EDITORIAL PAGE — Underground at Carlin

Back in the early 1960s, Newmont Gold made the first gold discovery in the high desert near Elko, Nev. By 1965, the Carlin mill and open-pit mine were operating, and during that year the operation produced 128,500 oz. of gold, which sold for US$35 per oz.

It was a modest beginning for Newmont, and for Nevada’s Carlin Trend which, today, is the leading gold-producing district in North America. By mid-1995, however, Newmont had poured its 16-millionth ounce, and still had 32 million oz. of identified resources on its books — 18 million oz. classified as proven and probable, and another 14 million oz. that may become reserves.

Yet while this resource base is the envy of any major mining company, it did not come as easily as Bruce Babbitt, the Secretary of the Interior and anti-mining activist, would have us believe. Back in the late 1980s, when annual production at Carlin had ramped up to 1.5 million oz., Newmont realized it would deplete its lucrative surface oxide reserves by the mid-1990s. As company officials recently told a group of mining analysts, “it was a case of looking deeper, or looking for another line of work.” Newmont began turning its attention to Carlin’s underground potential in 1988, when the first drill holes were sunk into the Deep Star deposit, north of Newmont’s Genesis-Bluestar pit. A deposit was outlined at a depth of 1,200-1,800 ft. below surface, which averages nearly one ounce gold per ton.

Today, Newmont leads the way in underground mining at Carlin, just as it did when it introduced heap leaching to the district decades earlier.

The company produced its first underground gold in 1994, from the Carlin East mine, which was reached by a decline from the bottom of the original Carlin pit. The Rain mine opened a short while later and, a few months ago, production was achieved at the company’s fourth underground mine, Deep Star, which contains the highest-grade ore yet discovered on Newmont land.

This year, Newmont expects to produce 150,000 oz. gold from its underground mines, up from 17,000 oz. in 1994. And next year, underground production is projected to reach 265,000 oz., with more growth predicted in the years ahead. Granted, mining costs will be higher, but this is largely offset by grades that run 10 to 20 times those of its open-pit mines.

While the underground potential is considered huge, much work remains to be done before this potential can be realized. At the end of 1994, only 1.1 million oz. (or 6%) of Newmont’s Carlin reserves were in underground deposits. The company has outlined another 2.4 million oz. of mineralized resources, which will have to be mined by underground methods.

Newmont expects the Carlin Trend will generate 70% of its production over the next five years, and, at the end of that period, it will still likely contain more than half its minable reserves.

Some American politicians have been critical of Newmont and other large gold companies working in Nevada. Babbitt, for example, argues that the company acquired all this gold by paying a mere US$5 per acre for land that was dripping with the yellow metal.

In truth, Newmont worked hard over the course of decades to discover first the surface deposits, and then the deeper underground deposits. It invested more than US$1.5 billion at Carlin to develop mines, and made use of autoclaves and other modern processing methods to exploit refractory deposits that would not have been viable decades ago. Mr. Babbitt has a lot to learn about mining.