High operating costs resulting from lower-than-expected head grades at the Hayden Hill mine prompted Amax Gold (NYSE) to take a second-quarter writedown of US$69 million.
Since June, 1992, when the mine started up, miners have learned that mill-grade ore occurs in thinner, less continuous structures than originally interpreted. As a result, the company was forced to shut down the mill. Amax re-evaluated the deposit, situated in Lassen Cty., Calif., and concluded that a large portion of the mineralization should be removed from proven and probable reserves. Reserves are now estimated at 22.1 million tons grading 0.023 oz.
gold per ton. This compares with figures at the end of last year of 5.3 million tons of mill ore grading 0.071 oz. gold and 35.4 million tons of heap-leach ore at 0.017 oz. gold.
All current reserves are classified as heap-leach, though the mill will remain on standby in the event sufficient higher-grade ore is encountered at depth to warrant intermittent milling.
Heap-leach production is expected to total between 60,000 and 80,000 oz. per year starting in 1994, with production this year projected at about 50,000 oz. Operating costs are projected at about US$300 per oz. for next year, although cash costs will remain high until the operation is up to capacity.
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