U.S. Report Nevada mining ventures not restricted to majors

It is easy to get the mistaken impression that small to mid-sized companies, stacked alongside giants like Newmont Mining (NYSE) and American Barrick Resources (TSE), aren’t playing much of a role in new mine development in Nevada. It’s true Newmont has secured the largest North American reserve position — an awesome 20.5 million oz. at the end of 1989 — largely because of its 16 gold deposits along Nevada’s famed Carlin Trend. But according to Fred Carrillo of the U.S. Bureau of Mines in Reno, companies of all sizes are represented in the latest crop of mines expected to be brought into produc- tion this year.

The smaller companies are attracted by the prospects of lower capital and operating costs, particularly for open pit reserves that are heap leachable. It’s part and parcel of the same operating strategy that made Newmont and American Barrick what they are today, albeit on a smaller scale.

Because most of the larger mines have already been brought on stream by the more dominant players in Nevada, Carrillo is noting a decline in the number and size of new mine projects this year.

“I would say 1986 through to 1988 were the peak years for new mine openings,” he said, although he stressed that Nevada is in no danger of losing its status as the leading gold and silver producing state.

Despite the slowdown, there are still a few “big ones” to come on stream in the coming year.

For example, a unit of Santa Fe Southern Pacific (NYSE) is reported to be ahead of schedule for a third-quarter 1990 startup at its 100% owned Rabbit Creek open pit gold mine near Winnemucca. When up to full capacity in 1991, this combined milling and heap leach operation is expected to produce about 100,000 oz. gold per year to Santa Fe’s account.

Proven and probable oxide reserves at Rabbit Creek were recently increased to an estimated 12 million tons averaging over 0.13 oz. gold per ton. The property also contains 38 million tons of oxide heap leach material averaging 0.028 oz. gold, plus substantial reserves of refractory material.

As Newmont moves into the 1990s, the company plans to build two new plants that will be integrated into existing mills to treat refractory ore reserves. These are expected to be operational in 1992 and 1993. The company is also continuing an intensive exploration and reserve development program (US$20 million was spent in 1989 alone), particularly on its properties along the Carlin Trend where it already operates five mills.

Plexus Resources (TSE), in partnership with majority owner Kennecott, is looking to start commercial production this spring at the Rawhide open pit, gold-silver deposit near Reno.

Rawhide, a project that will likely rank among the top ten heap leach producers in the U.S., is targeted to produce 81,000 oz. gold and 377,000 oz. silver annually. Reserves are reported as 29.4 million tons grading 0.04 oz. gold and 0.36 oz. silver.

Some of the projects being permitted in Nevada are actually for development of new pits at existing mines. For example, FMC Gold (NYSE) recently announced it will spend US$7.6 million to develop the Ketchup Flat gold-silver deposit at its Paradise Peak mine near Gabbs. Ore will be mined and heap leached adjacent to existing facilities at Paradise Peak. The company hopes to be in production by year- end.

Several new mines have already been opened in Nevada. In early January, officials of Alta Gold (NASDAQ) and Nerco (NYSE) held a dedication ceremony to mark the opening of the 4,000-tons-per- day Elder Creek open pit gold mine near Battle Mountain.

Owned equally with operator Alta Gold, this smaller-scale heap leach mine is expected to produce about 35,000 oz. per year. Reserves are reported as 1.8 million tons averaging 0.046 oz. gold.

Tenneco Minerals, a unit of Tenneco (NYSE), opened its Fondaway gold mine near Fallon in late January. This modest-sized open pit, heap leach mine is expected to produce 12,000 oz. gold per year during its 2- to 3-year first-phase mine life. But Tenneco is continuing exploration on the property as part of a second-phase mine program that has potential for a much larger reserve.

Gold King Consolidated (NASDAQ) hopes to be in production before mid-year at its recently acquired Adelaide Crown open pit gold mine in Humboldt Cty.

It is reported to have proven reserves of 585,000 tons grading 0.043 oz. gold and 1.3 oz. silver, plus additional reserves in other categories. The company expects a heap leach mine would produce about 20,000 oz. gold per year.

Horizon Gold Shares (NASDAQ) is reported to be looking to a late 1990 or early 1991 production start at its recently acquired Dixie-Comstock deposit in Churchill Cty. Geological reserves at the open pit, heap leach prospect are reported as 4.03 million tons grading 0.047 oz. gold. The company hopes to produce between 25,000-30,000 oz. gold annually.

U.S. Gold (NASDAQ) is in the startup phase of operations at its Tonkin Springs project near Eureka. Design capacity of the company’s new mill, the first to incorporate bioleaching as a pretreatment for sulphide ores, is 1,500 tons per day. The Tonkin Springs project also includes a heap leach operation.

Operator USMX (NASDAQ) and partner Pegasus (TSE) plan to place the Casino deposit in the Alligator Ridge area of eastern Nevada into production this year. It is reported to have 804,000 tons of 0.054 oz. gold. Definition drilling is continuing at the nearby Winrock deposit, also a joint venture between USMX and Pegasus.

Coral Gold (TSE) had a brief and troubled production run at its Robertson heap leach gold mine in north-central Nevada. However, it recently signed a deal that will allow Amax Gold to earn up to a 70% interest. Amax will spend US$11.5 million on a four-phase exploration and development program that will include testing the property’s potential for a sulphide reserves at depth.