Plug pulled on Pinson

Homestake Mining (HM-N) has closed the Pinson gold mine, near Winnemucca, Nev., after it failed to reach production targets.

Pinson is a 50-50 joint venture with Barrick Gold (ABX-T). The mine was expected to produce 68,800 oz. in 1998. Actual production was only 34,600 oz., of which Homestake’s share was 17,300 oz.

The shortfall is due to clay-rich ore, which blocked the heap-leach solution. Cash costs for the fourth quarter were US$537 per oz., and US$446 per oz. for the year. Homestake will write off its carrying value at Pinson, recording a US$2.6-million charge against 1998 earnings.

Homestake and Barrick will nonetheless continue to search for deep, high-grade mineralization at the property, and heap leaching is expected to continue for most of 1999.

In other news, Kalgoorlie Consolidated Gold Mines, jointly held by Homestake and Normandy Mining (NDY-T), will discontinue the use of mining contractors at the Super Pit in Western Australia.

Kalgoorlie intends to take over operation of the mine by adding all contract workers to its payroll. The move is expected to reduce operating costs to US$26 per oz. in the first year. The company plans to spend US$67.2 million on the transition, which will entail buying the mining fleet.