Nevada tax increase boosts unit costs for Amax Gold

It’s already been reflected in higher production costs at the company’s Sleeper mine which climbed to $111(US) per oz in the first quarter, compared to $93 the previous year. However, part of that increase was attributed to higher heap leach costs.

The company’s consolidated cash cost was $120 per oz, up from $93 in 1988, and part of that increase related to higher cost production at the Waihi mine in New Zealand. Cash costs there were $257 per oz but Waihi only contributed 4,321 oz during the quarter, compared to 62,250 from the Sleeper mine at Winnemucca, Nev.

Sleeper gold output was 18% higher because of a 56% increase in mill throughput to 1,476 tons per day. Average millhead grades were 0.45 oz gold, down marginally from last year. Recovery rate also dipped, averaging 93.9% for the quarter.

The company has been plowing some of its profits back into the mine. A new kiln has been installed which will be operational this quarter. The kiln should enhance recovery of silver which at present roughly equals gold output.

Describing Sleeper as “the crown jewel of our collection of mines,” Stott emphasized the mine is one of the lowest cost producers in the industry and he predicted “a similar performance for the rest of 1989.”

Construction has virtually been completed on the Wind Mountain mine northeast of Reno, Nev. The open pit heap leach operation poured its first dore bullion in mid- April and full production (42,000 oz gold per year) is expected to begin this quarter. Exploration around the mine has identified additional mineralization which will be followed up this year.

Exploration activity was accelerated at the company’s 60%-owned Hayden Hill project in California during the period but Stott said that “no new reserves can be announced at this time.”

“Amax Gold believes that reserves at Hayden Hill will expand beyond the 789,000 contained ounces of gold as indicated in our annual report,” he added.

Net income for the quarter dropped to $9.2 million from $12.5 million in 1988 which it attributed to higher income taxes and an equity loss from its interest in Canamax Resources (TSE).

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