Rosebud to blossom no more

In August, after nearly four years of operation and 375,000 oz. of gold production, partners Hecla Mining (HL-N) and Newmont Mining (NEM-N) will close the Rosebud mine in northern Nevada.

When the mine started up, in April 1997, reserves were estimated at 1.28 million tons grading 0.39 oz. per ton, or 500,000 contained ounces gold, and, although the mine life was expected to be five years, the dip in the price of the yellow metal has brought a premature end to an otherwise successful operation.

“Rosebud has been an outstanding project from the beginning,” says Arthur Brown, chairman of Hecla, which operates the mine.

Situated 58 miles west of Winnemucca, the underground operation was brought on-stream four months ahead of schedule and US$3 million under budget. Capital costs were originally estimated at US$25 million.

Cash operating costs were low from the start, coming in less than US$150 per oz. in the first months of operation. In 1999, its last full year of operation, the mine averaged US$184 per oz., without royalties. Then, as higher dilution caused lower gold production, costs began to increase.

Newmont’s participation in the joint venture entailed shipping the ore 100 miles east to the Pinon mill at the Twin Creeks mining complex.

Newmont inherited a half-interest in Rosebud and in the larger, Twin Creeks complex, in May 1997, when it acquired Santa Fe Pacific Gold.

Mining will cease in July, though processing will continue into August. By the end of August, 75 employees will be laid off, though 16 will remain on-site to continue exploration and carry out closure activities.

From the outset, it was hoped that exploration might extend the mine’s life span. Newmont put up the first US$1 million in exploration financing and 75% of all funds afterwards. However, underground drilling around the periphery of the mine failed to produce results that would justify prolonging the operation. Hecla nonetheless continues to carry out surface exploration in the Wild Rose area, a mile north of the mine.

Closure activities will be minimal, partly because there is no processing facility on site. Hecla has set aside US$1.5 million in cash for the reclamation.

Rosebud has posted an excellent safety record, winning an honourable mention in the Sentinels of Safety award program and completing nearly 1,000 days of operation without a lost-time accident.

Rosebud is not the first small mine put into production by Hecla. In Mexico, over five years, the company produced more than 300,000 oz. gold at the La Choya operation. Most recently, in Venezuela, it acquired the La Camorra gold mine.