Costs plummet for Homestake

Enjoying its lowest cash costs of the past 30 years, Homestake Mining (HM-N) reported substantial earnings for the third quarter.

The company turned a profit of US$1.7 million (or 1 cents per share) during the period, compared with a loss of US$182.8 million (80 cents per share) in the third quarter of 1998.

Cash flow between the two periods rose to US$52.6 million from US$40.5 million, while cash operating costs fell US$20 to US$182 per oz.

Homestake’s realized gold price during the 3-month period was US$278 per oz., compared with US$307 a year ago.

Its lowest-cost mine was Ruby Hill in central Nevada, which cranked out 33,002 oz. gold at US$94 per oz., compared with 27,743 oz. at US$120 in the third quarter of 1998.

Homestake can earn a 51% interest in the nearby Prospect Mountain property from European American Resources (EPAR-O) in return for spending US$2 million on exploration.

At the Eskay Creek mine in British Columbia, production totalled 80,342 oz. gold and 3.6 million oz. silver, or 153,239 oz. gold-equivalent — 25% higher than a year ago. Cash costs between the two periods dropped US$12, to US$126 per oz. gold-equivalent.

In Western Australia, changes at Homestake’s 50%-held Kalgoorlie operation translated into 98,092 oz. gold, compared with 92,467 oz. a year ago, while cash operating costs averaged US$231 per oz., compared with US$215.

The company also reported strong performances from its namesake mine in South Dakota, the Round Mountain mine in Nevada, and the David Bell and Williams mines in the Hemlo gold camp of Ontario.

In all, Homestake produced 539,104 oz. gold and 3.57 million oz. silver in the recent 3-month period, representing 612,000 oz. gold-equivalent, compared with 551,200 oz. gold-equivalent a year ago.