NEVADA — Dee mine mothballed due to weak gold price

Rayrock Yellowknife Resources (RAY-T) will mothball its Dee gold mine in northern Nevada as a result of weak gold prices.

Situated in the Carlin trend, the operation is expected to close sometime in the third quarter, though ore that is already stripped will be still processed. Until the shutdown, about 25,000 oz. gold will be produced. The mine’s staff will be cut to eight from 89 by the end of the year.

The shutdown will also affect the project’s planned expansion, which is no longer feasible at current gold prices. The suspension also prevents the second phase of mining, which was to have begun this summer.

The Dee is one of Rayrock’s higher-Cost operations, having produced 45,070 oz. last year at a cash cost of US$378 per oz. By contrast, the company’s Marigold mine, also in Nevada, produced a similar amount of gold at a cash cost of US$238 per oz. The company will continue to evaluate its long-Term options at the property.

At a gold price of US$400 per oz., recoverable reserves at the Dee at the end of 1996 stood at 11.7 million tons grading 0.034 oz. per ton, equivalent to 400,000 contained ounces.

The property also contains significant underground potential, particularly at its northern boundary, where Meridian Gold (MDG-N) intercepted high-grade mineralization on its Rossi property.