GLOBAL SEARCH FOR GOLD — Output rises as Golden Cross prepares to close

Everyone likes a happy ending, and Coeur d’Alene Mines (CDE-N) is attempting to pen its own as it prepares to cease production at the Golden Cross mine in New Zealand following the operation’s most productive year to date.

Coeur purchased its 80% stake in the property, situated on North Island, from Cyprus Amax Minerals in May 1993. However, the company suffered a setback when, in 1995, it found cracks in the hillside that served as the foundation for the tailings impoundment. In June of the following year, Coeur responded by taking a US$53-million writedown and drastically curtailing mining operations.

To address the problem, the company spent nearly US$16 million, most of which was applied to an effort to stabilize movement of the hillside by draining water from beneath the tailings impoundment and installing both vertical and horizontal walls to strengthen the slope further.

Pisometers and other equipment were used to monitor the movement of the hill. “The hill became one of the most highly monitored slopes in the world,” says Richard Richens, vice-president of environmental affairs.

The movement eventually stopped and, despite the onset of the rainy season, the ground has remained stable.

At about the same time, mining costs began to soar, prompting Coeur to reduce its workforce and implement a new mining plan which called for selective high-grade extraction. As a result, the mine life decreased by about two years; it is now scheduled to close at the end of 1997.

The company received an US$8-million insurance settlement as a result of the ground problems it experienced at Golden Cross.

Cash operating costs in the second quarter of 1997 dropped to US$248 per oz.

from US$505 in the comparable period last year.

For the first six months of 1997, cash operating costs were US$271 per oz.

compared with US$405 per oz. for the first half of last year.

Gold production in the second quarter amounted to 21,401 oz. — a 59% increase over figures reported for the similar period in 1996.

Production at Golden Cross in 1997 is expected to reach a record 84,000 oz.

“We’d like to go out on a strong note,” says Mitchell Krebs, a company spokesman.

Meanwhile, Coeur has begun legal proceedings against Cyprus Amax, alleging the company knew about the site’s instability before it sold the 80% interest. The case is still before the courts.