The Meikle `miracle mine’ — Barrick’s latest: deep but rich

American Barrick Resources (TSE) pulled another billion-dollar gold mine from its Carlin-area holdings recently, announcing development of its deep but rich Meikle gold deposit in Nevada.

Formerly known as Purple Vein, the mine was renamed in recognition of Senior Vice-President Brian Meikle’s major contribution to the company’s success.

The discovery of the Purple Vein deposit in 1989 was noteworthy because it was a “blind” discovery, lying at least 800 ft. below surface. The discovery hole intersected 540 ft. grading 0.41 oz. gold per ton from 1,305 ft. to 1,845 ft.

“As an operator,” President Robert Smith said at a Toronto news conference, “the biggest thrill will be to see the Meikle mine come into production, assuring continuing growth for the company the rest of the decade.” The orebody verges on the unique with a minable reserve (proven and probable) of 7.2 million tons grading 0.63 oz. gold per ton. One observor called it the miracle mine.

Contained gold content is 4.5 million oz. For reference, this resource may be compared roughly with northern Ontario’s Hemlo mines: Williams, David Bell and Golden Giant at 6.4 million, 2.7 million and 5.7 million oz., respectively.

The Meikle orebody lies at a depth of 800-1,900 ft. It will be mined through three shafts with sinking to start in mid-1993. Full production at 2,000 tons per day is scheduled for 1996. Capital cost is estimated at US$180 million (1992 dollars). The operating cost is estimated to be about US$125 per oz. Meikle joined Camflo Mines at Malartic, Que., as a geologist in 1962 straight out of McGill University. American Barrick acquired control of Camflo in 1984 after he had risen to mine manager and eventually vice-president of operations in 1978.

Another record year was achieved by American Barrick Resources (TSE) in 1991 in terms of production, earnings and cash flow.

Barrick also reported another remarkable financial year. Net income in 1991 increased by 59% to US$92.4 million (US68 per share) on revenue of US$344.7 million, compared with net income of US$58.2 million (US45 per share) on revenue of US$251.6 million in 1990.

Cash flow, before working capital adjustments, increased to US$157.8 million from US$117.3 million a year earlier. It is the sixth consecutive year of increase in both net income and cash flow.

Gold production increased by 32% to 789,846 oz., compared with 596,220 oz. in 1990.

Higher gold sales and lower operating costs contributed to a substantial increase in income from operations to US$157.4 million, compared with US$108.7 million a year earlier.

Operating costs of US$205 per oz. versus US$218 in 1990 reflect cost containment and the sharp increase in Goldstrike production. Barrick’s hedging policy enabled the company to realize an average price of US$438 per oz. compared with the Comex average for the year of US$362. For the fourth quarter of 1991, net income was US$24.1 million (US18 per share fully diluted), compared with net income of US$15.1 million (US12 per share fully diluted) in the same quarter of 1990. Cash flow in the fourth quarter was US$40 million, up from US$34.6 million in the same period of a year earlier.