Placer Dome gives nod to Getchell project

Vancouver — Placer Dome (PDG-T) is preparing to start up the Turquoise Ridge gold mine, part of the Getchell project in northwestern Nevada’s Humboldt Cty.

The daily milling rate is projected to be 1,100 tonnes, with annual production set at 300,000 oz. Over a projected mine life of nine years, cash costs are expected to be US$215 per oz., with total costs pegged at US$265 per oz.

“We’re excited about the results from test mining and contractor work undertaken last year,” says Placer Dome President Jay Taylor. “We’ve changed the mining method and opened up previously undeveloped high-grade areas. We know we can mine this property safely and profitably.”

Placer acquired the Getchell project in 1999 as a result of its $1.1-billion merger with Denver-based Getchell Gold. Some two months after the deal was complete, Placer stopped production at problem-plagued Turquoise Ridge, one of two underground gold mines on the property, in order to focus on exploration and development. Ore from the underground Getchell mine was stockpiled for later processing.

In late 2001, Placer took a US$292-million writedown on the project after extensive analysis failed to produce a mine plan that would recover the carrying value of the asset. The geology and poor ground conditions required a highly selective mining method that limited daily production to 1,500-2,500 tonnes.

Last year, Placer began evaluating the high-grade resources in the North zone of the Turquoise Ridge deposit. The program included 600 metres of drifting and 33,000 metres of diamond drilling. The results prompted the company to consider resuming production at Getchell.

Proven and probable reserves at Turquoise Ridge, based on a gold price of US$300 per oz. gold, are estimated at 3.5 million tonnes grading 23.9 grams gold per tonne, or 2.7 million contained ounces. Placer expects to convert additional known mineralization into reserves within the next 30 months.

The capital cost of ramping up to full production would be about US$80 million, which includes US$41 million for underground development, US$26 million for refurbishing the existing mill, and US$14 million for surface work and initial operating costs. Meanwhile, Placer Dome is negotiating alternative processing arrangements which could eliminate the costs of refurbishing the mill.

Twin Creeks

The major is currently producing gold from the Getchell portion of the property under an existing processing agreement with Newmont Mining‘s (NEM-N) Twin Creeks mine. According to the agreement, Newmont receives a credit for its processing cost of Getchell ore, plus a fee. The deal was inked in October 2001 and is good for 30 months (until June 2004), or until 1 million tons of ore are sold.

Ore resulting from development of the new Turquoise Ridge operation will also be processed under the existing agreement with Newmont. Turquoise Ridge, including the Getchell underground, will contribute 89,000 oz. gold to Placer Dome’s account in 2003. The mine is expected to achieve a sustained production rate of 300,000 oz. annually in 2004.

Geologically, the Turquoise Ridge deposit is hosted by hornfelsed mudstone, limestones, calcareous mudstones and some pillow basalts. Mineralization generally occurs at the intersection of north-south-, northeast- and northwest-trending faults. The North zone, is hosted in interbedded, carbonaceous mudstones and limestones, and calcareous mudstone breccias. Gold distribution is related to low-angle structural zones and to intersecting, high-angle north-south- and northeast-trending faults. Anticlines trending to the northwest and northeast play a significant role in localizing the gold mineralization.

The Getchell deposit is hosted in the Getchell fault, and in footwall of the fault. The footwall deposits occur at the intersections of northeast-, north-south- and northwest-trending faults and are hosted in carbonaceous limestone, silty limestone and calcareous mudstone breccias.

Gold mineralization is associated with arsenic, mercury and, to a lesser extent, antimony, as well as pervasive decalcification, silicification and carbonaceous alteration.