Yukon-Nevada sorts out Jerritt Canyon mess

After a year of addressing environmental and operational issues, Yukon-Nevada Gold (YNG-T) is finally able to restart milling at its Jerritt Canyon mine in Elko County, Nevada.

The company’s president, Graham Dickson, says the company will be processing stockpiled ore at a rate of 3,500 tons per day until it gets the mining operation going in the next six months or so.

Dickson says the Yukon-Nevada aims to produce about 8,000 oz. gold per month from the stock piled ore.

Yukon-Nevada first acquired the project in June 2007 when it took over Queenstake Mining and changed its name from YGC Resources to Yukon-Nevada Gold.

Over the first six months the company made an operating profit of about $9 million, but during that time, Dickson says an evaluation was carried out.

“The evaluation told us that there were many years of neglect of the mine and mill,” Dickson says. “There were concerns over safety and environmental issues.”

In February, Yukon-Nevada decided to shut down the operation all together to address the issues. Three weeks later, the company received a ‘stop order’ from the Nevada Division of Environmental Protection (NDEP) for the west and east roaster at Jerritt Canyon, but the operation was already closed.

The company reopened the mine by May. During the closure, Dickson says the company looked at expanding operations to match the 4,000 ton-per-day mill facility. The mine staff were producing about 2000 tons per day while the company carried out custom milling to make up the difference.

Dickson says the company raised about US$40.5 million in a debt financing to increase production, but the milestones to do so weren’t met by the mine staff.

“I went down there in July to investigate and came to the conclusion there was probably a corporate culture that hadn’t changed,” Dickson explains. “It’s impossible to change the corporate culture so we closed the operation to deal with the environmental problems.”

He says middle and senior management resisted the changes being implemented. When the mine was put on care and maintenance last  ongoing operating cost pressure was cited as the reason.

The company planned to reopen Jerritt Canyon with a group that could be relied on to carry out the changes necessary to improve the productivity.

Over the last six months, Yukon-Nevada has addressed all the environmental problems and has now received approval from NDEP to start the mill back up.

Once the whole mine is running, the operation will be much leaner.

“When we start the mine in the next six months there will be a lot less people to do the same amount of work,” Dickson says.

There were 500 people working on site when the operation was closed down last August.

About 60 people will be running the mill compared with 160 people before. Dickson didn’t say how many people would be working in the mine but some of them would be people who worked there before.

Dickson says there is about 10 months worth of ore stockpiled at Jerritt Canyon. He currently in discussions with companies to do custom milling as it did in the past, but only temporarily.

Prior to shutdown, the Jerritt Canyon project was expected to produce 120,000 oz. gold in 2008. The company’s 2008 results will be released in the near future.