FirstMiss goes underground at Getchell gold operation

Underground developers are gearing up at the Getchell mine in Humboldt Cty., Nev.

FirstMiss Gold (NASDAQ) started open-pit, heap-leach operations in 1985 and constructed a mill to process open-pit, sulphide material in the spring of 1989.

Underground operations should be producing mill feed by May, 1994, said President Charles McAuley. FirstMiss is using contractor J.S. Redpath for development and mining work.

Plans call for the use of open-stoping, as well as cut-and-fill stoping. Projected mining rate: 1,000 tons per day by fiscal 1995.

For the fiscal year ended June 30, open-pit heap-leach operations processed 1.1 million tons grading 0.028 oz. gold per ton, to produce 23,666 oz. gold at a cash cost of US$202 per oz.

At the mill, 1.24 million tons grading 0.169 oz. gold were processed, to produce 186,799 oz. gold at US$290 per oz.

No cash cost estimates for underground operations have been released, McAuley said.

Sulphide ore at Getchell is processed using high-temperature, pressure-oxidation autoclaving followed by conventional, carbon-in-leach techniques.

Mill capacity is 3,000 tons per day with a recovery rate projected at 89%. In 1993, actual mill throughput averaged about 3,400 tons per day while actual recoveries varied between 88% and 89%.

Proven and probable, minable, open-pit, oxide reserves, as of June 30, were estimated at 2.8 million tons grading 0.028 oz. gold.

Proven and probable, minable, sulphide reserves are estimated at six million tons grading 0.206 oz. gold. This includes 1.6 million tons of low-grade, stockpiled ore grading 0.106 oz. gold plus 2.4 million tons underground grading 0.282 oz. gold.

With strip ratios in 1993 pushing 29-to-1, underground developers will essentially be chasing open-pit reserves to depth. The underground reserve remains open to depth and along strike.

Regarding the short (fewer-than-3-year) life of the oxide reserves, McAuley said he is confident they can be expanded, noting that heap-leach production will likely continue for years.

His confidence is supported by the company’s finding record to date. Proven and probable, contained ounces have increased every year except 1990. The gold potential of the Getchell area is also reflected in its closeness to the huge Rabbit Creek and Chimney Creek gold mines, operated by Santa Fe Pacific on the eastern boarder of the FirstMiss property.

Geologic reserves were last estimated at more than 26 million tons, although no grade was released with the figure.

FirstMiss reported a loss of US$2.5 million for the year ended June 30, compared with earnings of US$4.3 million in 1992.

The company attributed the loss to lower grades, lower gold prices, higher exploration expenses and charges for writedowns.

Although cash flow totaled US$18.3 million during the year, it was insufficient to meet working capital requirements, exploration costs and gold loan repayments.

FirstMiss decreased its outstanding gold loan by 28,125 oz., to stand at 20,625 oz. at year-end.

The gold loan repayments, at a realized price of US$475 per oz., helped the company boost its averaged realized price to US$374 per oz., compared with the average market price of US$346 per oz. during the fiscal year. Helping cover the cost of the repayments and other cash requirements, the company increased by US$9.4 million its borrowings from parent company First Mississippi (NYSE). Total indebtedness to the parent stood at US$23.6 million at year-end.

First Mississippi owns 81% of FirstMiss Gold’s 18.1 million outstanding shares. The parent is still contemplating distributing the shares to First Mississippi shareholders but is waiting for higher gold prices and confirmation that the company is able to stand on its own.