NEVADA & THE WESTERN STATES — Ruby Hill low-cost producer for Homestake

Constructed at a cost of US$64.7 million, Homestake Mining‘s (HM-N) Ruby Hill gold mine near Eureka, Nev., has become the century-old mining company’s lowest-cost operation.

The new mine achieved commercial production in early 1988 and produced 116,500 oz. gold at a cash cost of US$122 per oz. for the full year. In the 1999 first quarter, the open-pit mine produced 25,200 oz. gold at a cash cost of US$121 per oz., down from US$129 a year ago. The lower costs were attributed to a higher percentage of high-grade feed amenable to conventional milling and higher recovery (compared with heap leaching).

Ruby Hill’s cost performance edged out Homestake’s Eskay Creek mine in northern British Columbia, which last year turned out 504,800 oz. gold-equivalent at a cash cost of US$133 per oz.

Wholly owned by Homestake, Ruby Hill utilizes conventional milling with carbon-in-pulp recovery and heap leaching. High-grade ore is ground in a ball mill, leached and filtered, and then combined with crushed low-grade ore in a rotating agglomeration drum before being placed on the leach pad. Existing reserves and resources total about 1 million contained ounces.

Homestake has other operating mines in the western U.S., which together produced 691,500 oz. to the company’s account at a cash cost of US$221 per oz. in 1998.

At its namesake mine in South Dakota, the company began a major restructuring last year aimed at reducing its high operating costs. The new mine plan, which saw the workforce reduced by 450 employees, introduced mechanized cut-and-fill mining methods, and was designed to limit dilution and increase head grades.

Last year, the Homestake mine turned out 277,400 oz. at a cash cost of US$249 per oz., compared with 397,300 oz. at a cash cost of US$310 per oz. during 1997.

The improved 1998 performance was attributed to a decrease in production from the higher-cost underground operations and an increase in the lower-cost, lower-grade open-pit ore. However, the open pit was completed in the fall of 1988, and the processing of stockpiled ore is scheduled to be completed this summer.

This summer, the company will decide whether to invest US$30 million to achieve annual production from the underground operations of between 150,000 and 180,000 oz. at a cash cost of US$280 per oz.

The McLaughlin mine in California turned out 128,700 oz. last year, compared with 118,500 oz. in 1997. Mining of new ore ceased in the summer of 1996, and the current operation processes low-grade stockpiled ore through a conventional carbon-in-pulp circuit. Cash costs last year were US$219 per oz., compared with US$254 a year earlier.

Production is expected to decrease, and costs increase, this year, owing to the depletion of the higher-grade portion of the remaining stockpiles.

Homestake’s 25%-owned Round Mountain mine near Tonopah, Nev., is the largest open-pit mining and heap-leach processing plant in North America.

Production last year was 127,600 oz. at a cash cost of US$220 per oz. This represents a 6% increase over 1997, owing to a new sulphide gravity recovery mill.

Homestake also has mines in South America and is the second-largest gold producer in Australia.