Ruby Hill new jewel for Homestake — Additional deep resource augurs well for mine life

The development of the Ruby Hill gold mine in central Nevada has been nothing if not speedy. Homestake Mining (HM-N) went from initial permitting in early 1995 to government approval in less than 24 months, an uncommon feat in these days of stringent environmental regulations. Construction and pre-stripping began in February 1997, followed by the first gold pour nine months later. The mine was officially opened in mid-August of this year, though it has been operating flawlessly for the past eight months.

Among the speakers at a ribbon-cutting ceremony attended by The Northern Miner was Homestake’s president, Jack Thompson, who praised Ruby Hill for being the company’s lowest-cost producer. “It comes at an important time for us in this climate of lower gold prices,” he said.

The company has dramatically lowered the cash costs at its mines over the years — to US$207 per oz. gold during the first six months of 1998 from more than US$340 per oz. in the mid-1980s

Attending the event was Russell Fields, president of the Nevada Mining Association, who stressed that, despite low gold prices, the mine is making money. The operation’s profitability is largely attributed to low cash costs, which averaged US$126 per oz. in the first half of this year.

Fields also cited Homestake’s ability to build consensus during the permitting process, pointing out that the company worked with regulatory agencies to resolve issues expediently. “There’s a right way to do things and a wrong way, and this was the right way,” he said.

The speed of the permitting is partly due to the company’s willingness to be innovative. For example, although Ruby Hill has a mill on site for its higher-grade ore, it does not have a tailings pond; instead, the tailings are sent to the leach pad.

The company has also dealt with waste dumps in a novel way: the rock piles, which are already undergoing reclamation, are used to screen the operation from Highway 50, less than a mile distant. Over time, Homestake intends to contour and re-seed the rock piles to create a natural appearance, thereby placating the townspeople of Eureka, who did not want their mountain views scarred by the mine.

Mining is currently focused on the West Archimedes orebody, which, at year-end, contained 7.6 million tons grading 0.099 oz. per ton, equivalent to 760,000 oz. gold. The reserve consists of 1.9 million tons of higher-grade material grading 0.23 oz. gold and 5.7 million tons at 0.053 oz.

The gold is hosted in late Paleozoic silty limestones and dolomites at the southern-most extension of the Battle Mountain trend. Mineralization is structurally controlled and entirely oxidized. Ruby Hill contains little silver and base metals, unlike most of the Eureka mining district, which contains significant silver, as well as lead and zinc.

The West Archimedes was discovered blindly in 1992, and subsequent open-pit mining has encountered no underground workings.

On a daily basis, Ruby Hill produces 900 tons of high-grade ore and 2,600 tons of low-grade ore. The high-grade material is crushed and leached in agitated tanks. After 12 hours of leaching, 84% of the gold is recovered from the oxide ore. The washed material, called filter cake, is agglomerated and mixed in with the lower-grade material before being sent to the leach pad.

Besides existing reserves, Ruby Hill hosts a resource, in the East Archimedes deposit, of 7.2 million tons grading 0.073 oz. gold, equivalent to 526,000 oz. Operators hope to gain access to this mineralization by deepening and expanding the main pit eastward.

Also, Homestake has encountered higher-grade, sulphide mineralization in what is called the Deep Archimedes deposit, 1,200-2,000 ft. below surface. Further deep drilling is required before any of this mineralization can be included in the resource category. “We’ve got lots of time to fully evaluate this,” Thompson said, adding that drilling is also planned for near-surface oxide targets on the 25-sq.-mile property.

In other news, Homestake is in the midst of assimilating gold mines and exploration projects acquired in Australia earlier in the year. From Plutonic Resources, the company gained five mines, making it the second-largest gold producer Down Under.

Total exploration expenditures in 1998 are expected to reach US$53 million, most of which is earmarked for the Australian projects.

At the Kundip joint venture in Western Australia, Homestake is earning a 70% interest from Tectonic Resources. Exploration there is still in the preliminary stage, and Homestake recently committed to spending A$2.5 million on the project.

Drilling on the Trilogy zone at Kundip extended gold and copper mineralization an additional 500 ft., while identifying a second zone to the west. Additional soil anomalies continue to be discovered, and Homestake plans further drilling for later in the year.

Exploration is also under way at the Australian mines known as Mt. Morgan, Lawlers, Plutonic and Darlot/Centenary, as well as at projects in Eastern Australia and Queensland.