American miners plot steady course

Despite a host of closings and failures, American miners managed to chalk up several exploration discoveries and mine openings in 1999.

Battle Mountain Gold (BMG-N) persevered through low gold prices, while exploration at the Phoenix project in northern Nevada added more than 1.5 million oz. to reserves, bringing the total to more than 4.5 million oz.

During the year, the company executed 150,000 ft. of drilling (more than 350 holes), utilizing a dozen rigs.

With capital costs projected at US$165 million, Phoenix is expected to produce 300,000 oz. gold annually at US$185 per oz. over a span of 14 years. However, a production decision is still a long way off.

Along Nevada’s Carlin trend, Great Basin Gold (GBG-V) completed a 50,000-ft. drill program at the Ivanhoe project, targeting high-grade feeder zones at depth. The work outlined a multiple system of northeasterly trending veins, with strike lengths exceeding 1,400 ft. and vertical extents of 500 ft. The company is using the Ken Snyder mine to the north as its model.

Great Basin has more than $5 million in working capital.

The year’s most anticipated acquisition was Homestake Mining‘s (HM-N) takeover of Argentina Gold in February. The company wasted no time launching a US$13-million drill program on the Veladero gold-silver property.

Meanwhile, Kinross Gold (K-T) tightened its grip on Alaska’s Fairbanks district by locking up the True North deposit, across the road from its own Fort Knox mine. The acquisition was accomplished in twin deals: in February, Kinross acquired La Teko Resources, which had a 35% interest in the 10,000-acre property; and in April, it purchased the remaining 65% from Newmont Mining (nem-n) for US$28 million.

The move is expected to boost annual production at Fort Knox by as much as 100,000 oz. to nearly 500,000 oz. Capital costs to develop the satellite deposit could reach US$20 million.

In other merger news, Glamis Gold (GLG-N) won out in the bidding for Rayrock Resources early in the year, and Idaho-based Hecla Mining bought Venezuela’s Camorra gold mine and other assets from Monarch Resources (MRE-T) for US$25 million.

Deep Post

Although few gold mines were commissioned around the world, Newmont contributed two new mines in Nevada. After completing an asset swap with neighbour Barrick Gold (ABX-N) in February, Newmont began building the Deep Post mine to gain access to mineralization beneath the Betze-Post pit.

The underground mine will be the company’s fourth, as well as its highest-grade, mine in the Carlin trend. Reserves stand at 3 million tons grading 0.77 oz. gold per ton, equivalent to 2.35 million oz. At full capacity, the mine is expected to account for 20% of Newmont’s Nevada production.

Construction has begun and Newmont anticipates startup in 2001. Two years later, annual production should reach 400,000 oz. at a cash cost of US$150 per oz.

In March, the company began production at the Trenton Canyon satellite operation, south of its Lone Tree mine. Heap leaching is carried out on site, though gold-laden carbon is shipped to Lone Tree for stripping.

Farther afield, Newmont began shipping copper-gold concentrates from the massive Batu Hijau mine in Indonesia.

Not all companies were so lucky with their development projects during the year.

Stalls & Snags

Battle Mountain and 46% partner Crown Resources (CRRS-Q) sought congressional help to push through a plan of operations for the Crown Jewel project in Washington state, only to be stymied by the Department of Interior. The government department wanted development stopped on the grounds that the project had exceeded the number of mill site claims allowed under the 1872 Mining Law. The partners cried foul, claiming the interpretation of the Mining Law had no legal basis, and, enlisting political muscle of their own, had confirmation of the project’s plan of operations attached to the government’s appropriation bill for fiscal year 2000.

Canyon Resources (CAU-X) spent the year pondering what to do about the stalled McDonald gold project in Montana after voters in that state vetoed the use of cyanide for new mining projects. The junior got a shot in the arm, to the tune of US$3.5 million, from Franco-Nevada Mining (FN-T), which urged Canyon to wage the legal challenge against the ruling. In return, Franco is to receive a third of the proceeds of any award from the soon-to-be-filed “takings lawsuit.”

Through it all, Nevada remained the world’s best place to explore, according to a survey by Canada’s Fraser Institute, and Alaska continues to draw junior companies around the multi-million-ounce Pogo gold deposit.

Meanwhile, the industry continues doing its best to weather low commodity prices.