Big projects coming online at Nevada gold mines

The New Year should see completion of two massive capital projects at two of northeastern Nevada’s largest mine sites.

Barrick Gold and Newmont Mining Corporation each will reap the benefits of projects totaling more than $1 billion that were several years in the making.

Newmont’s addition of a new vent shaft at its Leeville mine in Eureka County should be operational by the fourth quarter of 2015, says Doug Livermore, Newmont’s regional project director for North America. Construction crews had reached a depth of 1,900 feet at the end of November and expected to hit target depth of 2,050 feet in the first quarter.

When the new shaft comes online it will increase airflow for the Leeville underground gold mine, a crucial component of continued mining operations there.

“Leeville is a key element of our operations in Nevada, and the shaft allows us to maintain our levels of production and increase production on go-forward basis,” Livermore says. “We need more air to support our workforce and activities underground. This sets us up for future growth for the next 10 years or more.”

It also will be a big year for Newmont’s largest exploration project in the state, Long Canyon in the Pequop Mountains between Wells and Wendover. Newmont acquired the property in 2011, and after years of exploration drilling and permitting work the Long Canyon project team in February will request $300 million in construction funding from the company’s board of directors.

“We are looking forward to outcome of that decision,” Livermore says. “If that is approved, the investment would lead to production in the first part of 2017 and establish a new mining district for us in the state.”

Newmont still has some permitting work to wrap up at Long Canyon, though the majority of permitting already has been completed. The bulk of the company’s exploration activity in the state will focus on existing mine sites and at Long Canyon.

“We anticipate spending very similar amounts in 2015 that we did in 2014,” says Chris Howsen, regional chief financial officer. “Nevada is a key exploration area for Newmont.”

In May Newmont will celebrate 50 years of mining on the Carlin Trend. When Newmont’s Carlin operations first began production the mine had an estimated seven- to 10-year mine life.

Barrick Gold Corp., meanwhile, expects to bring back online its autoclave at the Goldstrike complex after implementing a new process to bond gold molecules to resins rather than carbon from ores mined in the region. The autoclave currently is in final commissioning stages and produced its first its first gold from the new process in late November. Once running at full capacity, Barrick expects to once again exceed one million ounces of gold production at its Goldstrike complex.

Barrick also will enjoy the culmination of roughly five years of permitting work when construction begins at the South Arturo open-pit gold project near Goldstrike in late 2015. The mine is expected to go into production in 2016 and will be staffed by surface crews from Goldstrike.

The continued falling price of gold is expected to continue to negatively impact junior mining companies operating in the state. Allied Nevada Gold Corp. of Reno, operator of the Hycroft Mine in Humboldt County, continues to struggle with cash flow. Allied Nevada stock peaked at $6.39 on March 14 of 2014 but by mid December had tumbled to 74 cents in the wake of weaker production estimates for the fourth quarter. Veris Gold Corp. of Vancouver, meanwhile, continues to operate the Jerritt Canyon mine complex and mill under bankruptcy protection from Canadian courts.

The soft price of gold also means the New Year will remain bleak for development-stage gold companies, who have struggled the past few years to raise capital to advance their projects.

“This is a difficult climate to operate in, and it’s not going to get any better,” says Joel Schneyer, managing director of minerals, capital and advisory for Headwaters MB, an investment-banking firm headquartered in Denver. “It’s pretty tough to be a gold company.”


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