The other shoe dropped.
Development of underground operations at the Pinson Mine in Humboldt County has been suspended as the result of falling gold prices, said Atna Resources Ltd., the Golden, Colo., operator of the mine.
Atna said last week it’s examining ways to cut the operating costs of the mine 27 miles northeast in Winnemucca in hopes of finding profitability. The company described the shutdown as temporary, but didn’t lay out a timetable for resumption of work.
The company had cut its staff at Pinson to 25 — down from 75 — in May. It said last week a core team will remain working at the mine to maintain its infrastructure and to gather the technical data that would be needed for a new operating plan.
Atna has been working to create an underground operation at the property, which was mined by Homestake Mining in an open pit. The pit operation was shuttered in 1999 after producing some 985,000 ounces in about 20 years.
But geologists long have believed that substantial deposits could be found more deeply, and Atna has been working to develop an underground mine whose tunnels would begin in the walls of the former open pit.
The company has projected that the underground mine could produce 548,000 ounces of gold during seven years. Employment had been projected to reach 240 when the mine was at full operation.
But it proved expensive.
Atna had estimated it would invest more than $72 million to bring the underground mine on line, and it estimated the full cost of producing an ounce of gold at Pinso would run between $1,000 and $1,100. With gold prices at $1,226 an ounce the day that Atna made its announcement, the property no longer penciled out.
The worst-case scenario developed by Atna’s economic consultant in 2012, in fact, envisioned gold prices at $1,300 — nearly $75 higher than last week’s figure.
Among the cost-reduction steps that are under study, Atna said, are:
• Screening ore, which appears to bring an improvement of 18 to 22 percent in the grade of the ore.
• Construction of larger mine openings, which would increase productivity.
• Detailed drilling, which would allow mine planners to more efficiently find deposits in the geologically complex property.
• Reduced use of third-party contractors, who were used to accelerate the mine’s development. The downside? They were expensive and reduced Atna’s control of the project, the company said.
The stockpile of previously mined ore at Pinson will be sent to third-party processors to generate funds for demobilization of the mine.
In a press release, Atna said its leadership team will share the financial pain. Executives have agreed to defer some of their salary, and members of the board of directors of the publicly held company will be paid with restricted stock rather than cash.