After incurring significant losses in the first quarter at the flagging Giant gold mine in Yellowknife, N.W.T., and witnessing similar results in April and May, Miramar Mining has decided to close the aging operation.
Giant will cease production in late July, whereupon Miramar will turn its attention to the Hope Bay and Back River gold properties in Nunavut.
The Giant was originally slated to close in early 2005. Miramar shuttered its sister operation, the nearby Con gold mine, last fall.
“The Giant mine continues to under-perform, and further evaluations provided no opportunity to generate sustainable cash flow,” says Miramar President Anthony Walsh.
The company says it will likely record a loss in the second quarter.
Six months after Giant closes, the Department of Indian Affairs and Northern Development (DIAND) will take over the operation and reimburse Miramar for holding costs incurred.
Miramar is indemnified by DIAND from all environmental liabilities related to previous operations at Giant but has put up bonds to fund its reclamation obligations.
Meanwhile, Miramar will continue its restoration activities at the Con mine, which include processing arsenic sludge and calcines.
Miramar signed deals in 1999 to sell forward gold production from Giant. At the end of June, there were about 24,600 oz. of forward contracts and call options outstanding at an average price of US$350 per oz. Miramar will pay off its obligations as they come due throughout the remainder of 2004.
The original Giant mine claims were staked in July 1935 by C.J. Baker and H.M. Muir for Burwash Yellowknife Mines. Giant Yellowknife Mines was incorporated in August 1937 to develop the property. Frobisher Explorations took over in 1943, and the first gold brick was poured in May 1948.
In November 1990, Royal Oak Mines bought the mine, which it operated throughout the 1990s. Royal Oak sought court protection in February 1999 and was placed in receivership three months later. The Giant mine was closed in October of that year.
Miramar bought the mine from DIAND in December 1999 and reopened it to feed its Con mill.
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