NEVADA AND THE WESTERN STATES — Homestake’s Ruby Hill cranking out low-cost gold

The Ruby Hill gold mine, at the southern end of Nevada’s Battle Mountain trend, is up and running, and contributing to Homestake Mining’s (HM-N) bottom line.

The operation began pumping out low-cost ounces last November; the timing — during a protracted period of low gold prices — was ideal, helping Homestake offset a drop in gold revenues.

Cash costs at Ruby Hill were US$129 per oz. gold during the first quarter of 1998, lowest among the company’s six U.S. mines, and not far above those of the Eskay Creek mine in B.C., operated by subsidiary Prime Resources Group (PRU-T). Total costs for Ruby Hill were US$240 per oz. during the first quarter.

Because of Ruby Hill’s contribution, Homestake was able to lower its overall cash costs by 17% to US$203 per oz., compared with US$245 in the first quarter of 1997.

Ruby Hill produced 30,600 oz. during the first quarter, enabling Homestake to increase its total first-quarter gold production to 517,900 oz. from 488,500 oz. a year earlier.

The company expects to produce about 29,000 oz. gold at Ruby Hill in the second quarter.

Homestake is currently exploiting the West Achimedes deposit, in which mineralization is hosted by oxidized limestone.

The company has identified a larger, deeper deposit below the present pit that it has dubbed East Archimedes. Partially oxidized to refractory mineralization occurs from 600 to 1,000 ft. below the surface.

Bruce Thieking, mine manager at Ruby Hill, notes that Homestake has delayed development of East Archimedes because it is not economic at current gold prices. Instead, the company is focusing exploration efforts on near-surface oxide targets in the Ruby Hill district.