NEVADA AND THE WESTERN STATES — Alta begins building Olinghouse gold mine

Now that all the permits and funding are in hand, Alta Gold (ALTA-Q) has begun construction of the Olinghouse gold mine east of Reno, Nev.

On May 8, the company received a record of decision from the U.S. Bureau of Land Management, which was the final permit needed before construction could begin. Several days later, the company announced a US$21.7-million financing package that will enable it to begin work.

In the weeks since the record of decision, Alta has been able to complete 50% of the crushing plant, which will have the capacity to handle 8,000 tons per day. In addition, the company plans to purchase a gravity-separation mill, capable of throughput of 800 tons per day, that is expected to produce as much as 12% of the gold at Olinghouse.

Alta is in the process of building roads to the deposit, as well as constructing the leach pad. Most of the mining equipment is already on site, and prestripping is expected to begin in June, followed by the first loading of ore onto the pad in July. Initial production is expected to come from the gravity mill in August, with production from the pad expected by September.

Project costs for Olinghouse have been estimated at US$18 million, leaving as much as US$5 million for working capital.

The financing package consists of an US$11-million term loan and a US$6-million revolving credit facility arranged by Gerald Metals, Standard Chartered Bank and Credit Agricole Indosuez. Another US$4.7 million was provided by U.S. Bancorp in the form of an equipment loan.

Alta anticipates production of 17,000 oz. gold from Olinghouse by the end of the year. Production during 1999 is forecast at 90,000 oz., increasing to 108,000 oz. in 2000. Cash costs are estimated at less than US$200 per oz.

At year-end 1997, proven and probable reserves stood at 512,800 oz. gold in 12.2 million tons grading 0.04 oz. per ton, using a gold price of US$300 per oz. In addition, the Olinghouse property contains several gold targets along a 6-mile trend that have the potential to significantly expand reserves.

Alta’s total annual gold production is expected to be 60,000 oz. this year and 150,000 oz. in 1999. Besides the development and exploration work at Olinghouse, the company is evaluating its newly acquired Lookout Mountain property, situated south of Homestake’s Ruby Hill mine, in central Nevada.