Santa Fe subsidiary developing 100,000 oz gold mine in Nevada

Santa Fe Pacific Minerals has started construction work at its Rabbit Creek mine near Winnemucca which is expected to produce 100,000 oz gold per year by the end of 1990.

Robert Krebs, chairman and chief executive officer of Santa Fe Southern Pacific, said the mine would cost about $75 million(US) and he anticipated cash costs of around $180 per oz. Design work is under way for mining and milling facilities and long-term plans include the processing of sulphide reserves at a later stage.

Vancouver-based Wright Engineers has been awarded the contract for engineering, procurement and construction assistance services. The plant will be designed to treat 1,500 tons per day of oxide ore using a carbon-in-leach (CIL) process over a 5-year mine life.

The project, which is wholly- owned by Santa Fe Southern, has geologic reserves of 3.6 million oz including both oxide and sulphide mineralization. Sufficient drilling has been completed to classify 2.1 million oz of those reserves as proven and probable with the balance designated as possible. In the first phase of construction, about 650,000 oz of gold is scheduled to be recovered.

Santa Fe’s first precious metals operation is the Trinity silver mine (50% interest) in Nevada which started production in 1988. The small orebody at Trinity will be mined out this year. The Marigold mine near Battle Mountain, Nev., is expected to reach full production this year and Sante Fe’s 30% interest will yield some 15,000 oz gold per year. The company owns the mineral rights to the majority of the property which extends 35 miles between the Marigold mine and Rabbit Creek project.

Last year, Sante Fe Southern reported net income from continuing operations of $146.7 million(US) or 93 cents per share. Operating income was $630.9 million of which $46.5 million came from what it classifies as “hard minerals” (coal, gold and silver mining).

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