Getchell lays off 100 at namesake mine in Nevada — Low gold prices take toll on mine plan

Dismayed by the low gold price, Getchell Gold (GGO-T) has ceased processing of low-grade ore from stockpiles and issued pink slips to 100 workers at its namesake gold mine in northern Nevada.

Meanwhile, the undergound mining plan has been modified considerably.

“We’ve put off mining material grading less than about 0.37 oz. gold per ton,” says Donald Robson, Getchell’s chief financial officer. “Instead, we plan to focus on higher-grade material, at or above 0.5 oz. per ton, from the Northwest zone.”

Discovered in mid-1996, the Northwest zone contains a preliminary resource of 1 million tons grading 0.5 oz. gold per ton, equivalent to about 500,000 oz.

During the first nine months of 1997, the company milled 835,000 tons of ore, 44% of which was mined from underground; the remainder came from the low-grade stockpiles.

The average grade for the first nine months was 0.18 oz. gold per ton. Since all the ore will now come from underground sources, the head grade at the mill should increase to more than 0.4 oz. per ton, says David Russell, chief operating officer.

The company will reduce its daily mining rate at Getchell to 750 tons, most of which will be pulled from the Northwest zones.

The 100 layoffs represent a 20% reduction in Getchell’s workforce. Most of these workers were employed at the low-grade operation and at the mill.

In the fourth quarter, the company will record a one-time charge of US$200,000 relating to severance costs.

Russell says there could be possible reductions in underground reserves, but he expects those ounces would be replaced by those added from the Northwest zone.

Exploration continues on the 33-sq.-mile property, and plans call for US$2-5 million to be spent on drilling in 1998. Currently, two rigs are underground, drilling off the second oreshoot of the Northwest zone.

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Turquoise Ridge

Meanwhile, development at the nearby Turquoise Ridge mine has progressed to the stage where Getchell has begun processing development ore. By mid-1998, daily production is expected to approach 1,000 tons.

Turquoise Ridge is scheduled to yield 500 tons per day in the first quarter, and 2,000 tons per day by year-end.

Cash costs during the first half of the year are projected to be US$250-260 per oz., dropping to the US$240 range by year-end, when Turquoise Ridge comes on-stream.

Two rigs are currently drilling at the 900 level, and another is positioned at the 1550 level, where drifting is also under way.

Getchell Gold expects to produce a total of 280,000 oz. gold in 1998, Russell says.