Amax Gold expansion plan to add 40,000 oz per year

From remarks made by Charles Stott, Jr., president and chief executive officer of Amax Gold at the company’s 1988 annual meeting in Golden, Colorado.

I’d like to give you an overview of the Sleeper Mine, which today is the cornerstone of Amax Gold. I will describe the steps we’ll be taking to complete the third expansion to increase production by 40,000 oz per year.

This expansion will cost some $17 million and will include 8 million yards of stripping, increasing mill capacity to 1,500 tons per day, increasing heap leach capacity, purchasing additional mining equipment, relocating tailings lines and other facilities, and expanding tailings dam capacity.

Currently we are accelerating our drilling activity between the Sleeper and Wood Pits to more thoroughly delineate the ore there before we start stripping in that area. The stripping contractor will remove overburden between the two pits and around on all sides. And, the tailings dam to the west will be expanded.

The milling facility at Sleeper currently processes about 1,000 tons per day. By adding another ball mill, additional agitation tankage, and de-bottlenecking the rest of the process, we will achieve a throughput of some 1,500 tons per day.

The heap leach crushing plant, which was completed at the end of last year, currently has a capacity of 4.5 million tons per year. Later this year, again as part of the third expansion, we will expand this facility to 5 million tons per year.

I would like to point out how the statistics at Sleeper have changed — and changed dramatically — since we began operating in 1986, and how they will improve again in 1989 — all as a result of our past expansion activities and our new $17 million expansion to be completed by the end of this year.

The mill was originally designed to process 500 tons of ore per day. Due to improvements made over the past two years, we are now processing ore in the mill at a rate of about 1,000 tons per day. With the new expansion, we expect to be milling at a rate of 1,500 tons per day. The recovery rate at the mill remains excellent at over 95%.

The heap leach facility is now operating at an annualized rate of 4.5 million tons of ore, which is up from the 1987 rate of 1 million tons. Expansion plans for 1989 call for 5 million tons of heap leach ore to be processed.

Putting the heap leach and milling totals together, we have steadily increased total gold production at Sleeper since we began mining in 1986, when we produced 130,000 ounces per year. This increase amounts to a current annualized rate of about 250,000 ounces per year.

Sleeper continues to be a world- class gold producer, with estimated cash costs for 1988 of $103 per ounce. This makes Sleeper the lowest cost gold producer of its size in North America and one of the lowest cost producers in the world.