Some two months after a US$1.1-billion merger with Getchell Gold,
Getchell’s Nevada property contains two underground mines — the older Getchell mine and the newer, higher-grade Turquoise Ridge mine — as well as a mill facility that includes a pressure oxidation plant to process the refractory ores.
The property has total underground reserves of 17.1 million tons averaging 0.38 oz. gold per tonne (6.5 million contained ounces) plus a small surface reserve of 1.3 million tons averaging 0.054 oz. It also has additional resources of 9.4 million contained ounces not yet classified as reserves.
Despite its exploration success, Getchell has posted consistent losses from its Nevada operation. In 1998, it lost US$11.5 million, compared with a loss of US$19.4 million in 1997. In the 1999 first quarter, Getchell posted a loss of US$15.5 million, compared with a loss of US$4.9 million a year earlier.
Getchell produced 159,546 oz. gold at a cash cost of US$321 per oz. last year, down from 179,676 oz. at US$418 per oz. in 1997. The 1998 numbers do not include the 15,756 oz. sold from Turquoise Ridge, for which the production expenses were offset against the project’s capital costs.
Getchell’s original plan was to develop Turquoise Ridge at a rate of 2,000 tons per day and at a cost of US$92 million. Costs proved higher than anticipated, at US$114.3 million, and ground conditions are less than stellar.
Production of development ore at Turquoise Ridge began in early 1998. Its higher-grade reserves were expected to improve Getchell’s operating performance and bottom line. However, the mine has yet to achieve commercial production. Development has been constrained by “inadequate infrastructure,” which Placer Dome hopes to improve during the shutdown. It also plans to accelerate underground development.
Inadequate infrastructure refers to the drifts and declines that provide access to the deposit, says Hugh Leggatt, spokesman for Placer Dome. “One of the problems is that we don’t have a good handle on the geometry of the orebodies, so we want to do more definition drilling to fill in the gaps.”
Toward this end, Placer plans to widen existing underground declines as well as develop and expand drifts.
“We also have to finish facilities that were half-completed, such as the maintenance shops, the backfill plant, and upgrading the dewatering system.” Leggatt adds.
The revised work program will result in the loss of 216 jobs. However, the major believes the shutdown is necessary in order to support the implementation of “larger-scale and more cost-efficient” extraction methods.
Underground operations will continue at the Getchell mine, with ore stockpiled for later processing. Meanwhile, the major intends to complete development of the new Turquoise Ridge mine and double mill capacity to 6,000 tonnes per day. The long-term goal is to increase production at the Getchell and Turquoise mines to 800,000 oz. gold per year at a cash production cost below $200 per oz.; the total cost of the project would be US$230 million.
Exploration drilling is expected to continue and Placer hopes to increase reserves to about 10 million oz. gold. Only a fraction of the property has been explored and Placer has earmarked US$16 million for further mine site exploration.
Meanwhile, in central Nevada, Placer Dome is bouyed by recent drilling southeast of the Pipeline gold mine, which encountered significant mineralization for the Cortez joint venture.
Placer operates the mine through a 60% interest in the joint venture, with
Placer outlined an area of oxide mineralization in a series of widely spaced holes; 14 of the 16 reported holes intersected significant mineralization. The zone, measuring at least 1,500 by 1,500 ft., extends southeast from known mineralization in the South Pipeline pit, beneath at least 350 ft. of gravel. The depth of the gravel increases to the east.
Highlights from the program include:
- 50 ft. of mineralization starting at a depth of 510 ft. averaging 0.047 oz. gold per ton in hole 360.
- 70 ft. of 0.074 oz. gold starting at a depth of 420 ft. in hole 361;
- 60 ft. of 0.055 oz. gold at a depth of 450 ft. in hole 363; and
- 90 ft. of 0.079 oz. gold at a depth of 560 ft. in hole 366.
In deeper mineralization, Placer encountered 120 ft. of higher-grade material averaging 0.17 oz. per ton starting at a depth of 930 ft. in hole 369.
Placer plans to carry out further drilling in this zone before calculating a resource on the mineralization. At the end of June, the Pipeline-South Pipeline complex contained 8.3 million oz. gold within 173 million tons averaging 0.048 oz. per ton.
Denver-based
Placer forecasts that its share of gold production for 1999 will weigh in at 3 million oz. at an average cash cost of US$170 per oz.
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