send a letter of support for the project to the BLM because of the economic benefits to the county. “In the first five years, we will produce 20 million pounds of copper per year,” Lenz said.
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According to the BLM study, Newmont would recover roughly 245 million pounds of copper through the project over the years. Along with the work on the leach pad, Phoenix has contractors on site for a processing expansion that involves adding new secondary crushers “to improve our ability to handle the hard rock at Phoenix,” Lenz said. Phoenix also will be adding flotation cells at the mill to improve processing. “We’ve got a lot going on,” Lenz said. Work at the mill includes adding more flotation cells, as well as the crushers. Schmueser & Associates was pouring the foundations for the crushers in November, but Lenz said Newmont hadn’t awarded a contract yet for the flotation cells. They will probably be awarded in December, he said. The work should be completed by the middle of next year. Lenz said the new cells will be tied in during routine mill maintenance.
The project that includes the new flotation cells, a small building to house the cells and the secondary crushers will cost about $75 million, he said. Another Phoenix project under way is the Phase 6 expansion of the tails embankment, and N.A. Degerstrom is the contractor on that project. Lenz estimated there were 150 contractors on site in November for the tails pond work, crusher expansion and the copper leach pad. Mining at Fortitude Meanwhile, the mining at Phoenix is at the Fortitude Pit, in different phases, and at the Glory Hill Pit and at the Bonanza Pit. “But most of the production now is in the Fortitude Pit. It’s all one big high wall and layback,” Lenz said. The material with copper ore mined from the open pits is stockpiled in a special area of a waste dump until the ore can be put on the leach pad, but See PHOENIX, page 25
Phoenix ... Continued from page 24 earlier that lower grade copper ore was considered waste. The new plant for the leached copper will be near the current mill, but separate. This plant will be a copper solvent extractionelectrowinning facility that will produce sheets of 99.9 percent copper, Lenz said. The sheets that will be between a half inch and quarter inch thick and 3-feet-by-3 feet will be shipped by truck or train for sale to a copper trader. The copper concentrate from the current Phoenix operations goes by train to the Estrada smelter in Quebec. Despite all the copper mined, Phoenix is a gold mine and copper is a byproduct. “When you look at gold production, twothirds goes with the copper concentrate and one-third ends up as doré bars,” Lenz said. Although Phoenix expects to basically double copper production with the Copper Leach Project, copper has a lower value than gold and silver, and gold will still provide 85 percent of Phoenix’s revenue. “We produce more copper, but the value See PHOENIX, page 27
Ross Andreson/Mining Quarterly
Blast-hole drills work in the F4 phase of the Fortitude Pit in November. Snow is visible in spots.
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26 MINING QUARTERLY, Elko, Nevada WINTER 2011
Phoenix ... Continued from page 25 of the gold is much higher. Copper really matters too,” Lenz said. Gold has been selling for roughly $1,700 to $1,800 an ounce, sometimes dropping below $1,700, while copper has been selling at roughly $3.50 a pound, after slipping from more than $4 a pound earlier this year. Silver is in the range of $30-$40 an ounce. Land disturbance According to the draft supplemental EIS, the Copper Leach Project will disturb 902 acres of public and private land. “A lot of that has been disturbed,” said Davis. The Copper Leach Project pad is in an area that hadn’t been disturbed before 2005 but was disturbed later with the collection of alluvial materials for reclamation, Lenz said. The area where the plant will be built is in an area disturbed before Newmont acquired the Phoenix property when it acquired Battle Mountain Gold Co. in 2001, he said. Because the project is “such a low-
profile project,” the BLM decided not to schedule the traditional open houses on the draft supplemental EIS unless there are requests, Davis said. The main focus of concern for the project was over long-term issues and closure of the copper leach pad, according to Davis. “It was one of the big driving issues, the closure of leach pads,” he said when the study was released. Phoenix will use sulfuric acid to leach the copper, and Lenz said the leaching will all be contained. The pad is lined with plastic and crushed rock. “We put a lot of effort into addressing those concerns, and we worked closely with the BLM. Closure was what took the most time,” Lenz said. The sulfuric acid solution is diluted to pH 1.9 and then goes through the rock leaching out the copper minerals. The solution will then go to the process plant, where a solvent extraction process that mixes the copper-bearing solution with a kerosene base will produce a concentrated copper solution. The copper will be stripped out in an electrolyte solution
Ross Andreson/Mining Quarterly
An Hitachi hydraulic shovel dumps a load into the bed of a 240-ton Caterpillar haul truck in the F5 phase of the Fortitude Pit at Newmont Mining Corp.’s Phoenix Mine in Lander County. All the trucks have safety slogans. and then goes back to electrowinning cells, according to Lenz. The kerosene solution will be recirculated. This system has been in use since the mid-1970s, starting in Arizona, and it
was used at Copper Basin at the Phoenix property from 1979 through 1984, when Duval was processing copper at the site. “I worked there from 1981 to 1984,” See PHOENIX, 28
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Phoenix ... Continued from page 27 Lenz said. He was the plant metallurgist. Exploration also continues at Phoenix and Copper Basin to build resources and reserves, and Lenz said there were three drill rigs operating in November. Lone Tree production Lenz also oversees the Lone Tree Mine near Valmy, where mining ended in late 2005 but a rehandle leach project is under way there. “We’ve actually expanded the system, and we’re putting in a new pad. “It’s becoming a nice little operation for us,” Lenz said. The leaching is producing gold. Newmont continues to add lime to the pit lake formed at Lone Tree when mining ended to reduce the pH of the lake, he also said. The current mining fleet at Phoenix includes 16 trucks, but Lenz said two more trucks will be added by January. The current fleet is made up of 250-ton Caterpillar haul trucks, and the two to be added are rebuilt 190-ton trucks. Phoenix earlier tested a prototype 350-
ton Caterpillar electric diesel haul truck and is still evaluating the data, but “operators really liked that truck,” Lenz said. Steve Johnson, mine manager at Phoenix, said the dispatching system for the trucks is now in the administration building, rather than above the pits, but there are cameras throughout the mining areas for the dispatcher to track trucks. Nevada projects Along with the Copper Leach Project at Phoenix, Newmont is continuing construction work for the new Emigrant Mine south of Carlin. Production is expected from Emigrant in mid-2012. Newmont President and Chief Executive Officer Richard O’Brien also reported in the company’s third-quarter earnings teleconference that stripping has started on the new Vista 7 Project at the Twin Creeks Mine in Humboldt County. Newmont also continues exploration and planning for a mine at Long Canyon in Elko County.
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Ross Andreson/Mining Quarterly
Trucks are carrying overliner material to put on the new copper leach pad at Newmont Mining Corp.’s Phoenix Mine in Lander County. Ames Construction is the contractor for the project. O’Brien said Newmont is looking at filing a mining plan of operations for Long Canyon in mid-2012, which would trigger permitting efforts with the BLM and state. Gold production from Nevada opera-
tions in the third quarter totaled 428,000 ounces, produced at a cost attributable to sales of $641 per ounce in the third quarter, down 6 percent from the 2010 See PHOENIX, 29
Phoenix ... Continued from page 28 quarter due to lower mill grade ore processed, partially offset by higher leach placement and recoveries, according to the earnings report. Newmont reduced production expectations from Nevada operations for the year to between 1.7 million and 1.8 million ounces because of lower grades at Gold Quarry north of Carlin due to sequencing, lower tonnage and grades from the new Exodus underground mine north of Carlin and the temporary lack of access to the Chukar underground mine at Gold Quarry. Chukar access has been restored. O’Brien said, however, that the company expects a strong fourth quarter in Nevada, with more ore coming from the Pete Bajo underground mine north of Carlin, Exodus, Chukar and Gold Quarry. Newmont production Companywide, Colorado-based Newmont still expects to meet its guidance for gold production for the year of between 5.1 million and 5.3 million
ounces at a cash cost of $560 to $590 per ounce on a co-product basis. Newmont’s gold production was down 7 percent in the third quarter to 1.3 million ounces, compared with 1.4 million in the 2010 quarter, according to the earnings report. Copper production dropped 30 percent to 58 million pounds from 83 million pounds. Newmont’s realized copper price was down 20 percent to $2.94 per pound. Costs applicable to sales were $622 per ounce for gold and $1.10 per pound for copper. For the third quarter, Newmont’s adjusted net income was up 19 percent with help from high gold prices, but the company’s net income from continuing operations fell 8.2 percent because of writedowns. The company’s adjusted net income was $635 million, or $1.29 cents per share, up from $533 million, or $1.08 per share, for the 2010 quarter, but earnings with the impairment charges totaled $493 million, or $1 per share, compared with $537 million, or $1.09 per share, last year.
Ross Andreson/Mining Quarterly
Schmueser & Associates Inc. is constructing the foundation on a late afternoon in November for a secondary crusher at Newmont Mining Corp.’s Phoenix Mine near Battle Mountain. Newmont took $142 million in charges, mostly related to acquisition of Fronteer Gold in April based on a decline in value of shares of Pilot Gold Inc. and Paladin Energy Ltd. Pilot Gold was spun off from Fronteer in the deal and Paladin came with Fronteer.
Newmont said Paladin lost value after the nuclear crisis in Japan because it is a uranium producer. Newmont’s key reason for acquiring Fronteer was the Long Canyon Project. Newmont’s revenue was up nearly 6 percent to $2.7 billion for the quarter.
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VIEWPOINT
Precious metal still ‘The Golden Constant’ By JOHN L. DOBRA
be said about the power of compound interest! A big issue is being made today in In 1977, Roy Jastram published TV and print commercials about “The Golden Constant,” which investing in gold. I'm not discourshowed that, since the early 1700s, aging gold investment — there is the gold has maintained its purchasing “Golden Constant” to consider. But power. That is, to put in the simplest you also have to consider terms, an ounce of gold has the power of compound been able to purchase a interest. Gold is a safe dinner for two in a good investment in the long run, restaurant in New York or but so is bomb shelter in London, or a high quality your basement. The real man’s suit. question is how much do History is a bit more you want to spend on the complicated than that but bomb shelter? Jastram had a point. Gold Individual investors like has also maintained its you and me should want to value more than most major diversify our investments, commodities. and gold is a good way to do John Dobra A couple of weeks ago, I that for your 401(k) or was talking to my principles of ecowhatever retirement plan you have. nomics class about inflation and Gold is a good defensive investment showed them the U.S. Bureau of Labor Statistics’ inflation calculator because of the “Golden Constant,” but as the numbers should show you, (http://www.bls.gov/data/inflait’s not going to make you rich. It tion_calculator.htm). I used gold will save your money in a meltdown prices as an example. — but I'm not predicting that. In 1980, the price of gold hit $852 For your information, I do not own — it closed at that on a Friday and opened there on the next Monday. In gold except jewelry (mainly my wife’s) — some of which is bullion inflation adjusted terms, the 1980 jewelry (a better purchase than the peak price is equivalent to $2,346 14 carat stuff). A significant part of today, considerably above the Nov. my income comes from the gold 13 price of $1,773 and the 2011 high industry, so I see no point in going in of $1,895. deeper. I diversify and invest in Both of the prices for this year are bonds. London PM fixes, which are always I also own some gold stocks, and below the futures prices that get I’ve done very well at that, thanks to quoted widely in most media outNevada miners. Gold stocks, espelets. cially small company stocks, have The average price for 1980 was the greatest leverage to the gold around $610. In today’s dollars, price. That has an upside and a that’s the equivalent of $1,680. Not downside, so you have to do your much different than today’s price. homework. On the other hand, if you had invested your ounce of gold, worth ——————— $852 in 1980, in the S&P 500, you Dr. John Dobra is the director of would have earned an average return the Natural Resource Industry of about 7 percent, and today you Institute and an associate professor would have $6,940. So, there is lot of economics at the University of to be said about the “Golden Nevada, Reno. Constant” — but there is also a lot to
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Jerritt Canyon ramping up at SSX-Steer By ADELLA HARDING Mining Quarterly Editor
ELKO — Yukon-Nevada Gold Corp.’s Jerritt Canyon Mine north of Elko continues on a growth path that already has added ore production at the SSX-Steer Mine and aims for new surface mining, as well as development of the Starvation Canyon underground project. “At SSX, we’re getting ore now but still ramping it up,” said Yukon-Nevada Chief Operations Officer Randy Reichert. Jerritt Canyon will be getting deliveries into January to build the mining fleet at SSX-Steer so the underground mining will increase as more equipment arrives on site, he said in November. Yukon-Nevada also is working on engineering and establishing the gold resources at Burns Basin and for the Saval and Pie Creek pits, where the company hopes to mine again. Reichert said the company has identified a push back and possible deepening at the Burns Basin Pit and would be seeking new permits to mine there. Jerritt Canyon has been strictly underground for a number of years, but the large claim block includes a number of pits that Yukon-Nevada is looking at mining See JERRITT, 33
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Arnold Romero of Elko drives a new 30-ton Sandvik haul truck out of the portal at the Jerritt Canyon Mine’s SSX-Steer underground operation on Oct. 3, the first official mining day at SSX-Steer. Adella Harding Mining Quarterly
Yukon-Nevada Gold Corp.
Construction continues on mill improvements at Yukon-Nevada Gold Corp.’s Jerritt Canyon Mine north of Elko. This view shows the baghouse and gas scrubbing for it.
Jerritt ... Continued from page 32 again, especially now that the gold price is high. Reichert said the resource identified at Burns Basin at a gold price of $1,400 an ounce already has nearly doubled with the price in the range of $1,700 an ounce. Along with the new mining at the SSXSteer operation, mining continues at the Smith Mine, where Small Mine Development is the operator and is back up to producing 1,000 tons of ore a day. Starvation Canyon at the south end of the Jerritt Canyon property will be an underground mine, and one of the first steps is building a new road from the Tuscarora Road to the site. “It would have been nice to get a road to the site this fall, but it was delayed,” Reichert said. Starvation is on private property, and Jerritt Canyon has the state permits in place for mine development. Yukon-Nevada said current plans are to begin development work at Starvation Canyon in the third quarter of next year, with production to begin in January 2013. Gold production Jerritt Canyon already is producing gold from the Smith underground mine that Small Mine Development operates and from ore stockpiles, as well purchased ore from Newmont Mining Corp. Yukon-Nevada reported Jerritt Canyon shipped 21,296 ounces of gold in the
third quarter from purchased ore, stockpiles and mining operations, compared with production of 17,202 ounces in the 2010 quarter. The purchased ore from Newmont Mining Corp. totaled 90,911 wet tons in the quarter containing 9,835 ounces of gold at an average cost per wet ton of $115, according to the report. Production from the Smith Mine totaled 14,893 ounces from 87,330 tons that contractor Small Mine Development delivered to the mill during the 2011 quarter at an average cost of $645 per ounce, Yukon-Nevada reported. The company stated that production in the 2011 quarter would have been higher except for rolling shutdowns at the mill during winterization upgrades and for repairs. Yukon-Nevada expects production to be down in this quarter because of a planned overhaul at the mill at the end of November, when repairs will be done and the new winterization system brought on line. “Due to dryer manufacturing delays, that’s put us out to shutting down at the end of November. We’ve got quite a bit to do,” Reichert said. The Jerritt Canyon mill-roaster facility will have the ore-drying system at the beginning of the cycle instead of later as part of the winterization, and the conveyor system has to be changed for fine See JERRITT, 34
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Jerritt ... Continued from page 33 crushing as part of the update. A new direct-control system also will be installed in the mill. “It’s a high level of automation,” Jerritt Canyon General Manager Guy Simpson said in November. Reichert said the upgrades will allow for more efficient mill operations in the winter months, and the new automation will make the mill more efficient. Construction work Contractors also are busy on site working on upgrades at the mill and completing the new tailings dam and water storage facilities. VT Construction is the contractor working on the dam and water storage facilities. The Jerritt Canyon complex also continues to add employees. Simpson said in November there were 250 employees, and SMD has 40 to 50 workers at Smith. He said earlier the goal is to have 300 workers by the second quarter of 2012. Mine Manager Mike Armuth has been “very successful recruiting. A bunch of people have come back. People enjoy
Jerritt Canyon,” Simpson said in October. “It’s a bit of a family.” He also said the company is looking at the housing situation in Elko and how to find housing for new workers, while also planning to go to job fairs in about four states. “We need miners, mechanics and electricians,” Armuth said. At SSX-Steer, mining officially began on Oct. 3. “There was a huge amount of work to get us where we are today,” Armuth said at the time. Mining ended at SSX-Steer in August 2008 when Yukon-Nevada shut down Jerritt Canyon due to financial troubles, but the mine now has new equipment and will continue to boost production as more equipment arrives and more miners and mechanics are hired. “The consensus in the past was a lack of belief in our ability, but that’s not the case. We’ve got strong technical, supervisory and operating teams. It’s very exciting,” Simpson said on opening day.
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See JERRITT, 35
Adella Harding/Mining Quarterly
Ken Hirst, left, senior miner, talks with Toby Alt, who provides surface support for the SSX-Steer underground operations at the Jerritt Canyon Mine north of Elko as they stand in front of the backfill plant used for SSX-Steer.
Adella Harding/Mining Quarterly
Yukon-Nevada Gold Corp. has new mining equipment for the SSX-Steer underground operation at the Jerritt Canyon Mine north of Elko. The equipment includes a Normet transmixer truck and shotcrete gear, a Caterpillar loader and a rebuilt Sandvik jumbo drill.
Jerritt ... Continued from page 34 “We fired the first ore blast on Thursday, and we’re mucking and trucking today.” “SSX is the second mine at Jerritt Canyon to be put back into production on schedule and on budget. Our technical and operating teams are doing an exem-
plary job restarting the mines, proving that Yukon-Nevada has the team in place to advance production,” Yukon-Nevada President and Chief Executive Officer Robert Baldock said in an announcement See JERRITT, 36
Adella Harding/Mining Quarterly
Doug Sanchez, left, of Spring Creek, shop supervisor at Jerritt Canyon’s SSX-Steer operations, talks on Oct. 3 with mechanic David Beaudoin of Wildhorse about the new Rolbott bolting carousel they mounted onto an older Tamrock bolter chassis.
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Jerritt ... Continued from page 35 for the first day of mining at SSX-Steer. Plans call for mining 400 tons of ore a day in the beginning at SSXSteer and ramping up to 800 tons in the first quarter of next year and to 1,200 tons per day in the second quarter, Simpson said. “I’m pretty confident we can beat that,” he said during a drive to the SSX site. Jerritt Canyon started the SSX portal in 1996, and the Steer portal and facilities at that end were added later. The two are connected underground, and the latest figures show there are 229,200 ounces of gold reserves there. Armuth said the mining now is at the Steer side, but Jerritt Canyon is using the SSX facilities for the start-up because of more complete infrastructure, including a backfill plant that was ready to go, after repairs and installation of a new computer and software. There also is an orebody at SSX to develop later. Work started with a 30-ton Sandvik haul truck, a new Caterpillar loader with a 6-cubic-yard bucket, new Normet transmixer truck and sprayer, as well as a rebuilt jumbo driller, but Simpson said two jumbo drills are arriving in December, and there are orders out for three Sandvik loaders and three Sandvik trucks. Armuth also said one new Atlas Copco jumbo drill is coming Dec. 5 and another one Jan. 7, and an Atlas Copco bolter was due to arrive Nov. 15. Exploration continues on site. Yukon-Nevada reported reverse circulation rigs mobilized to begin drilling at West Generator, Saval and See JERRITT, 37
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Adella Harding/Mining Quarterly
Mike Armuth, left, mining manager at Jerritt Canyon, driver Arnold Romero and General Manager Guy Simpson chat on Oct. 3, the first official day of mining at the SSX-Steer underground mine. Romero is driving a new 30-ton Sandvik haul truck.
Jerritt ... Continued from page 36 East Dash, and a diamond drill was mobilized to drill at Starvation Canyon. Earnings report Yukon-Nevada Gold Corp. reported a net loss of $18 million in the third quarter, compared with a net loss of $103.8 million in third quarter of last year. The net loss for the third quarter of 2011 was due to a loss from operations of $11.2 million, $3.7 million in finance and transaction costs and an $11.4 million loss on derivatives offset by an $8.5 million gain in fair value of warrants recorded as derivative liabilities, according to the earnings report. Yukon-Nevada stated it closed a $120 million forward gold purchase agreement in the third quarter with Deutsche Bank AG for the delivery of 173,880 ounces over a four-year period beginning on Sept. 30. Proceeds from the agreement are mainly for improvement projects at Jerritt Canyon and for new mining projects, Yukon-Nevada reported.
Yukon-Nevada Gold Corp.
This aerial view taken on Oct. 28 shows construction of the new tailings storage facility at Yukon-Nevada Gold Corp.’s Jerritt Canyon Mine north of Elko. In the foreground are two new water storage reservoirs and in the back is the tailings storage.
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38 MINING QUARTERLY, Elko, Nevada WINTER 2011
Streamlining permit times gains steam in Washington By ADELLA HARDING Mining Quarterly Editor
ELKO — The mining industry is getting help with its efforts to reduce permitting times for its projects for job creation, and the Nevada mining industry is promoting the economic benefits it brings to the state. Sen. Dean Heller, R-Nev., proposed a bill that would force the U.S. Bureau of Land Management and Interior Department in Washington to spend no more than 45 days on project proposals before publishing them in the Federal Register. The 45-day limit applies after the state BLM offices send proposals to Washington. “Nevada is fortunate to have resources in our own backyard that can provide job opportunities, but job creators need access to them. By shortening the time the Department of Interior has to complete certain administrative reviews, we can reduce red tape in the permitting process and help new projects move forward in a responsible manner,” Heller said. U.S. Rep. Mark Amodei, R-Nev., said in Elko in November that streamlining permitting times is one of his priorities. He is a former president of the Nevada Mining Association. Nevada Gov. Brian Sandoval wrote to President Barack Obama calling for faster permit times for mining projects that would provide jobs for struggling Nevada. On the promotion side, the Nevada Mining Association started a statewide campaign in September. “We’re using television to show our side, primarily in Clark and Washoe counties,” said Nevada Mining Association President Tim Crowley. He said the advertising campaign called “Mining for Nevada’s Future” also features billboards, banner ads online and newspaper advertising, and the feedback has been positive. “We just think there is a need. We haven’t done a good enough job of making people aware of how we have evolved and grown and what are contributions are to society,” Crowley said. “The main concern is economic development, and we have such a grand story to tell,” he said. Crowley pointed to the economic ben-
efits when Coeur d’Alene Mines Corp. restarted mining at the Rochester silver mine in Pershing County that provided new jobs and more business for suppliers. Crowley said mining isn’t even close to filling in the gaps left with the downturn of the gaming and construction industries in the state, but “it’s certainly been helpful.” The industry has hundreds of jobs available, and the industry “is working very hard to find people to put in those spots,” Crowley said. He said the association started working on the campaign before the Progressive Leadership Alliance of Nevada began its campaign during the 2011 legislative session to find more revenue for the cashstrapped state by targeting the industry. PLAN claimed success when the Legislature trimmed the deductions mines can take on the net proceeds of minerals taxes, and PLAN is promoting a ballot initiative that would do away with the net proceeds tax. The Legislature passed a joint resolution in this year’s session and has to pass it in 2013 before it can then go on the ballot in 2014. Nevada approved an increase from 3.64 percent to 5 percent net proceeds tax in 1989, and that presented new revenue to the state, but PLAN is looking at giving the Legislature authority to level higher taxes by eliminating the net proceeds tax. “We want the Legislature to make the decision rather than the Constitution,” Guy Rocha, the former state archivist, said during a PLAN-sponsored forum in Las Vegas in October that was broadcast on the Internet. Rocha also said the industry has already “started a propaganda campaign” against the initiative. Michon Eben of the Reno-Sparks Indian Colony said at the forum that extractive industries aren’t paying their fair share. “Mining companies promise the moon but usually deliver little more than moonbeams,” she said. The legislative approval of changes to the deductions for net proceeds didn’t automatically change things. The Nevada Tax Commission has to implement the changes, and the part on sales taxes is especially confusing, according to Crowley.
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40 MINING QUARTERLY, Elko, Nevada WINTER 2011
BLM sends draft Mt. Hope study to D.C. By ADELLA HARDING Mining Quarterly Editor
ELKO — General Moly Inc. hopes the U.S. Bureau of Land Management will release the draft study on the Mt. Hope molybdenum project in Eureka County in December to begin another step toward development of the proposed mine. “We anticipate publication will occur before year’s end,” General Moly Chief Executive Officer Bruce Hansen said in a teleconference. Pat Rogers, director of environmental and permitting for General Moly, said in November he believes there will be “a lot of positive comment” on the company’s plan for the Mt. Hope Project when the draft environmental impact statement is out to the public for comment. “We’ve studied this thing for the last five years inside and out and up and down,” he said. “I sure don’t expect any substantive technical issues.” General Moly is planning a molybdenum mine 21 miles north of the town of Eureka. Mt. Hope will have a projected mine life of
44 years and employ 400 people once construction is completed. Hansen said in late October production should begin in midto-late 2014. Hansen said the BLM appears to be streamlining permitting and “given the urgent need to create jobs in Nevada, he is hopeful the agency will issue a record of decision on Mt. Hope within six to nine months. “We’re seeing shifts to weeks rather than months,” Rogers said. General Moly also awaits final resolution on applications for water rights to be changed from agricultural to mining use for the Mt. Hope Project. The company submitted a monitoring, management and mitigation plan to State Engineer Jason King in October as King ordered when he approved General Moly’s applications in mid-July. King’s order called for General Moly to work with Eureka County on this 3M plan. If King approves the 3M plan and
issues the permits, they will remain in effect while litigation moves ahead against the state engineer’s action, Rogers said. Eureka County and two parties of water rights holders filed an appeal in August in district court over King’s July ruling approving the applications. This was the county’s second appeal. The first led the court to remand the matter back to King over procedural issues. Eureka County Commissioner Jim Ithurralde told the Legislative Committee on Public Lands during the committee’s early November meeting in Elko the county fully supports mining “if it is done right,” but commissioners are worried about the long-term legacy of Mt. Hope. “We feel we’re the founding fathers. This will change the whole dynamics of the county,” he said. Mt. Hope will use 7,000 gallons per minute during operations, and Ithurralde said the county is concerned about that
amount of consumptive use. Hansen said in the earnings teleconference that General Moly plans to continue discussions with the county and farmers and ranchers to address issues outside of court on a “rational and reasonable” basis. The 3M plan calls for General Moly to post $1 million in financial assurances for any future mitigation of impacts from water usage for the Mt. Hope operations. “We proposed the $1 million bond on a very conservative estimate of what it would cost to mitigate impacts,” Rogers said. “We will have a very robust program to monitor for potential impacts,” Hansen said. Eureka County already pledged $4 million to a Diamond Valley cooperative to purchase water rights to reduce drawdown in the valley south of the town of Eureka. Hansen said current modeling shows the drawdown in Kobeh Valley would be 10 feet in the 44 years of anticipated mine life at Mt. Hope, but there should be little See GENERAL MOLY, page 42
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General Moly ... Continued from page 41 impact to Diamond Valley and its alfalfa growers. The $1 million would be financial assurances on water impact, and General Moly will post a separate, much larger bond with the BLM for future reclamation at Mt. Hope. General Moly also has been holding town hall meetings in Eureka and Crescent Valley to keep the public up to speed on the proposed Mt. Hope Project, including a meeting and dinner in Crescent Valley in mid-November. Meanwhile, molybdenum prices are dropping, with the price at roughly $12.65 per pound in early November, the lowest this year. The company reported prices in the third quarter traded in a narrow range between $14.10 and $14.90 per pound, finishing the quarter at $14.10 per pound. Looking at the money side, General Moly reported its cash balance at the end of the third quarter was $54 million, similar to the balance at the end of 2010. Expenses included $2.4 million in development, engineering, and equipment deposit costs, $2 million in general
and administrative costs and costs associated with the pre-feasibility update for the Liberty Project and $500,000 in debt issuance costs related to procurement of the Mt. Hope Project’s bank loan. General Moly announced a net loss for the third quarter of $2.4 million, or 3 cents per share. The loss for the 2011 quarter compared with a loss of $6.3 million, or 9 cents per share, for the 2010 quarter, according to the Lakewood, Colo.-based company. General Moly also said in its earnings announcement that when it receives final permits for Mt. Hope, POS-Minerals Corp., the 20 percent owner of the Mt. Hope Project, is expected to fund its final $56 million initial contribution, plus 20 percent of all costs the company has covered on Mt. Hope to date. The company estimates this combined payment will be roughly $100 million, after which POS-Minerals will provide 20 percent of the funding for Mt. Hope. Also, within nine months after General Moly receives permits for developing Mt. Hope, Hanlong (USA) Mining Investment Inc. is obligated to procure a drawable loan from a Chinese bank of not less than $665
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General Moly’s chart shows the timeline for expected U.S. Bureau of Land Management approval for the proposed Mt. Hope molybdenum mine in Eureka County. General Moly
million under an agreement with Hanlong. “The fourth quarter and 2012 will be very exciting for General Moly,” Hansen said. “General Moly is moving forward on all fronts, water rights, financing and preliminary development activities.” General Moly also recently updated proven and probable reserves at its Liberty Project near Tonopah, where the company is looking at mining molybdenum and copper. The Liberty site has been mined in the past. The new figures in an updated pre-feasibility study show an 18 percent increase
in contained molybdenum, putting proven and probable reserves at 722 million pounds. The new study also shows a 47 percent increase in copper reserves to 894 million pounds, according to General Moly. Measured and indicated resources are at 849.5 million pounds of molybdenum and 978.8 million pounds of copper. The update incorporated results of 33 core drill holes not included in a 2008 prefeasibility study and used a price of $12 per pound for molybdenum and $2.50 a pound for copper.
Klondex hopes to be bulk sampling soon By ADELLA HARDING Mining Quarterly Editor
CRESCENT VALLEY — Klondex Mines Ltd.’s underground Fire Creek exploration project northwest of the town of Crescent Valley could be in gold ore and producing bulk samples early next year. The company estimates the bulk sampling will begin in the first quarter of 2012. The Fire Creek Project has moved fairly quickly to become an underground operation that can produce gold. “I think it’s great. It’s very interesting to see a work in progress,” said Doug Carter, surface superintendent with Klondex for nearly a year and a half. Small Mine Development did the first blast to open a portal at Fire Creek in April. “I was out when it was just sagebrush,” said Larry Wilson, environmental and permitting coordinator for Klondex, who said he started with
Eddie Marquez of Small Mine Development remotely sprays shotcrete in October at Klondex Mines Ltd.’s Fire Creek underground project. The shotcrete is ground support for the decline SMD is developing. Ross Andreson Mining Quarterly
See KLONDEX, 44
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Klondex ... Continued from page 43 archaeological work, planning and permitting. “We started clearing and grubbing, racing the winter,” he said. “Then, you could see it begin taking shape. It’s interesting to watch it built.” Klondex can extract and process up to 36,500 tons of ore a year and a maximum of 120,000 tons in a five-year period under current permitting to bring cash flow to the company that has offices in Vancouver and Elko, while pursuing permitting for a full-scale mine. Underground, American Drilling is doing core drilling with one rig, and SMD is progressing with the decline, spraying shotcrete all along the decline for ground support after bolting wire mesh over the rock surface. “We take ground support very seriously,” said Travis Copenhaver, safety and security supervisor for Klondex. “There is lots of shotcrete.” Shotcrete is brought in by 3D out of Battle Mountain. Copenhaver also said SMD used 6-foot bolting because the ground looked like it needed longer bolts. “There have been zero injuries,” Copenhaver
Ross Andreson/Mining Quarterly
See KLONDEX, page 46
Brian Engelson, assistant superintendent for Small Mine Development at Klondex Mines Ltd.’s Fire Creek underground project, drives a tractor out of the mine portal.
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Klondex ... Continued from page 44 said, since the project started with surface work and then went underground. SMD had completed 1,814 feet of drifting as of mid-October. The underground contractor is drifting toward the planned site of a vent raise that will provide ventilation and have an escape hoist. “Once we have that in place, we can start bulk sampling,” said Jim Newton, the underground mining superintendent for Klondex. U.S. Mine Safety and Health Administration regulations don’t allow mining until there is a secondary escapeway at an underground project. The portal to the underground operations is not far from a small open pit that was mined in the 1980s, but the portal is not in a pit wall. Rather, SMD started the portal into a hillside after clearing the path to it, according to Carter. While guiding a tour underground, Brian Engelson, SMD’s assistant superintendent for Fire Creek, pointed out the “Redford Reservoir” that holds water pumped underground for project use. Klondex currently has 11 employees,
including Chief Executive Officer Blane Wilson. “Things are going well. We continue to build our Nevada staff,” said the CEO. SMD has 20 people assigned to Fire Creek, including 17 hourly workers and three salaried employees, and they work 24 hours a day seven days a week, Engelson said. The company’s ore will be processed off-site, and Carter said that by the time SMD reaches the ore, Klondex will find a mill to process the ore. Klondex would like to have its own mill, however, according to Carter. One possible mill is Gold Bar in Eureka County, which is 75 miles away. “We’re very gold, not much silver,” Larry Wilson said. “It’s a high-grade deposit, and the first bulk sampling we are going after is more than 1 ounce per ton,” Carter said. “A good grade with a good gold price gives you a lot of wiggle room.” Newton said the ore will be oxide and require standard milling, at least for some time to come. Later, they may be refractory ore. “We’ve got to know what’s in the ore
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Ross Andreson/Mining Quarterly
Doug Carter, surface superintendent for Klondex Mines Ltd.’s Fire Creek Project near the town of Crescent Valley, talks about the project during an October tour. and pick out the best place to process it,” Carter said. Fire Creek is a vein system, and Newton expects drifts of probably 10 by 10 feet and the use of longhole stoping with fill to be the mining method. “That’s the preliminary plan now,”
he said. Although the ore is in a vein system, Newton said the longhole stoping should allow for minimal waste, while jackleg drilling is “too labor intensive.” See KLONDEX, page 47
Klondex ... Continued from page 46 He has been at Klondex only a few months. He said he enjoys work on a small site. Newton said Fire Creek will never be a huge mine, estimating that at full-scale it would employ roughly 150 people. Currently, Klondex is nearing completion of surface facilities, with two lined drainage ponds and a lined wasterock dump completed and monitoring wells installed. SMD has two shop buildings on site, as well. Widening and improving the road through BLM land to the site is the next step. “We’re waiting on approval to improve the remaining portion of the access road,” Larry Wilson said. Klondex also was awaiting approval of a plan for additional drilling, but the company isn’t ready for permitting for full-scale mining, he said. The BLM’s Battle Mountain District would decide whether to do a full environmental impact statement or environmental assessment for the project. “You are talking about a goodly time frame,” Larry Wilson said.
He also said the company’s stated goal is to be a model of compliance. Klondex reported in mid-November that the surface drilling program continues to find new gold veins and to expand the scope of the resource at Fire Creek. There were five surface drill rigs operating in November and one diamond drill working underground, according to Blane Wilson. “We just expect this resource to get bigger and bigger,” he said in November. Fire Creek’s current indicated gold resource is 1.65 million ounces and the inferred resource is 460,000 ounces. The surface rigs were doing in-fill drilling of the Main, Far North and New North zones, core drilling of new veins earlier intersected with RC drilling, doing directional drilling to test possible extensions of Main Zone at depth and drilling 10 new targets, according to Klondex. Five different companies were drilling — REI Drilling Inc., Boart Longyear, Envirotech Drilling LLC, O’Keefe Drilling and Brown Drilling.
Ross Andreson/Mining Quarterly
Travis Copenhaver, safety and security supervisor for Klondex Mines Ltd., talks about the company’s Fire Creek Project while at American Drilling’s underground core-drilling platform. “Rigs are in high demand,” said Larry Wilson. The 2011 surface program is estimated to planned to include 30-35 holes and approximately 56,000 feet of exploration drilling.
The company completed 16,947 feet of core and 18,040 feet of reverse circulation drilling by mid-November, and 20 holes had been completed, with assays See KLONDEX, page 48
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Klondex ... Continued from page 47 done for 12 of the holes. The assays showed one hole extended the north Main Zone mineralization and intersected strong gold values, including gold averaging 0.298 ounces per ton over a true width of 53.6 feet, according to Klondex. Another hole intersected new veins between the Main and Far North Zones, including true widths of 4.2 feet averaging 0.389 opt and 2.1 feet of 0.544 opt. A North Zone infill hole intersected two veins of 0.3 opt, including 4.1 feet averaging 1.41 opt. Although there was a short period of open-pit mining and several joint exploration ventures over the years at Fire Creek, deeper drilling and expansion of the gold resource came later. Klondex started the deeper exploration program in 2004. Klondex applied to the BLM in March 2007 for designation as a small-scale facility and received BLM approval in December 2009. The Nevada Division of Environmental Protection issued its approval effective March 1 of this year.
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LEFT: Robert Tresner operates the core drilling rig in October on the American Drilling platform at Klondex Mines Ltd.’s underground Fire Creek Project. RIGHT: Envirotech drillers Shaw Christensen, left, of Carlin and Raul Barajas of Elko work in October on a rig near new surface facilities at the Fire Creek Project. Ross Andreson Mining Quarterly
Dylan Woolf Harris/Mining Quarterly
WETLAB worker Cindy Katsma runs a water test in the Elko lab.
WETLAB works with mines By DYLAN HARRIS Mining Quarterly
ELKO — Clients of Western Environmental Testing Laboratory might not know it, but the Elko WETLAB staff is virtually always on call. “We continually try to meet the needs of our clients,” said Phaedra Harmening, WETLAB’s operations manager in Elko. This includes frequently meeting clients after hours and on the weekends, Harmening explained. WETLAB is based out of Sparks, with an Elko branch. “We provide inorganic analysis using matrices,” Harmening said. Component matter such as water, soil, rock and sludge is tested in the office. Mine companies are a significant portion of WETLAB’s clientele, but the company works with many other entities and tests the matter for specifics based on the needs of the client. “We aren’t limited to mining, we work with federal agencies, municipalities, consulting and environmental firms as well,” Harmening explained. “Each client has different regulations
and components that need to be tested,” she said. “We are a state certified lab, and provide high quality data that is legally defensible.” WETLAB tests material for regulated elements. “Our strength is our customer service,” Harmening said. Harmening runs the Elko office with Cindy Katsma and Aimee Keys. All three women fulfill the roles the job requires, including preparing bottle kits, driving the kits to or from a client’s location and running the analysis in the lab. “We are client-oriented. We curtail our daily activities to our clients,” Harmening said. WETLAB is also a problem solver, she added. In the past, WETLAB has worked with a client to develop a new method of testing for specifics, but because the method is still ongoing, not much could be said about it at this time. Typically, WETLAB serves its clientele by providing kits to fill with matter and See WETLAB, page 50
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From left, Cindy Katsma, Aimee Keys and Phaedra Harmening, who make up WETLAB’s Elko staff, pose in their office. Dylan Woolf Harris/Mining Quarterly
WETLAB ... Continued from page 49 return to the lab for analysis. For example, if a municipality wants its drinking water tested, WETLAB will supply a bottle kit properly equipped to test the water based on the specific regulations that govern that municipality. The client would, in turn, fill the bottle with water, and a WETLAB courier would pick it up. The filled bottle kit would then go to the laboratory for testing and approximately 24 hours later the results would be available to the client, who then would know if the water is safe to drink.
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“If we are testing drinking water for micro-biological material it will be ready in 24 hours,” Harmening said. WETLAB opened its Elko branch in 2007. And with the commitment to customer service, the staff at WETLAB expect to remain an integral part of Elko’s business community. “We see ourselves as partners with those we work for,” Harmening said. “The needs of our clients can change, and we provide support.” WETLAB is at 1084 Lamoille Highway. Harmening can be reached at 340-3173 or 777-9933.
Companies work with youths to build workforce By DANIELLE SWITALSKI Mining Quarterly
ELKO — The mines want to keep youth across northeastern Nevada interested in the industry through a program that not only recruits a workforce, but trains it. Twice a year, 40-plus students in northeastern Nevada interested in careers with the mining industry get the opportunity to tour either a Barrick Gold of North America mine or a mine operated by Newmont Mining Corp. as part of Great Basin College’s “Nevada Mining Rocks” tour. The purpose for the students is to expose them to the vast array of careers available through the industry. For the mines, it is a way to recruit and train new talent, as well as keep people interested in the jobs offered by the industry, said Melanie Lawson, Barrick’s community relations specialist. “The range of trades and careers are all over the board,” said David Florence of maintenance, training and development for Barrick. GBC Tech Prep offers training programs in relation to the mining industry. The “Nevada Mining Rocks” tour takes those interested in careers in specific areas of mining, such as electrical or welding, and shows those students exactly what those jobs entail, said Tech Prep Coordinator Heather Steel. Students from Wells, West Wendover, Carlin, Elko, Spring Creek and as far as Winnemucca participated in October in a tour of Barrick’s Goldstrike Mine. The students got a chance to tour the roaster, the maintenance shop, assay lab and view a blast at the Betze Pit. They also got to see a P&H 4100 XPC shovel in action. This particular shovel
ABOVE: Vanessa Watson, a trainerdeveloper, shows gold flakes to northeastern Nevada high school students as part of Great Basin College’s “Nevada Mining Rocks” tour in October at Barrick Gold Corp.’s Goldstrike Mine. LEFT: Summer Boston, a senior at Carlin High School, waits and watches with other high school students from around northeastern Nevada for a blast in the Betze Pit at Barrick Gold Corp.’s Goldstrike Mine during a Great Basin College “Nevada Mining Rocks” tour. Ross Andreson Mining Quarterly
See MINING, page 52
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Mining ... Continued from page 51 costs $18 million and loads between 8 million and 10 million tons per month, said Barrick’s Travis Munster, who discussed the pit and process area during the tour. It takes one operator and two support personnel to operate the shovel. “It’s the most efficient way of moving dirt,” Munster said. He said one of the reasons there are electricians in the mine’s pit area is to support the electric shovels. Electrical careers were only one of the various career opportunities introduced to the students throughout the day. “I think most people think of the dirt and shovels as the crux, but the opportunities in science and the medical field, even for nursing and paramedics, office personnel, computer programs, almost any job you’re interested in we can do through this company,” said Wells High School adviser Dave Shellembarger, who accompanied his students on the tour. He encourages his students to take the Mining Rocks tour at the ages of 15 and 16 so they can begin preparing for their future earlier than their senior year of high school. For Wells High School sophomore Brieanna Archuleta the trip out to Goldstrike was an affirmation of the
Ross Andreson/Mining Quarterly
See MINING, page 53
High school students around northeastern Nevada get a chance to see a blast in the Betze Pit as part of Great Basin College’s “Nevada Mining Rocks” tour in October at Barrick Gold Corp.’s Goldstrike Mine north of Carlin.
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Mining ... Continued from page 52 vision she has for her future. Since the eighth grade when Archuleta was first introduced to welding, she knew she wanted to work as a welder alongside her uncle at Goldstrike. The tour reaffirmed her career path after high school. “I just loved it today,” Archuleta said after the tour. “I already knew I wanted to work here and now I want to so much more.” The highlight of the tour for her was the new knowledge that welders not only fix things but help rebuild them completely, which she saw firsthand when the students visited the maintenance shop. At Goldstrike, maintenance workers rebuild haul trucks. A hail truck costs $4.5 million to purchase, Florence said. He said the company can rebuild a truck for $750,000. Depending on how long a rebuilt truck lasts, it can end up saving the company millions of dollars. Students can be trained locally for maintenance jobs at the mines through GBC’s Career and Technical Education programs. These 48-week education programs include diesel technology, welding technology, industrial millwright technology, electrical systems technology and instrumentation technology. See MINING, page 55
Ross Andreson/Mining Quarterly
Brieanna Archuleta, left, a sophomore, and Jennifer Kelso, a senior at Wells High School, stand in front of the mills in the roaster facility during Great Basin College’s “Nevada Mining Rocks” tour in October at Barrick Gold Corp.’s Goldstrike Mine north of Carlin.
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Ronnie Joe Varnell, senior assayer at Barrick Gold Corp.’s Goldstrike Mine, conducts a gold sample pour as high school students around northeastern Nevada watched as part of Great Basin College’s “Nevada Mining Rocks” tour in October. Ross Andreson Mining Quarterly
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Mining ... Continued from page 53 “We’re looking for kids that are dedicated and hard working. With the diesel mechanic program and electrical instrumentation program, it’s a lot of kids who maybe don’t think the four-year college is for them, but they like hands-on work,” said Lawson. She said students who graduate from GBC can make anywhere from $16 to $24 an hour with their first job with Barrick. “This tour is to keep kids interested, and we can train these kids locally,” Lawson said. Students must apply by April 1 to be accepted into the 48-week Career and Technical Education programs. They start school in mid-August and graduate in June, which will enable them to begin work at the mine. Students must submit three letters of recommendation, a resume, letter of intent, take their placement tests and generally be accepted into GBC first, Steel said. Students can also apply for an MTC scholarship of up to $5,000 that also includes a paid internship. This scholarship is provided by Barrick, Newmont, RAM Enterprise Inc. and Round Mountain Gold Corp. “The goal is to see you come out with a degree,” Florence told the students after the mine tour. “A degree might not seem to matter, but in a few years it can make a big difference in moving up.” The application for the CTE program is available at www.gbcnv.edu.
Ross Andreson/Mining Quarterly
Alejandra Talamantes works with ore samples in October at the laboratory at Barrick Gold Corp.’s Goldstrike Mine north of Carlin. Students on the “Nevada Mining Rocks” tour visited the lab.
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Staffing the mines Agencies work closely with industry By DANIELLE SWITALSKI Mining Quarterly
ELKO — The mines keep local employment agencies busy. Staffing agencies continue to see a multitude of available jobs in the mining industry, as well as job seekers looking to fill them. Manpower The majority of work orders that come through Manpower’s Elko office are mining related, said Becky Tully, Elko office branch manager. With 98 percent of the work orders being in relation to the mining industry, she said things are as busy as ever at the staffing agency. Manpower has been in the Elko area since 1989. “We just need some good, dependable employees,” Tully said. Most of the work orders that come
through Manpower are labor-related, however, they still receive a fair share of skilled jobs in need of employees. “The neat thing about going through Manpower is you have people moving to the area and we like to target the new people coming into the area,” Tully said. She said many people moving to the Elko area do not have any basic mining experience, and they receive rejection letters when they apply to the mines. Through the temp agency, job seekers can garner mining experience through a temporary job and then reapply to the mines with that experience on a resume or application. To apply for a job through the temp agency, Manpower requires a resume. Those interested also need to fill out an application. Once the application is filled out, they need to go through a basic interview at the Manpower office. “We are looking for dependable people
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Matt Unrau/Mining Quarterly
Staffing specialists Brenda Stokes and Chris Minard review files at Manpower in Elko. Manpower is a temporary-job agency that matches qualified employees to jobs in the mining industry. that want to work,” Tully said. She said Manpower typically fills work orders quickly. On occasion, however, the company has to search for skilled laborers.
The types of jobs available vary, however, the trend is that they are seeing an increase in jobs. The jobs can range from See STAFFING, page 57
Staffing ... Continued from page 56 short term — meaning one day to a few weeks — to an indefinite time frame. “They all vary on what that customer is looking for,” Tully said. Carlin Trend Mining Supplies and Service Mining is the busiest industry in Elko and is also what Carlin Trend Mining Supplies and Service deals with the most at the Elko office. “It seems like it’s been pretty steady and it seems like there are more jobs than qualified applicants,” said manager Sandi Sullivan. Although Carlin Trend deals with a variety of jobs, the company specializes in geology and geotechs, of which Sullivan said there is a shortage. Fifty percent of the jobs related to the mining industry are generalized labor and the other 50 percent are geared toward geology. “Because of the gold price where it is, all the geologists are working, and I’m seeing fewer people to fill those positions,” she said. “We have a lot more temps than we did a year ago and it is hard to find qualified people to fill the jobs.”
Sullivan said geologist jobs can last a few months to a few years, however, project geologists prefer the short-term jobs so they can move around more. The best way to apply for a temp job through Carlin Trend is to stop in to the Elko office and fill out an application. Mine Safety and Health Administration training is preferred, but not required. Carlin Trend sees available short- and long-term labor jobs. Long term means three to four months. “The labor jobs you just have to be serious and you have to be dedicated,” Sullivan said. “The mines don’t put up with missing the bus or put up with excuses for not coming to work and there’s a lot of youngsters that don’t understand that. “With labor jobs there are so many open to fill,” she said. American Staffing Inc. Up to 75 percent of the business that comes through the doors of American Staffing’s Elko and Winnemucca offices is directly related to the mining industry, be it work for the mining companies or mine contractors, said American Staffing District Manager Shaun Dominguez. He said he has seen an increase in available jobs in the past year that are both entry level positions and professional
services, such as geologists. The majority of the business American Staffing handles is temp-to-hire, which allows the client to see if the employee is a good fit. “After a certain amount of time they will roll them over to their payroll” if they are a good match for the company, Dominguez said. He said American Staffing is flexible and will find an employee to fit any need of an employer. The majority of jobs are temp-to-hire, however, they will also fill temporary-only positions. “We are so versatile and we do any industry, but the convenience of our service is to have that flexibility,” Dominguez said. To apply for a position through American Staffing, people must apply in person and go through an orientation process. Safety is a priority of the agency and applicants have to watch a safety video during orientation. The applicants are then interviewed one on one. “We take that time to meet that employee and we get to see who they are and what they are looking for,” Dominguez said. American Staffing is constantly looking for applicants with experience, however, Dominguez said because of the
number and variety of work orders they receive, he suggests anyone of any skill level take the time to go through orientation and the screening process. “Anyone looking for work is highly encouraged to come down and go through that orientation process because that’s our business — employees,” he said. “We can’t succeed without employees.” Orientation is offered at 12:45 p.m. Monday-Thursday at American Staffing in Elko. Fewer agencies There are fewer employment agencies around northeastern Nevada, according to the agencies still open. In the past year, SOS Staffing, Price Mine Service, Labor Finder Intermountain Inc. and Able Body Labor have closed their doors in the Elko area. American Staffing’s Dominguez claims it is because American Staffing has continued to expand operations and garner more clients. Whatever the reason for the businesses closures, Dominguez, as well as representatives from Carlin Trend Mining Supplies and Service and Manpower, said they are working continuously to fill these positions with qualified employees. Geotemps did not respond to Mining Quarterly phone calls by deadline.
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HELP WANTED
Engineers, geologists, skilled workers By ADELLA HARDING Mining Quarterly Editor
ELKO — Gold producers have jobs to fill, lots of jobs, but they are looking for skilled workers and professionals, which means advertising, recruiting at colleges and job fairs and recruiting from competitors. “We have 200 openings today,” Dana Pray, recruiting manager for Barrick Gold of North America, said on Nov. 1. Those openings are in Barrick’s mines in Nevada, Hemlo in Canada, Golden Sunlight in Montana and the Salt Lake City regional offices, but they are mainly for people with mining experience, certified skills or college degrees. “People come to town and think they will just hire on here. We need certain skill sets,” Pray said. “I don’t think we’ve done a good job explaining that we’re very high tech. We don’t pan for gold.” Pray estimated that by Dec. 31 the company will have filled roughly 1,600 positions in 2011, including replacing workers who leave and adding new people. She estimated that applications will again hit the 30,000 mark as they did in 2010. Those applications include duplications, because applicants fill out one for every job opening they might be interested in taking. Newmont Mining Corp. had received 34,000 applications this year as of midNovember, said Nick Tompkins, recruiting manager for North American operations. “Current budgeted manpower is 3,800 for 2011 in Nevada, and between now and 2017, we will gradually grow that to 4,300,” Tompkins said. He said Newmont hired 110 truck drivers from August through October because of growth, and that hiring effort was “very, very successful. We had over 1,000 applications. It was an opportunity for applicants to get a foot in the door.” Both Tompkins and Pray said the key jobs are harder to fill. “It’s a great time to be an engineer,” Tompkins said. Pray said the need is for experienced See JOBS, page 59
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ABOVE: Nick Tompkins, recruiting manager for Newmont Mining Corp.’s North American operations, advises applicants to put their mining-related experience at the top of their resumes, even if it is out of chronological order of employment. LEFT: Dana Pray, recruiting manager for Barrick Gold of North America, writes on the board in her Elko office about a job fair in Tennessee. Barrick includes job fairs in its efforts to recruit workers.
Adella Harding/Mining Quarterly
Jobs ... Continued from page 58 underground miners, experienced mechanics, electricians with high-voltage experience, experienced process operators, mining engineers, geologic engineers, mine geologists, metallurgists, safety and health professionals and millwrights. “We hire a certain number of inexperienced people we can train, “but we can just bring in so many,” Pray said. She also said experienced equipment operators are wanted. If a potential employee meets Barrick’s needs and gets through interviews with human resource representatives and a supervisor, and receive an offer, that person still has to go through a criminal background check, a check for substance abuse, a fit-for-duty physical, verification of education and a reference check, as well as a check of past employment, Pray said. “You would be surprised at the number who will lie on applications. Tell the truth,” she said. Applications are generally filled out online for both Barrick and Newmont.
Tompkins recommended those filling out applications be specific about their experience, including details about equipment they have repaired, for example. “Don’t assume everyone knows,” he said. Applicants should put the work experience that relates to mining at the top of their resumes, he also said. Tompkins said Newmont is looking to the future, as well as filling job slots now. Carlin operations now employ 2,400 people and “we see that growing to 2,700,” he said. The Phoenix Mine near Battle Mountain has 450 now and expects to be at 600 by 2016, while the Twin Creeks Mine in Humboldt County will stay fairly steady at the current 550 for the next five years, according to the forecast. Newmont also plans to develop the Long Canyon Project in Elko County between Wells and West Wendover. Tompkins said that project still has to be permitted, so numbers aren’t certain. Round Mountain Gold Corp. currently has 850 company employees and
another 200 contractors are on site, “and we will add about 50 more company positions next year mostly due to Gold Hill,” General Manager Randy Burggraff said. Round Mountain has “fairly decent success” finding miners, but continues to struggle to recruit engineers and geologists, he said. Round Mountain is operated by Kinross Gold Corp., which owns 50 percent of the operations. Barrick Gold Corp. owns the remaining half of the operations. Great Basin College offers courses geared to the mining industry, such as electrician, millwright and diesel mechanics, and Barrick works with the college. Pray said certification in these skills offers students a chance at a job. Tompkins said Newmont would like to see the programs at GBC grow, but there are problems because of college budget cuts and a shortage of instructors. He also said those courses now have students of all ages, where in the beginning mainly young people were enrolling.
Burggraff said Round Mountain also relies on GBC to train workers, and the mine has its own electrician apprentice program. Pray said Barrick also recruits extensively from six colleges that offer degrees that fit the industry, including the University of Nevada, Reno, Montana Tech, the South Dakota School of Mines, the Missouri University of Science and Technology, the University of Utah and the University of Arizona. Pray said a report shows there are 111 mining engineers graduating in 2011, but the demand is for 500. Tompkins said Newmont looks at college recruiting and specifically provides scholarship donations to such schools as UNR, the Colorado School of Mines, the University of Arizona, Montana Tech and the South Dakota School of Mines in hopes of recruiting people. Even when jobs are filled from out of the area, there is the problem of housing. “We have made around 16 trips to other areas and tried to hire people and See JOBS, page 61
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Jobs ... Continued from page 59 move them here. We have apartments and rooms at the High Desert Inn,” Pray said. The new Rabbit Brush Run apartment complex in Elko is exclusively for Barrick too. Pray said the first building with 12 units was ready on Nov. 1, and Ormaza Construction should have all 76 apartments ready by March. “This will help, but it’s not the answer by any means,” Pray said. The company also has 46 temporary apartments in Elko and will keep those for recruits coming from out of town, she said. “This week, we have a team in Knoxville, Tenn., looking at underground zinc miners,” Pray said on Nov. 1, adding that trips also are planned to Kentucky, Illinois and Arizona to look for workers. “We’re continually out doing these events,” she said. “We’ve done Reno and Vegas and will do them again,” Pray said. Getting people to move from Las Vegas is difficult because the potential workers are underwater on their homes
there, meaning they owe more than the price they can get for their homes, she said. Newmont also is visiting communities where there may be potential employees, including in Idaho, Missouri and Oregon. “It’s a busy time. It’s wonderful to be talking to people outside Nevada and to be talking about jobs and northern Nevada’s lifestyle,” Tompkins said. He said Newmont is doing a risk assessment that looks at what rentals are available and what is needed in Elko, Carlin, Battle Mountain and Winnemucca, as well as Wells and West Wendover. Newmont also is looking at where potential employees want to live, he said. Tompkins said he is surprised more developers don’t come to Elko and the other mining communities to build more housing. “We’re seeing a lot of interest from outside the area, which causes that housing pressure,” he said. People coming from other places face
“sticker shock” here, however, Tompkins said. Housing prices, rents, gas prices and grocery prices all surprise those coming from out-of-state, other than from California, he said. Companies in several states advertise around the West in hopes of enticing workers to move from one mine to another and one state to another. “We never lose big numbers with the out-of-state ads. Typically, they are the professionals,” Pray said. “It’s getting competitive, but it’s certainly been friendly. I am a big believer that fit’s going to make the difference,” Pray said, explaining that job candidates can often tell what mine or what company they will best fit, and that is why Barrick does extensive intern programs. Barrick sells “the whole package” of pay, benefits, stability and opportunities, she said. “Gold can drop a long way before it affects us, and we sell opportunity. The opportunities are really large. We have so many assets, and we do lots of transfers among the mines. Jobs are posted at the sites,” Pray said.
Still, junior mining and exploration companies may have to offer “crazy pay” to get experienced people because of the higher risks with new or small companies, and their offers will eventually impact the labor market, she said. Tompkins said with the economy down, people are holding onto their jobs longer. He doesn’t anticipate a “bidding war” over jobs. “It’s hard to find seasoned mining engineers, metallurgists and geologists,” said Cary Brunson, general manager of Quadra FNX’s Robinson Mine. “We have several openings on the professional side and for maintenance people.” The housing shortage in Nevada mining communities is also a problem for Robinson. “When we try to bring people in and they start looking, it’s discouraging,” Brunson said. Quadra FNX is building four modular houses in Ruth now, has 10-12 studio apartments in Ely, and plans to build a daycare center in Ely that will be free to employees as an added incentive.
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Coeur Rochester ready to produce By ADELLA HARDING Mining Editor
ELKO — Coeur d’Alene Mines Corp.’s Rochester Mine near Lovelock is “on the cuff of a resurgence in production,” said Coeur President and Chief Executive Officer Mitchell Krebs. “Production begins this fourth quarter from the new leach pad that was constructed this year, which adds seven more years of silver and gold production from our longest running mine,” Krebs said in the company’s third-quarter earnings report. Production at Rochester, the company’s only Nevada operation, totaled 352,000 ounces of silver and 1,435 ounces of gold, down from 419,000 ounces of silver and 1,935 ounces of gold in the 2010 quarter. The 2011 third-quarter cost was $36.71 per ounce. Leon Hardy, senior vice president and chief operating officer, said production at Rochester was from on-going residual leaching activities, while the mine focused on completing construction of a new leach pad and placing material on the pad.
“Costs were temporarily higher during the quarter due to these activities, while ounces were produced solely from residual leach, resulting in the higher cost per ounce,” he said. “We have been loading the new leach pad with ore containing 4,000 ounces of gold and 400,000 ounces of silver through the end of October. We will continue loading that much material each month, and we will expect rapid recovery in the first 30 to 60 days of placement, which will drive higher productions in the fourth quarter,” Hardy said. Rochester mining resumed this year after it ended in 2007 and production came from residual leaching at the mine site in Pershing County. Hardy said there is potential for new reserves at Rochester. “There is a significant amount of resources containing over 100 million ounces of silver and nearly 800,000 ounces of gold, which we are aggressively pushing to convert to resources, while planing for new leach pads on which to place this material,” he said in the teleconference.
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The Idaho-based company also reported companywide silver production of 4.9 million ounces in the quarter, 13 percent higher than in the 2010 quarter, and gold production totaling 57,052 ounces, 20 percent higher than last year’s quarter. “We remain on track to produce approximately 19.5 million ounces of silver at unchanged cash operating costs of $5.75 per ounce and expect to achieve our financial targets of $1 billion in total sales and over $500 million in operating cash flow,” Krebs said. He said, however, that the gold production forecast is being revised to roughly 220,000 ounces because of problems at the Kensington Mine in Alaska. Krebs said in the teleconference “Kensington is an underground operation with one primary way in and primary out of the mine through the main portal. So we need to slow down production activities for about six months, while we focus on completing several key projects, which are designed to get Kensington performing consistently and more efficiently. “What this means in the short-term is that Kensington’s 2011 production, will
“Production begins this fourth quarter from the new leach pad that was constructed this year, which adds seven more years of silver and gold production from our longest running mine.” — Coeur d’Alene Mines Corp. President and CEO Mitchell Krebs total about 85,000 ounces of gold, and cash cost will be about $990 an ounce,” he said. Companywide, Coeur reported realized net income of $31.1 million, or 35 cents per share, in the third quarter and adjusted net earnings of a record $93.8 million, or $1.05 a share. The net income compared with a net loss of $22.6 million, or 25 cents per share, in the 2010 quarter, while adjusted earnings that didn’t include accounting adjustments compared with a loss of $4.5 million, or 5 cents per share, last year. The company stated record net sales of $343.6 million were 190 percent higher than last year’s third quarter, and record operation cash flow totaled $151 million.
Australia-based Navaho Gold explores in Nevada By ADELLA HARDING Mining Quarterly Editor
ELKO — Navaho Gold’s shareholders are mainly in Australia, but the company’s exploration focus is in Nevada, where the company has a half dozen properties. “Not many Australians get exposure to the U.S. market. This is a unique story,” said Navaho Chief Executive Officer Mark Dugmore. He said the company started out looking for Carlin-style gold in Australia and then “decided to come to Nevada and look for the real thing. We’re in the land of giants here.” Navaho has only been listed on the Australian Stock Exchange since April, and Dugmore said, “We’ve been quick out of the box.” Dugmore said he was in Nevada last year for the Geological Society of Nevada Symposium and then began acquiring properties that the company started drilling this year. “We’re prepared to take the risk and
do the drilling,” he said. “We’re prepared to go deep.” Jason Babcock, the Salt Lake Citybased operations manager for Navaho, said the cost is higher to go deep but much of the surface has been covered in earlier drilling to the 500-foot level. The company recently finished a second round of drilling at Stevens Basin in Eureka County southwest of Barrick Gold Corp.’s Ruby Hill Mine, where mineralization was found in the first hold. Navaho also recently finished drilling at the Rose Mine Project, southwest of Ruby Hill. “We’re awaiting results, and we’ll see what is required next year to go forward. It’s still early days,” Dugmore said. Navaho Gold has an earn-in agreement with Columbus Gold Corp. for Stevens Basin, and an earn-in agreement with Renaissance Gold for the Rose Mine Project. The company also had a rig operating See NAVAHO, page 64
Ross Andreson/Mining Quarterly
Jason Babcock, left, Salt Lake-city based operations manager for Navaho Gold, and Mark Dugmore, chief executive officer of the Australian exploration company, are enthused about the company’s exploration work in Nevada.
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Navaho ... Continued from page 63 in mid-October at the TAZ Project near Eureka and a short distance east of the Gold Bar property, Dugmore said during a visit to Elko. “We’re down to 2,200 feet now,” he said. Navaho has an agreement with Miranda Gold for TAZ. The company also reported on Nov. 1 it started drilling at Whitehorse Flats at the south end of Elko County off Alternate U.S. Highway 93 near the closed Kinsley Mine. Babcock said this is a different target and not at Kinsley. Pilot Gold is exploring at Kinsley. Whitehorse also is a Columbus Gold property where Navaho has an earn-in agreement. The hope is that this area may be part of the Long Canyon Trend, Dugmore said. Navaho has a joint venture with Genesis Gold, a private company, for the Carlin East Project north-northeast of Newmont Mining Corp.’s Leeville and Turf deposits, and another one with
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Columbus Gold, called the Utah Clipper Project northwest of Barrick Gold Corp.’s Pipeline deposit. “Two things are operationally challenging: getting the right drill rigs and getting them before winter,” Dugmore said. He said in a Nov. 1 announcement that by the end of this year the company will have completed roughly 45 drill holes on five projects in Nevada. Dugmore said the goal is to find gold deposits that could attract buyers, and the company would continue on as an exploration company, rather than attempting to be a gold producer. He said he is confident gold prices will remain high, giving him the confidence to drill deeper in hopes of finding gold. Additionally, the company has greenfields property in Australia, said Dugmore, a geologist who worked for BHP in global base medal exploration before leaving 10 years ago to work mainly for junior companies.
Gold prices keep assay labs busy By ANDREA GLOVER Mining Quarterly
ELKO — The high price of gold and new exploration projects are contributing factors keeping assay labs throughout the Silver State busy. “We’re just going full force,” said Vickie Friesen, manager of the American Assay Laboratories branch in Elko. The number of samples being seen has resulted in ALS Minerals reporting a record year, according to U.S. Director Tom Needs. He credited the gold price and the quality of the analysis provided by ALS Minerals with fueling the business. The high price of gold has been driving exploration across Nevada, in turn increasing the number of samples submitted to assay labs and the number of
people employed processing samples. “We have three labs in Nevada and all three labs have undergone expansion in order to create capacity and improve our turnaround time,” said Needs. The three ALS Mineral labs are in Elko, Winnemucca and Reno, and together employ approximately 300 people throughout the state. With a larger work force, samples from ALS Minerals are available sooner than other locations, according to the company. When the Elko ALS lab receives samples, workers prepare them and then ship them to the Reno laboratory for final analysis. ALS Minerals receives approximately 4,000 samples daily throughout their Nevada labs and results from the analysis are typically available in three weeks, Needs said.
Ross Andreson/Mining Quarterly
Saul Tamcho mills product in mid-November at the SGS Assay Lab in Elko. Locally, there are four people working at Elko’s American Assay lab, and Friesen said approximately 300 samples are processed during an eight-hour shift. As a prep laboratory, the Elko branch
is responsible for grinding down the samples prior to shipping them to the main laboratory in Sparks. Friesen said See LABS, page 66
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Labs ... Continued from page 65 the whole process takes between three and five days. “It varies upon what type of samples they are,” said Friesen of the process time, “whether they’re hard-core or large samples or small ones, it all depends on how big they are.” The SGS laboratory in Elko employs eight people and prepares samples to ship to larger labs in Vancouver or Toronto. On average the Elko lab can process between 300 and 400 samples in a day, and it takes 15 days to receive results from Vancouver or Toronto, Miguel Gonzalez said. The Elko SGS lab is currently in the peak months of operations with projects ending, according to Gonzalez. While the fall is normally the busiest season for the SGS lab, he said this fall is even busier than last year. Assay labs can receive samples from anyone, whether a large mining company or an individual prospector. Neither SGS, American Assay nor ALS Minerals retain contracts with designated mines.
“If companies like to send us them, we’ll process them,” said Needs. According to Friesen, one of the largest clients American Assay Laboratories has at the Elko location is Barrick Gold Corp., and Sparks handles a lot of samples from Newmont Mining Corp.’s operations. She said the Elko branch also handles a lot of samples from individuals coming in with their own samples, believing they have found gold. The SGS lab also sees a number of individuals not associated with a mine coming in to have samples processed. “We have a lot of people that just want to check what they got in the rock,” said Gonzalez. “We’re not infatuated just with the big ones.” Friesen credited the high gold prices and new exploration as helping keep Elko’s economy strong, as well as keeping work steady for those employed at assay labs. “It’s nice that we have this where the rest of the U.S. is really in a financial turmoil,” Friesen said, “but we’re doing great here.”
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Ross Andreson/Mining Quarterly
Enriqueta Vanuelos, left, and Genoveva Vanuelos bag samples in mid-November at SGS Assay Lab in Elko.
Plant work under way at Gold Hill By ADELLA HARDING Mining Quarterly Editor
ELKO — Construction of the processing plant and leach pad at Round Mountain Gold Corp.’s new Gold Hill satellite mine in Nye County is under way, according to General Manager Randy Burggraff. “We’re still looking at pouring gold at Gold Hill in the second quarter of 2012,” he said. Installation of the liner for the leach pad was slated to begin in mid-November, and crushed rock for the pad is coming from the Gold Hill Pit. “We started digging the pit to supply rock for construction, so in a sense we’ve started mining,” Burggraff said. Contractors for Gold Hill are Gold Canyon, which is doing the earthwork, and Phoenix Industrial, which is building the carbon-in-leach plant, he said. Round Mountain Gold will mine, leach and process gold ore at Gold Hill, but the gold will be refined at the Round Mountain site, and workers will arrive at Gold Hill via a new road from Round Mountain. Gold Hill is a roughly $50 million project. Gold Hill is a new mining area about five miles north of the main Round Mountain Mine, where crews are digging the Phase 8 expansion at the Round Mountain Pit and at the new Fairview satellite pit nearby. Fairview is in the stripping stage but the gold ore is near the surface. Crews also are stripping the deeper Phase H, Burggraff said. “And then we get another mine expansion called JK in late 2012,” he said. Western Extension Round Mountain, which is 50 percent owned and operation by Kinross Gold Corp. and 50 percent owned by Barrick Gold Corp., also continues “heavy duty drilling in what we now call the Western Expansion,” Burggraff said. The potential expansion area was called Deep Northwest but the name was changed as the trending of the deposit appeared to be going west. If this expansion gets the green light, it will still entail relocation of facilities, including the
administration building, Burggraff said. “That’s got about a three-year study phase, and we’ve just completed the first year,” he said. Round Mountain may begin the permitting process for the West Expansion before the study phase is complete, however, if it looks like there is good potential for the project. “It could potentially add 10 to 15 years to the mine life,” Burggraff said in a telephone interview in November. The mine life currently is expected to go to 2019. Round Mountain produced 54,588 ounces of gold in the third quarter for the Kinross share of operations, according to the company’s earnings report. The 2011 production compares with 48,477 ounce in the 2010 quarter, when Round Mountain produced the gold for $625 per ounce, compared with $668 per ounce in the third quarter of this year. Kinross stated that production at Round Mountain increased over the third quarter of last year due to increased processing levels. “We’re completing a very solid year,” Burggraff said. “We’re 3 percent over budget on gold, and things have gone quite well. Of course, the Western Extension has huge excitement.” Reno-based Andre Bourget is in charge of the Western Extension Project. Round Mountain Gold currently has 850 company employees and another 200 contractors are on site, “and we will add about 50 more company positions next year mostly due to Gold Hill,” Burggraff said. Round Mountain has “fairly decent success” finding miners, but continues to struggle to recruit engineers and geologists, he said. Kinross earnings Toronto-based Kinross reported companywide adjusted net earnings rose 134 percent to $273.4 million in the 2011 quarter, compared with $116.8 million, or 15 cents per share, in the third-quarter of 2010. Reported net earnings were down, however, at $212.6 million, or 19 cents per See KINROSS, 68
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Kinross ... Continued from page 67 share, compared with $540.9 million, or 71 cents per share, in the 2010 quarter because of significant one-time gains in the 2010 quarter. Kinross Gold’s revenue rose to $1.07 billion, up 45 percent over the 2010 quarter as gold prices increased, with the average realized price at $1,646 per ounce in the 2011 quarter, compared with $1,190 last year. “Kinross recorded another strong quarter, with revenue exceeding $1 billion for the first time, and adjusted operating cash flow increasing by more than 82 percent year-over-year to a record $422 million,” said Kinross President and Chief Executive Officer Tye Burt. He also stated in the earnings announcement that Kinross remains on track to meet its production and cost goals for the year of between 2.6 million and 2.7 million of attributable gold equivalent ounces at a production cost of sales of between $565 and $610 per ounce. Production cost of sales was up in the third quarter to $634 per ounce, compared with $517 per ounce in the 2010
quarter, and Burt said this was because of “industry-wide cost pressures, as well as the impact of mining lower grade portions of the orebody at several locations.” Total production for the quarter of 647,983 ounces companywide compared with 575,065 ounces in the 2010 quarter. Production cost of sales companywide was $634 per ounce, up from $517 per ounce last year, the earnings report showed. The company said production from operations in North America remained strong, despite the expected reduction in grades at all three mines — Round Mountain in Nevada, Kettle River in Washington and Fort Knox in Alaska. The Fort Knox Mine near Fairbanks produced 76,261 ounces in the third quarter at a cost of $712 per ounce, compared with 108,680 ounces in the 2010 quarter, produced at a cost of sales of $501 per ounce, according to the earnings report. The Kettle River-Buckhorn operations produced 41,200 ounces of gold in the quarter, down from 46,687 in the
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2010 quarter. The production cost of sales was $463 per ounce, up from $368 per ounce last year. The Kupol Mine in Russia produced 124,912 ounces, down from 159,393 ounces in the 2010 quarter, and costs were up to $422 per ounce from $347 per ounce last year, according to the earnings report. In South America, the Paracatu Mine produced 135,099 ounces at a cost of $670 per ounce, compared with 129,257 ounces at a cost of $506 per ounce in the 2010 quarter. The Crixas Mine produced 15,551 ounces at a cost of $922 per ounce, compared with 19,866 ounces at a cost of $483 last year. The La Coipa Mine produced 38,539 ounces at a cost of $903 per ounce, compared with 53,471 ounces at a cost of $729 last year, while the Maricunga Mine produced 53,123 ounces at a cost of $515 per ounce, compared with 28,844 ounces at a cost of $868 in the 2010 quarter. In West Africa, the Tasiast Mine in Mauritania produced 47,175 ounces at a
cost of $842 per ounce, compared with 8,853 ounces at a cost of $1,176 per ounce last year, according to the earnings report. The Chirano Mine in Ghana produced 68,372 ounces at a cost of $735 per ounce, compared with 12,650 ounces at a cost of $970 per ounce last year. a 10 percent interest in Chirano was 6,837 ounces, which was subtracted from total attributable production. Kinross acquired Tasiast and Chirano in its acquisition of Red Back last year. Kinross also reported that projects are progressing. “Our drilling campaign at Tasiast continues both to confirm our confidence in the resource and indicate potential further expansions to our previous model,” Burt said. “We received approval of the first-phase environmental impact assessment at Tasiast, and mobilization for construction is under way.” He also reported exploration led to the discovery of a new mineralization area near the surface at the La Coipa Mine in Chile.
Midway Gold Corp. making plans for Pan By ADELLA HARDING Mining Quarterly Editor
ELKO — Midway Gold Corp. hopes to be mining gold at its Pan Project in White Pine County in two years, creating 150 new jobs for the Eureka and Ely communities, said Midway Chairman and Chief Executive Officer Dan Wolfus. Although he said the company hopes to be hiring in two years, the U.S. Bureau of Land Management is looking at signing a record of decision on the project in mid2014. Midway filed its plan of operations on Oct. 28 for the Pan Project, according to Miles Kreidler, mining engineer and mining geologist for the BLM’s Egan Field Office at Ely. The plan calls for two large pits and two satellites,and they will all be looked at in one environmental impact statement, he said. “We estimate June 2014 to get the ROD
signed,” Kreidler said, Midway Gold’s plans don’t stop at Pan, however. Wolfus said that once Pan is in operation, the company plans to seek permits for the company’s sister Gold Rock Project that will need another 150 or so employees who likely would live in Ely and Eureka. He said Midway has a good relationship with the BLM, both in Ely and in Washington, and Midway’s regional office is in Ely. The Pan Project is “18 miles from Eureka as the crow flies and 30 to 35 miles to Ely,” said R.J. Smith, vice president of administration for Midway. “This will be about as simple an open-pit project as can be done in Nevada,” he said, reporting the plan of operations will propose two open pits, a crusher system, conveyors from the crusher to the leach pad and a “typical recovery plant.” Plans call for production of roughly
Midway Gold Corp.
This map shows the locations of Midway Gold Corp.’s Pan and Gold Rock projects in White Pine County. 75,000 to 77,000 ounces of gold a year from Pan, Smith said. Pan won’t require any dewatering and should have minimal environmental impacts, and there shouldn’t be any major
sulfides at the site and no visual impacts, he said. “It will be a smaller project that will See MIDWAY, 71
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Nevada Copper to start sinking shaft By ADELLA HARDING Mining Quarterly Editor
ELKO — Nevada Copper Corp. expects to begin sinking a shaft in early 2012 at the Pumpkin Hollow Project on the outskirts of Yerington in another step toward developing a mine. “It’s strictly a shaft sinking for exploration. That will start in January,” said Timothy Dyhr, vice president of environmental and external relations. The shaft sinking will be an estimated $30 million to $50 million project that will bring immediate economical benefits to Yerington and Lyon County, which has a 16.8 percent unemployment rate, he said. While plans are under way for the underground exploration, Nevada Copper is working on a feasibility study for the proposed mining operation, and the target date for completion of the study is Jan. 16, Dyhr said. “It will present plans for integrated underground and open pit mining and a single mill,” he said. Plans call for a flotation mill and ship-
ping copper concentrate. Nevada Copper earlier looked at plans to begin underground mining and build a mill on private property so production could begin while awaiting permitting for surface mining that would extend onto land managed by the U.S. Bureau of Land Management, but has since decided on one project. The plan changed after Yerington looked at proposed annexation of Pumpkin Hollow to provide additional tax benefits to the city, Dyhr said. “We’re right there. We have pizzas delivered to our site. We’re so close to town it is a viable option,” he said. First, the company and community officials have to convince the Nevada congressional delegation to approve a land deal. The BLM would sell the public land to Yerington and the city would then lease or sell the property to Nevada Copper. Yerington also would have land for its own use. The public land currently separates Nevada Copper land from city land so the deal is necessary for annexation.
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“I met with the congressional delegation just now,” Dyhr said in a telephone interview in November as he prepared to fly out of the Washington, D.C., area. “We’re pushing for quick movement on the bill.” Dyhr said that because of the “dire economic situation” in Lyon County, there is impetus to move the project along. He said Nevada Copper will finance the acquisition, but Yerington would take title to the land. Yerington City Manager Dan Newell said the Yerington City Council and Lyon County Commissioners have approved resolutions supporting the property transfer. Nevada Copper has been working closely with the city, which is anxious for the mine development to boost the local economy, including agreeing earlier to make Pumpkin Hollow a city water customer. Nevada Copper in turn did the due diligence on potential annexation. “The city has been very helpful to us,” Dyhr said. “The critical link is annexation of BLM land.”
If all goes as planned, Lyon County gets net proceeds revenue from Pumpkin Hollow production and “the city gets a piece of the pie,” he said. Annexation of the roughly 12,000 acres also takes the BLM out of the equation, so Nevada Copper will go to the state and county for permits to develop a mine. “A lot of the land will be city,” Newell said, adding that the city is looking at creating an industrial park, motocross track, an RV park and other options for the land. Nevada Copper hired Timothy Drake in September to be the construction manager for Pumpkin Hollow, which has measured and indicated resources that include 6.1 billion pounds of copper, 1.6 million ounces of gold and 60 million ounces of silver. “It’s a huge resource. We haven’t found the end of it. Drilling is still going strong,” Dyhr said. The company announced in October See PUMPKIN, 71
Midway ... Continued from page 69 chug along,” Wolfus said in a telephone interview. “We think it’s the perfect size for a company our size,” Smith said. Denver-based Midway announced in October that the gold resources at Pan grew 19 percent to 1.13 million ounces and mineralization remains open, with exploration drilling continuing. Midway recently received BLM permitting for expanded exploration on the site and is building an access road from U.S. Highway 50 to Pan under the expanded exploration permit, according to Kreidler. Midway reported on Nov. 15 the new feasibility study for Pan shows Pan would be a robust project at gold prices of $1,200 to $1,900 an ounce, and the capital cost would be $99 million. Pan would be the first operating mine for Midway, which has been exploring in Nevada for a number of years. Projects include Gold Rock, Midway in Nye County and Spring Valley in Pershing County, as well as the newer Burnt Canyon in Pershing County. Barrick Gold Corp. is exploring Spring Valley in Pershing County under an earnin option. “Pan’s first, then Gold Rock and then Midway,” Smith said. Gold production from Pan will generate cash flow to pay for additional development and exploration work in Nevada, and Wolfus said Midway wants to become an operator. “We’ve set ourselves up to be able to do this ourselves. We’re an independent company, and we like it. Bigger is not necessarily better,” he said. Wolfus said Midway started bringing in
new people in the past year and a half to help develop projects, including President and Chief Operating Officer Ken Brunk, Richard Moritz, vice president of operations, and Roger Gross, vice president of Nevada operations. During the past year, Midway has grown from a five-person company to one with 30 employees, according to company. Although the current gold price is down from the recent high of more than $1,900 an ounce, Wolfus said the price was at $1,200 an ounce when the company decided to take Pan into production, so “$1,600 is a whoopee and $1,900 is a double whoopee.” He said Midway is looking at producing gold at Pan for about $470 an ounce, and with capitalization incorporated, $700 an ounce. “There will be some ups and downs,” Wolfus said of the gold price, adding that with the European debt crisis and central banks buying gold, he believes gold will be a “very desirable commodity to own.” At Gold Rock, the drilling is designed to verify historic gold mineralization reported in drill results from past operators, and the company reported in September that initial results are very positive. A 1988 resource around the Easy Junior open pit mine that Alta Gold operated between 1989 and 1994 was reported at 344,770 ounces of gold. Easy Junior is on the Gold Rock Project site southeast of Pan. “We believe Gold Rock could host a gold deposit that is comparable in size to our nearby Pan gold deposit, but with a potentially higher average grade,” Brunk said in a mid-September announcement on Gold Rock drilling results.
Pumpkin ... Continued from page 70 there were three exploration rigs on site. “The mineralizing system at Pumpkin Hollow continues to expand and produce positive step-out drill results,” Gregory French, vice president and senior project manager, said in an Oct. 19 announcement. “The successful expansion of mineralization along the northeast and southwest edges of the North Deposit are expected to have a positive effect on future open pit mine designs by converting waste to mineralized material.” He said mineralization discovered between the North and South deposits
also has the potential to positively affect pit designs, and the deposits “could combine into a single open pit if sufficient mineralized material continues to be found.” Pumpkin Hollow has been explored in the past, and companies considered developing a mine but then put the property on a back burner, but Nevada Copper has been pushing toward turning the property into a producing mine. “We are a start-up company, but in the last year we’ve seen a real change of attitude. Investment companies are very bullish long-term on copper,” Dyhr said.
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Royal Gold continues growing trend By ADELLA HARDING Mining Quarterly Editor
ELKO — “This was yet another solid quarter of growth for the company,” Royal Gold Inc. President and Chief Executive Officer Tony Jensen said as he talked about the company’s earnings. The company also has the resources to keep growing, and Jensen said in a teleconference that Royal Gold continues to look for investment in projects. Royal Gold had a working capital surplus of $148.5 million at the end of September, and $155 million available under its revolving line of credit, he said in the earnings teleconference on the first quarter of the company’s fiscal year. Royal Gold announced record net income of $22.5 million, or 41 cents per basic share, on record royalty revenue of $64.5 million for the quarter ending Sept. 30, up 91 percent over net income for the quarter ending Sept. 30, 2010. Net income in the 2010 quarter was $11.8 million, or 22 cents per share, on royalty revenue of $45.3 million.
The 42 percent increase in revenue for the quarter was largely driven by higher average gold prices, along with higher prices for other metals and higher production at key royalty properties, according to Denver-based Royal Gold. The average price of gold for the first fiscal quarter was $1,702 per ounce, compared with $1,227 per ounce for the comparable period, representing a 39 percent increase, the company reported. The key properties boosting production include Andacollo in Chile, Voisey’s Bay in Canada and Peñasquito in Mexico, and there was first-time revenue from Holt in Canada and Canadian Malartic. “Our record financial results are now reflecting the many investments we have made over the past several years, as well as strong metals prices,” Jensen said in the earnings announcement. “We anticipate further production increases over the next few quarters from Andacollo, Peñasquito, Holt, Las Cruces and Canadian Malartic as they all work to achieve full design capacity. And, construction at two key development proper-
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ties, Pascua-Lama and Mt. Milligan, remains on schedule. We expect these properties to play a significant role in driving future growth,” he said. According to Royal Gold, net income for the quarter was impacted by the restructuring of a royalty that resulted in a charge of $1.3 million, or 2 cents per basic share, on an after-tax basis. Excluding this charge, net income would have been 43 cents per basic share for the quarter. Jensen said Royal Gold reduced its royalty on the Relief Canyon Mine in Nevada from 4 percent to 2 percent after Firstgold Corp. filed for bankruptcy. Sagebrush Gold Ltd. now owns Relief Canyon in Pershing County. Top revenue generators Revenue and production from the company’s top royalty properties during the quarter ending Sept. 30 included $16.84 million from 13,286 ounces of gold at Teck’s Andacollo Mine in Chile, up from $8.17 million on 8,905 ounces in the 2010 quarter. Voisey’s Bay operated by Vale provided
$7.23 million in revenue on 22.7 million pounds of nickel and 16 million pounds of copper, compared with $3.51 million on 18.2 million pounds of nickel and 3.9 million pounds of copper last year. Penasquito operated by Goldcorp Inc. provided $5.83 million in revenue on royalties tied to 48,621 ounces of gold, 3.9 million ounces of silver, 29.2 million pounds of lead and 67.4 million pounds of zinc, compared with $3 million on 35,624 ounces of gold, 3.2 million ounces of silver, 21.9 million pounds of lead and 39 million pounds of zinc in the 2010 quarter. William Zisch, vice president of operations for Royal Gold, said the company’s highest royalty providers in Nevada “all exceeded production” over the previous quarter. Barrick Gold Corp.’s Cortez Mine in Nevada provided $5.11 million on 42,855 ounces of gold, compared with $2.49 million on 33,134 million ounces of gold last year. Zisch said Barrick processed more See ROYAL GOLD, page 73
Royal Gold ... Continued from page 72 stockpiled ore from Pipeline in the latest quarter. Royal Gold holds royalties in the Pipeline area of the Cortez Mine but not in the new Cortez Hills operations. Quadra FNX Mining Ltd.’s Robinson Mine in Nevada gave $3.69 million in royalties to Royal Gold on 8,972 ounces of gold and 27.9 million pounds of copper in the quarter ending Sept. 30, 2011, compared with $3.13 million on 19,012 ounces of gold and 28.5 million pounds of copper last year. Zisch said Quadra reported to Royal Gold that localized slope stability issues impacted calendar third-quarter output but production improved as mining moved into the lower benches of the Ruth Pit and higher-grade ores were accessed. Robinson also completed mud removal from the bottom of the Ruth Pit and moved five haul trucks from the Carlota Mine in Arizona to Robinson, which improved production, he said in the earnings teleconference. Quadra reduced the 2011 calendar-
year copper guidance from between 105 million to 120 million pounds to a range between 95 million and 100 million pounds, however, because of new sequencing of the mine plan and delays in accessing the portion of the highergrade material that was originally expected to be mined in the fourth calendar quarter. The Holt Mine in Canada operated by St Andrew Goldfields provided $3.59 million in revenue on 9,397 ounces of gold for the first time. According to Royal Gold, St Andrew Goldfields reported production continued to increase during the quarter and development activities at the mine improved. Ramp advancement, footwall access, stope development and long-hole mining in Zone 4 will be the primary focus for the remainder of 2011. “Head grades increased steadily,” Zisch said. St Andrew Goldfields expects to reach its steady state production rate of 1,000 metric tons per day by the end of the first quarter of calendar 2012. Newmont Mining Corp.’s Leeville
Ross Andreson/Mining Quarterly
Snow borders the Ruth Pit at Quadra FNX Mining Ltd.’s Robinson copper mine in White Pine County, where Royal Gold holds a royalty. Mine in Nevada provided $3.07 million in revenue for Royal Gold on 101,240 ounces of gold, compared with $2.64 million on 122,834 ounces in the 2010 quarter, according to the earnings report. The Mulatos Mine in Mexico that Alamos Gold operates gave Royal Gold $2.4 million on 29,476 ounces of gold, up from $1.72 million on 29,025 ounces last year. The Dolores Mine in Mexico operated by Minefinders Corp. provided $1.42 million in royalty revenue on 15,945
ounces of gold and 693,531 ounces of silver, compared with $400,000 on 8,479 ounces of gold and 160,254 ounces of silver in the 2010 quarter. The Las Cruces Mine in Spain operated by Inmet Mining Corp. provided $1.31 million in royalty revenue on 23.8 million pounds of copper,compared with $880,000 on 17.5 million pounds of copper last year. Canadian Malartic Mine operated by Osiko provided $1.31 million on 60,826 ounces of gold to Royal Gold for the first time.
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Draft environmental study for Hollister due out soon By ADELLA HARDING Mining Quarterly Editor
ELKO — A draft environmental impact statement on Great Basin Gold Ltd.’s Hollister Project in Elko County should be out in early 2012, according to the U.S. Bureau of Land Management. “Hollister is now the top priority for our Tuscarora Field Office, and they are working closely with Rodeo Creek Gold and hope to have the EIS out during the first part of 2012,” said Lesli Ellis, public affairs officer for the Elko BLM District. Rodeo Creek Gold is the subsidiary of Great Basin Gold operating the Hollister underground mine that is currently producing gold and silver under bulk sampling permits while awaiting BLM approval to become a full-production mine. “We are anxious to complete this significant milestone in the National Environmental Policy Act process and to move on to the next steps, those being the final EIS and ultimately, the record of decision,” said Teresa Conner, Great Basin Gold’s Nevada environmental manager. She said in November the company hopes the draft EIS would be out for public comment by the end of this year. The study looks at turning Hollister into a full-production underground mine, including construction of facilities on the surface outside the old pit where the portal and facilities are located now. Meanwhile, the company continues bulk sampling and trial mining at Hollister. “We continue to explore and delineate the vein systems,” Conner said. Ore from Hollister is processed at Great Basin Gold’s Esmeralda mill near Hawthorne, and she said the mill is running well with fine-tuning continuing. Esmeralda also is in the process of permitting a second tails facility through the Nevada Division of Environmental Protection, Conner said. “However, construction cannot be initiated until next year due to weather constraints at the higher elevations,” she said in November. Currently, Great Basin Gold’s Nevada operations have 235 employees, Conner said, adding that the company continues to have problems hiring experienced, narrow vein miners. Great Basin also recently announced Joe
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Driscoll is the new vice president for the company’s Nevada operations. He will be responsible for leading the team developing the company’s Hollister operations in northwestern Elko County and the Esmeralda mill. “We are extremely pleased to have Joe join the company and strengthen our operational team in Nevada,” said Great Basin Gold President and Chief Executive Officer Ferdi Dippenaar. Driscoll most recently was mine manager for Newmont Mining Corp.’s underground Carlin mines and earlier was general manager of Newmont’s Leeville underground mine. “We are anxious to welcome our new vice president of Nevada operations, Joe Driscoll, to the company. We are excited at the experience and knowledge that Joe will bring to the company and our team looks forward to working with him to advance all aspects of our operations in Nevada,” Conner said. Great Basin Gold reported in late October that its Nevada operations produced 26,045 ounces of gold from trial mining in the quarter ending Sept. 30. The company reported Hollister mined 26,474 metric tons of ore in the quarter and the Esmeralda plant processed 29,869 tons of ore. The company also reported that gold and silver recoveries at the Esmeralda mill remain at the targeted levels of 92 percent for gold and 74 percent for silver. Great Basin said in the late October announcement that the installation of an acid wash and carbon regeneration system was completed in early October at the mill, and the company planned to pour doré on site by the end of that October. At Hollister, development focused on the Blanket Zone spiral ramp, the BZ Alimak raise and the 5400 BZ I-Drift in the quarter, according to Great Basin. The BZ Ramp had advanced 1,136 feet during the quarter, with 204 feet remaining to finish the work. “The Nevada operations continue to build momentum in delivering improved quarter on quarter operational results as evident from the Q3 2011 performance,” Dippenaar said. Great Basin Gold also operates an assay laboratory near Lovelock after purchasing it from Canarc Resource Corp. for $600,000 plus roughly $25,000 in expenses.
Comstock Mining awaits air quality permit By ADELLA HARDING Mining Quarterly Editor
ELKO — Comstock Mining Inc. has started construction of a processing pond but still needs a Nevada Division of Environmental Protection air quality permit to begin additional work before mining its starter pit near Virginia City. “So earthwork is going on. We got an order from the state so we could do this before winter,” said Doug McQuide, director of marketing and public relations. Comstock hopes the first gold pour will be in the second quarter of next year, once mining can begin and the Merrill Crowe process plant is expanded, he said. “We’ve purchased or ordered everything already,” McQuide said in November. Comstock recently increased gold equivalent resources at the Comstock Mine Project in Storey and Lyon counties. The measured and indicated resource is now 1.78 million gold equivalent ounces, and the inferred resource is 990,000 ounces.
Combined, the 2.77 million ounces of resources are a 94 percent hike over the last estimates in August 2010, according to the company. “Validating 2.4 million ounces of gold and over 20 million ounces of silver is a significant step for our team,” said Corrado De Gasperis, chief executive officer of Comstock. He said the new report represents the “most efficient drilling program in our company’s history, with a discovery cost of just $6 per gold-equivalent resource ounce, a truly exceptional result.” Comstock Mining is planning a surface mine about a mile and a half south of Virginia City and in the vicinity of Gold Hill and Silver City, according to McQuide. The surface mining will be in previously mined area, expanding and going deeper than earlier mining. Gold Springs mined in 2005-2006, and there was mining in the 1990s and historic mining by the Oliver Hills Mining Co., he said. Gold Springs later changed its name to Comstock and reshaped the company.
Comstock controls roughly 6,100 acres of mineral rights, including 1,000 acres of patented mineral rights. The mining operation would be small, adding roughly 35 jobs, McQuide said. The company currently has 30 employees for the mining project so the additional hiring will bring the number to 75-80. Comstock also has 20 employees at its Gold Hill Hotel, he said. Plans call for producing 20,000 ounces of gold a year initially and moving up to 40,000 ounces, using heap leaching and a Merrill Crowe process plant, McQuide said. The resource estimates are included in a technical report written by Behre Dolbear & Co. that also recommends Comstock complete a pre-feasibility study, which would allow the company to calculate reserves. “Behre Dolbear believes the Comstock Mine Project represents a well-explored epithermal precious metal deposit within a world-class mining district,” the new report states. “The density of geologic data is high,
and the reliability is excellent, especially in the starter mine areas,” Behre Dolbear wrote. Opposition to the project has come from the community. Virginia City is a tourist town highlighting historic mining. McQuide said the company will be involved with the community and in restoration of old mine properties. The most recent drilling program, which ran from Oct. 25, 2010, through Aug. 19, 2011, focused on infill and development drilling in the Lucerne and Dayton resource areas, and included 389 holes, totaling 132,294 feet. The Dayton Resource Area is south of the Lucerne Resource Area and includes the historic Dayton, Alhambra, Kossuth, Cherokee and Metropolitan mines. The historic Dayton Mine was the last major underground operation in the Comstock District, before being closed by the War Act in 1942, according to Comstock. The company acquired these mineral properties, including the results from 252 previously drilled holes, in two separate transactions in July.
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State, federal agencies secure mine hazards By JARED DuBACH Mining Quarterly
ELKO — With an estimated 200,000300,000 abandoned mines in various degrees of complexity and decay, the Nevada Division of Minerals has a lot of work cut out for its staff and that of other government entities. According to an abandoned mines report for 2010 issued in September of this year, 598 hazards were discovered and ranked, which is a 35.7 percent drop from 2009. The report indicates 816 hazards were secured, and mining claimants and private property owners secured 110 hazards. Division of Minerals staff secured 387 orphan sites, which are abandoned mining operations on public lands where no claimant or property owner exists, according to the report published by the division. The report indicates $579,244 was spent in 2010 for the abandoned mines program. U.S. Bureau of Land Management grants accounted for $75,000, mining claim fees contributed $463,236 and disturbance fees accounted for $41,008. There were no reported incidents at abandoned mine sites in 2010; however, a Battle Mountain man died in March of this year after falling 190 feet down an old mine shaft in the Murphy’s Mine Complex in Pershing County. The victim was pronounced dead after it was apparent to rescuers on the surface through use of a video camera that he had suffered a severe head injury. The rescue was called off when it was determined rescuers could not safely get to him. Since the formation of the minerals division in 1987, 15,238 hazards have been identified and ranked, and as of 2010
Bulldozer operator Scott Heseltine deftly maneuvers his dozer among the large rocks and steep slopes of the southeastern portion of Elko County on Oct. 21 to close extremely hazardous abandoned mines identified during a U.S. Bureau of Land Management survey in June as a high priority for closure. This particular shaft was so big it took more than 20 pushes of dirt to fill, according to the BLM. U.S. Bureau of Land Management
11,089 have been secured. Such sites have been found in every county in the state. More than half of the sites have been considered to be of low risk, but as much as a quarter pose moderate risk of hazard to the public and domestic animals. Division records indicate that outside of people, it is not unheard of for a dog to wander into a mine site and be injured or killed. According to the division’s report, 119 bat gates also were constructed and installed in 2010 at hazard sites. Abandoned mine shafts have been determined by biologists to be prominent habitat sites for species of bats because of
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See ABANDONED, page 78
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Abandoned ... Continued from page 76 their similarity to naturally occurring caves. Sealing up a shaft that is home to bats would impact that local population. Bats play an important role in reducing insect populations. Federal agencies also secure sites and keep the division informed of the work. In early November, the BLM secured 80 old mine sites near Winnemucca, and the BLM’s Elko District closed 60. Elko district’s heavy equipment operators worked about 3,000 hours pushing dirt and 16 district personnel from various resource programs and field offices assisted in providing safety guides to the bulldozer crew, according to Lesli Ellis, public affairs specialist for the Elko BLM District. The Elko BLM District targeted Tuscarora, Contact and various smaller areas in the southern part of the district for the closure work, she said. The BLM closures were coordinated in close cooperation with Nevada Division of Minerals, the Nevada Department of Wildlife and the Idaho Forest Service, Ellis said. The BLM also encourages the public to avoid abandoned mine shafts and openings. Ellis stated, “Abandoned mines can contain toxic chemicals, lethal air and steep drops. Remember to ‘Stay Out and Stay Alive.’” She also said abandoned mine sites are archaeologically significant, and “any debris found among them should be left as is, to preserve it for the benefit of present and future generations.” A side benefit to performing these closures, which often require the use of heavy equipment and contracted labor, is the benefit to local communities when workers stay in hotels, dine in restaurants, buy supplies and shop locally, according to the BLM.
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Nevada Division of Minerals
This chart shows the categories of risk in the abandoned mines located in Nevada from 1987 through 2010, with a total of 11,089 secured by the end of the year.
Revett Minerals has record production By ADELLA HARDING Mining Quarterly Editor
ELKO — Revett Minerals Inc. President and Chief Executive Officer John Shanahan foresees “a very good year,” after record production in the third quarter at the Troy Mine in northwestern Montana. “I would say the guys nailed it. They went beyond our targets,” he said. The mine produced 402,700 ounces of silver and more than 3.28 million pounds of copper, which was a 45 percent increase in silver production and a 39 percent increase in copper production. Shanahan said, however, that Revett ended the quarter with $6 million inventory because of problems scheduled ore cars to take the concentrate for smelting. “We really need to work on this,” he said, to get the backlog on rail cars by the end of the year. In October, he said the net cash provided to the company before capital expenditures totaled $8.4 million in the quarter, but the amount would have been
between $10 million and $12 million if all the copper had been shipped. The underground mine produces the copper and silver for milling on site, ships the concentrate by truck to Libby, Mont., and puts it on rail cars to move to a smelter in Mexico. The mill throughput of 4,370 tons per day and silver production of 402,700 ounces were the most produced in a quarter since the mine opened in late 2004, according to Revett. Cash costs also improved, with cash costs net of a by-product basis at $4.32 per ounce of silver and 69 cents per pound of copper. Although the copper and silver prices were down by the end of the quarter, Shanahan said $30 silver and $3 copper “are still wonderful. I am bullish on copper and surprised it is not back toward $4.” He said he believes the fundamentals for copper remain due to worldwide demand and “not a lot of stockpiles. I still
Submitted
See REVETT, page 80
Revett Minerals Inc.’s underground silver and copper Troy Mine near Troy, Mont., is nestled in forest land.
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Silver investment forecast
Revett ... Continued from page 79 think we will see copper prices of $5 and $6 in late 2012 or into 2013. I really do.” Revett has sold 25 percent of its copper in advance at $4 a pound, Shanahan said. “If it goes to $5, it will be good to be wrong,” he said in a telephone interview. The copper price was in the $4 range in the second quarter, while copper for December delivery was at $3.72 a pound in late October. Silver was as high as $48 an ounce in the second quarter, but the spot silver price was at $30.45 on Sept. 30. Meanwhile, Revett continues to add life to Troy, a mine that was expected to have a mine life of three and a half to four years in 2004. Revett has preliminary design plans for development of the I Bed, which it hopes to begin developing in late 2012, pending approval from state and federal agencies. Shanahan said that because it is a new mining area, the company needs agency approval, “which will take a few months,” but doesn’t involve an environmental impact study. “We will continue to capitalize on our
exploration and engineering efforts as well finalize our I Bed development plans for 2012 and detail our longer-term exploration program in and around the Troy Mine,” Shanahan said in the announcement on production. Revett is drilling both below and adjacent to the Troy Mine and also reassaying and relogging old core from the JF Property, as well as drilling new holes on the JF Property nearby. Revett also is reworking the supplemental EIS with the U.S. Forest Service for the Rock Creek Project that the company has long been trying to permit. The Kootenai National Forest is expanding the original EIS after a U.S. District Court ruling remanding the study back to the USFS over concerns about threatened bull trout populations and habitat, according to the Bonner County Daily Bee in Montana. “We’re waiting for the next definite news, a ruling from the 9th Circuit. We’re hopeful we will have something by the end of the year. I just hope it will be sooner rather than later, and I suspect it will be positive,” Shanahan said.
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ELKO — The Silver Institute released a report entitled “The Silver Investment Market — An Update,” which forecasts world silver investment will reach a record high of $10 billion in 2011. That would be a 66 percent increase over the $6 billion posted in 2010, according to the report. “This update examines how silver’s price characteristics, including its safe haven status and price volatility have appealed to different groups of investors, and how they have reacted to price variations, as well as the changing economic backdrop,” said Washington-based Silver Institute Executive Director Michael DiRienzo. The new report by Thomson Reuters GFMS also found that the outlook for silver prices is bullish for the rest of this year and into next year. Spot silver prices started the year with a high of $30.67 per ounce and low of $26.68 per ounce, rose as high as $48.70 an ounce in April, according to London fix prices on a kitco.com chart and is $33.93 today on the New York Mercantile exchange.
Silver holdings through exchange traded funds since January 2008 have grown by 364 million ounces to 577 million ounces as of Oct. 31, and silver coin sales is expected to break the 2010 record, according to the report. The report states that sales of 41 million coins are forecast for the U.S. Mint’s American Eagle silver bullion coin sales, eclipsing last year’s record of 34 million coins. The institute reported in October that sales of the coins broke the all-time record of 34,662,500 set in 2010, with current sales exceeding 35 million in early October. Monthly sales were averaging 3.7 million, and if the pace continues until year’s end, total sales could top 44 million for 2011, the institute’s new newsletter states. The Silver Institute said the new report on silver investments covers several key areas of silver investment. “We believe this report will give silver market participants a fresh look into silver’s role as an investment,” DiRienzo said. A copy is at www.silverinstitute.org.
Marigold in higher grades at Basalt ELKO — Goldcorp Inc. reported the Marigold Mine near Valmy produced more gold in the third quarter as the mine processed higher grades from the Basalt Phase 7 open pit. The mine reached the ore after stripping at Phase 7. Goldcorp’s share of gold production for the quarter was 52 percent higher than in the 2010 quarter at 25,600 ounces, compared with 16,800 ounces. Goldcorp operates the mine and owns two-thirds. Barrick Gold Corp. owns the remaining one-third of the mine. Total cash costs for the quarter at Marigold were down 4 percent to $788 per ounce from $817 per ounce in the 2010 quarter, according to Goldcorp. Operating costs, however, were higher due to longer hauls, higher fuel prices, higher labor costs and increased costs for consumable goods, along with higher taxes and royalties due to higher production and higher gold prices. The company also reported Marigold received permitting to construct the planned Trout Creek diversion dam to shorten haulage times and provide access to future reserves at Marigold.
Marigold also had a successful drilling program that leads to the expectation that the Target II, Target III and Red Dot deposits will join together, according to Goldcorp’s earnings report. Companywide, Goldcorp reported adjusted net earnings were up 88 percent to $459 million, or 57 cents per share, in the third quarter. Chuck Jeannes, Goldcorp president and chief executive officer, said in the earnings report the company is on track to produce between 2.5 million and 2.55 million ounces of gold this year. The adjusted net earnings compared with net earnings from continuing operations totaled $336 million, however, down from $721 million in the 2010 quarter. Revenues were up 48 percent to $1.3 billion on gold sales of 571,500 ounces, according to the report, on Vancouverbased Goldcorp’s average realized gold price in the third quarter of $1,719 per ounce. The third-quarter 2011 realized price compared with $1,239 per ounce in the 2010 quarter. Goldcorp produced 592,100 ounces of gold in the quarter, compared with 588,600 ounces in the 2010 quarter.
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Allied Nevada says Hycroft has silver lining By ADELLA HARDING Mining Quarterly Editor
ELKO — Allied Nevada Gold Corp. is expanding, seeing silver production surge and making plans for even more expansion and construction of a mill at the Hycroft Mine in Humboldt County. The company also is looking at moving as quickly as possible to enter the permitting process to create a mine at its Hasbrouck Project near Tonopah. Silver production at Hycroft soared to a new record of 121,264 ounces in the third quarter, compared with 75,552 ounces in the 2010 quarter, according to the earnings report. “Silver production is far greater than what we had expected. It continues to trend up to effective recovery and silver grade, recovery certainly appears to be a couple of percentage points higher than we thought and silver grade is about 30 percent better than the model so as it should be,” said Scott Caldwell, president and chief executive officer of Allied Nevada. “For the quarter, we sold 4.6 ounces of
silver for every ounce of gold, and I mean even I can do that math, that’s a nice credit to costs, 30 bucks silver, nearly $150 an ounce,” he said in a teleconference. “Again I keep telling people what makes this thing work, what makes it work on a heap leach, what makes it work on a milling expansion, its silver, silver; it’s a phenomenal credit to cost now. And once we get the mill built, it becomes a real cash flow generator making 20 plus million ounces a year,” Caldwell said about plans for Hycroft. Gold production at Hycroft was below expectations at 26,339 ounces in the quarter, however, compared with 29,563 ounces of gold produced in the 2010 quarter. Adjusted cash costs of $478 per ounce for the third quarter were down from $486 per ounce in the 2010 quarter. Allied Nevada’s net income for the quarter was $14.7 million, or 16 cents per share. This compares with $3.1 million, or 3 cents per share, in the same quarter last year. Total revenue in the quarter was $49.6 million, up roughly $10.7 million from
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the same quarter last year. Gold revenues were $45.4 million, representing 26,971 ounces of gold sold at a realized price of $1,684 per ounce, according to the company. The company reported gold production was down in the third quarter because of delays in delivery of new equipment that will increase production, according to the earnings report. The mine put the first Hitachi shovel in operation in September, six months behind schedule, and expected the second shovel in late November. The delays were cause by the tsunami that hit Japan, where the shovels are manufactured. Additionally, Allied Nevada reported an eight-week delay in the arrival of pumping equipment needed to increase the flow of cyanide solution to the leach pads at Hycroft, which resulted in lower production out of the Merrill Crowe process plant. Hycroft also plans to construct a gyrating crusher to boost production and components are on order, according to the earnings report.
Plans are progressing for a mill and mining expansion project at Hycroft. The company received a positive feasibility study during the quarter that estimates the project could produce 616,800 ounces of gold and 25.9 million ounces of silver at $190 per ounce with construction of a mill. The company also announced reserves at Hycroft are now 10.2 million ounces of gold and 388.6 million ounces of silver, or 17 million ounces of gold equivalent. The conversion of resources to reserves was part of the mill feasibility study. Looking at Hasbrouck, Allied Nevada said the company is completing a preliminary economic assessment for the project and hopes to announce the study results and an updated mineral resource estimate in the first quarter of 2012. “We are going to fast-track that project. As soon as we can, we are going to move right into the permitting process,” Caldwell said. “We believe that at reasonable gold prices, and by reasonable I am saying $800 ... that it’s going to be our next mine,” he said in the teleconference.
American Vanadium plans Nevada mine By ADELLA HARDING Mining Quarter Editor
ELKO — American Vanadium Corp. is making plans for the a vanadium mine in Eureka County, the first in Nevada. “We’ve moved into the detail engineering phase and awarded Scotia Engineering the contract for engineering, procurement and project manager,” said Michael Doyle, Reno-based executive vice president of operations. The company also has awarded Amec in Reno with the civil design work for the project that will be done while American Vanadium awaits permitting. Doyle said in mid-November the company has submitted a baseline review with the U.S. Bureau of Land Manage Battle Mountain District toward permitting the proposed operation in Little Smoky Valley roughly 30 miles south of Eureka. “We’re getting everything done that can be done. The next step is the permits,” he said. Doyle said American Vanadium plans
presentations at the Northwest Mining Association convention in Sparks. “It’s a neat project, really,” he said. Plans call for an open-pit mine and a heap leach operation that is “one of few in the world,” Doyle said in an earlier interview. Vanadium is used to strengthen steel and also would be used for future vanadium redox flow batteries. The company released the technical report in October that shows the economic viability of the Gibellini Vanadium Project that will be on less than 650 acres. Doyle said plans call for roughly 91 workers, including contractors, working five days a week. The mining rate would be 3.4 million tons per year. The processing would go on 24 hours seven days a week. The feasibility study that is included in the compliant technical report states the Gibellini Vanadium Project could produce 11.4 million pounds of vanadium pentoxide per year at an operating cost of $4.10 per pound at an average selling price of $10.95 per pound.
Capital costs for the project are estimated at $95.5 million, and the payback on the startup costs would take just under 2.5 years, according to the study. There are no apparent environmental issues, and there will be no water issues, Doyle said. Plus, it would be a small operation with contract mining and a process plant on site, making it a good candidate for the BLM’s acceleration efforts on permitting, he said. The technical report states that American Vanadium’s vanadium proven and probable reserves for the Gibellini deposit total 120.5 million pounds. Measured and indicated resources total 131.37 million pounds of vanadium pentoxide. The report also includes a first-time inferred resource estimate for the Louie Hill deposit, 41.87 million pounds. “There is more drilling to go,” Doyle said, estimating the Gibellini deposit would provide seven years of mining to start, and the Louie Hill deposit would add two more years. “I think we can keep this going.”
The project is all on public land, and Atlas was the first to discover the deposit in the 1950s. Others also drilled at the site but didn’t do anything more, according to Doyle. The late Louis Gibellini, who was well known in Eureka, mined for base metals on the property, he said. The redox battery American Vanadium hopes will be the upcoming market for its product is expected to be a key to inexpensive renewable energy, according to the Vancouver-based company. Doyle said large redox batteries would store energy and release it onto the power grid. “The technology is just coming on line,” he said. The project in Eureka County would produce what is called purple flake, which would go into super sacks and electrolyte for the battery industry, Doyle said. Meanwhile, vanadium is used to strengthen steel used in construction of See VANADIUM, page 84
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Vanadium ... Continued from page 83 buildings, bridges, pipelines, ships, rail cars, airplanes and motor vehicles, which also is a growing market. Doyle said China recently mandated that rebar be strengthened for future projects in that country, which will increase demand. “That’s really driving the forecast,” he said. The feasibility study includes a forecast from Roskill Consulting Group of London that there is a potential deficit in vanadium production coming in 2015 so prices will begin to increase in 2014. Doyle said vanadium has a military use because it is used to strengthen steel for the defense industry. “We’re trying to get the U.S. to list vanadium as a strategic metal,” he said. Currently, roughly 95 percent of vanadium is imported mainly from South Africa, China and Russia, and any produced in this country is a byproduct. Ron MacDonald, vice Chairman of American Vanadium, recently wrote an opinion piece about vanadium and renewable energy. He said the “U.S. government’s commitment to supporting both the renewable energy and electric vehicle industries underlines the need for the rapid development of the automotive and mass storage batteries, and has thrown the spotlight on domestic vanadium supplies. “In the not-too-distant future, will America find itself exchanging an addiction to foreign oil with an addiction to foreign batteries? Or will it create a successful battery market policy through its current efforts to bolster manufacturing while securing strategic materials? Either way, it seems certain that playing a critical role will be a little known element: vanadium,” he said.
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Nevada mine reclamation awards go to three projects ELKO — The Nevada Excellence in Mine Reclamation Awards for 2011 went to Newmont Mining Corp. and to Baker Hughes Oilfield Operations Inc. for their accomplishments in restoring and preserving Nevada’s environment. “Many of the projects receiving the Nevada Excellence in Mine Reclamation Award are unique in the United States, if not the world,” said Alan Coyner, administrator of the Nevada Division of Minerals. According to the Nevada Division of Minerals: • Newmont was given an award in the category of Wildlife Habitat Enhancement for the company’s work at the Mule Canyon Mine in Lander County. The mine is located in an area repeatedly impacted by wildfires in recent years and revegetation at Mule Canyon provides a “wildlife oasis” in an otherwise compromised environment. • Baker Hughes was given an award in the category of Innovative Design and Planning for its work at the Argenta Mine in Lander County. Poor quality water from the F-Pit at the mine
was pumped to a lined evaporation pond for disposal and non-acid producing waste rock was placed in the pit as backfill to preclude future development of a pit lake, the Nevada Division of Minerals said in an announcement on the awards. • Newmont was given an award in the category of Overall Mine Reclamation for the company’s work at the closed Trinity Mine in Pershing County. All obligations have been met and all permits have been terminated, making the mine Newmont’s first walk away closure in Nevada. Newmont acquired Trinity in the merger with Santa Fe Pacific Gold in 1997. The 2010 awards were presented at the Nevada Mining Association convention in Stateline in September. The Nevada Excellence in Mine Reclamation Awards are an annual effort of the Nevada Division of Minerals, Nevada Division of Environmental Protection, Nevada Department of Wildlife, the U.S. Bureau of Land Management and the U.S. Forest Service.
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Core drilling At Fire Creek Silverio Lara knocks ore core out into a tray at American Drilling’s underground platform at Klondex Mines Ltd.’s Fire Creek Project.
Ross Andreson/Mining Quarterly