NEVADA & THE WESTERN STATES — Newmont builds new Carlin mine — Projected capital cost of underground operation reduced to US$65m

With the aid of a portal at the bottom of the Betze-Post pit, Newmont Mining (NEM-N) has begun building its fourth underground mine in Nevada’s Carlin trend.

In recent years, the company has been depleting oxide reserves at its mines in the area, while, at the same time, increasing its dependence on refractory ore. The mine currently under development, known as Deep Post, is said to be representative of this trend.

The development program was made possible by a land swap between Newmont and Barrick Gold (ABX-N) in February. The exchange consolidated land holdings for both companies. In particular, Newmont gained mineral rights to the corridor running from the Deep Post deposit to the Deep Star underground mine. Barrick acquired the Goldbug deposit and a corridor running by its Rodeo deposit.

Access to the corridor to the Deep Star mine enabled Newmont to begin development at Deep Post. Startup is projected for 2001, and, by 2003, production could reach 400,000 oz. gold at a cash cost of US$150 per oz. Total production costs are pegged at US$210 per oz.

Deep Post will be Newmont’s highest-grade mine on the Carlin trend, and, at full capacity, will account for 20% of the company’s production in the state.

Deep Post contains reserves of 2.35 million oz. gold within 3.05 million tons grading 0.77 oz. per ton. Most of these reserves are on Newmont’s ground and were included in 1998 calculations. However, the land swap added 450,000 oz., and Barrick retains a portion of the deposit, which it will continue mining from the Betze-Post pit.

By November, Newmont expects to complete two permanent portals higher on the walls of the pit at the 4,480 level. The company built the first portal to give immediate access to mineralization at the bottom of the pit, says Project Geologist John Jory.

Capital costs for construction will be about US$65 million, though estimates were much higher before the land swap. “We’ve cut our original estimate by US$30 million and accelerated the schedule by two and a half years,” says Scott Santti, Newmont’s manager of underground operations.

As crews drift into the deposit from the new portal at the 4,350 level, Newmont is preparing to drive a 5,000-ft. drift north from Deep Star. Ultimately, the drift will provide a secondary escapeway, as required by regulators, but it will also serve as an exploration platform for drilling between the two mines.

Neither Barrick nor Newmont had performed much exploration on this strip of land prior to the land swap. Only a few holes had been drilled.

“We expect to expand the orebody as we drill,” says Jeff Huspani, vice-president of mine geology.

Deep Post is a compact, high-grade deposit within the metamorphic aureole of a dioritic intrusion. Mineralization, hosted in intrusive and metamorphosed sedimentary rocks, is structurally controlled along the eastern limb of a northerly trending regional anticline. The deposit is 900-1,300 below the ground surface, though Newmont has already begun to mine the uppermost portions of it in the pit.

Because of occasional poor ground conditions, Newmont intends to mine the deposit using underhand drift-and-fill methods.

Meanwhile, the company is exploring several other promising targets across Nevada. In particular, crews are evaluating the possibility of mining deeper extensions of the Twin Creeks orebody, northeast of Winnemucca.

Newmont is also investigating the Relay Ridge property, a shallow oxide deposit west of the company’s Trenton Canyon mine, and the Mill Canyon prospect, a potential underground target in Crescent Valley, near the Pipeline deposit.

In all, Newmont expects to produce 4 million oz. in 1999 at a cash operating cost below US$180 per oz.