Now The Good News
Jerritt Canyon pours gold bar
By ADELLA HARDING - Mining Quarterly Editor
Published: Thursday, April 16, 2009 12:26 PM CDT
ELKO — Cheers and a few tears of joy Wednesday afternoon greeted the first gold pour at the Jerritt Canyon Mine since the mine’s shut down last August.
“It’s an exciting time for us after nine months of hard work,” said Yukon-Nevada Gold Corp. President and Chief Executive Officer Graham Dickson as Chris Zerga of Golden Eagle International Inc. prepared to pour the symbolic first gold bar to mark the reopening of the mill 50 miles north of Elko.
“I didn’t think it would be so emotional,” said Golden Eagle Chief Operating Officer Blane Wilson, who has been at Jerritt Canyon since last September leading a crew to bring the mill back to life and help Yukon-Nevada meet Nevada Division of Environmental Protection standards. “It’s a big day for us.”
Yukon-Nevada contracted with Golden Eagle to operate the mill, process ore from stockpiles and handle the fluid management that goes with gold production, and Dickson said he hopes Yukon-Nevada can resume underground mining by the end of the year to provide more gold ore for the mill.
Fifteen people were on hand to watch the first pour, including Yukon-Nevada officers and Golden Eagle employees.
The first bar weighed 260 ounces, but subsequent gold bars will be larger. At Wednesday's London afternoon fixing price of $887.50 per ounce, the bar would be worth $230,750, although refining for pure gold will bring the price down.
“That’s the culmination of 4,000 tons of ore,” said Yukon-Nevada Project Manager Terry Eisenman, pointing to the bar as it cooled off after the pour.
Dickson said current plans are to produce roughly 2,000 ounces of gold a week for the next year and to produce 90,000 ounces of gold from now until the end of this year from the 800,000 tons of ore in stockpiles, including ore from Newmont Mining Corp. operations that Jerritt Canyon had contracted to mill.
Dickson said Yukon-Nevada and Newmont came to an arrangement after the shutdown over the ore, and he said it was an “equitable agreement,” but he wouldn’t go into the financial details. “We're good friends again.”
Newmont froze a Yukon-Nevada bank account when Vancouver-based Yukon-Nevada decided to shut down the mine without advance notice last August, laying off 400 people. Newmont took the action because their ore was still on site.
“We are pleased to hear that Yukon Gold has started production at Jerritt Canyon and wish them well with their operations. It is our understanding that the 300,000 tons of Newmont ore on the ground at Jerritt Canyon will be processed once Yukon Gold has milled their own ore and we look forward to that occurring,” Mary Korpi, director of external relations for Newmont, said this morning.
Now that Yukon-Nevada will have cash flow from gold sales, Dickson said the company plans to pay down its debt, including paying severance pay for workers laid off last year, covering medical costs that weren’t paid when the mine closed and paying suppliers.
“It won't be all at once, but certainly by the end of the year,” he said. “We’ve received a lot of support from the community, and we will repay that by making sure we repay bills as quickly as we can.”
Currently, Yukon-Nevada has 12 employees and six openings to fill, and the site has gone from 18 to 71 people in two weeks, including Golden Eagle employees, Eisenman said.
Wilson said that since he placed at ad in the Elko Daily Free Press that also went online, he has had 450 job applications from Elko, Wyoming, Colorado, Montana, Arizona and back East.
“I was overwhelmed,” he said. “It’s been crazy.”
Wilson said he had a staff of 17 people for the mill work over the past months, and now has 62 people. The goal is 70 employees. Some of the people are former Jerritt Canyon employees, but “we also brought in new folks,” he said.
Golden Eagle and Yukon-Nevada also hired other contractors to work on the mill project and fluid management on site, including SRK Consulting, Enviroscientists Inc. and AMS.
Wilson worked at Jerritt Canyon from 1989 to April of last year, when he joined Golden Eagle before the mine closure. Golden Eagle has a five-year contract to operate the mill.
Yukon-Nevada received permission from NDEP last month to restart the mill, after the agency determined the company met environmental standards. NDEP had issued orders against the project last year, but Dickson decided to close the mine because it was losing money.
NDEP had ordered the company to install equipment to reduce mercury emissions by the end of last year, but the agency extended that order after the closure. The company now has to the end of May to install mercury collection equipment, and Wilson said the new Calomel system will be in place May 28.
NDEP spokeswoman Jill Lufrano said earlier this week that the new system will reduce mercury air emissions to 175 pounds per year from the 1,700 pounds reported in 2007.
“It will be way down,” Wilson said, although he wasn’t ready to say what the emissions will be. “We’re smiling on what we expect the results to be.”
While the mill is processing stockpiled ore this year, Dickson said he will be trying to raise money to start mining again at the SSX and Smith mines. He raised roughly $6 million over the past months to use to keep Jerritt Canyon on care and maintenance and restart the mill.
“It’s been a struggle to keep the money coming in and keep going and, obviously, Blane has been very helpful. We've been through some ups and downs,” Dickson said.
The mine has 2.5 million ounces of gold resources, including 720,000 ounces in reserves, and Dickson said the plan is to produce about 140,000 ounces of gold a year when underground mining resumes.
“The gold in reserves alone is five years of mining,” he said. “I’m confident we will get back into mining.”
Dickson said permitting also continues to open the proposed Starvation Canyon underground mine on the Jerritt Canyon property.
Along with the Newmont ore in the stockpiles, Jerritt Canyon also has 5,000 tons of gold ore to process from Great Basin Gold’s Hollister underground exploration project in Elko County, and Dickson said Yukon-Nevada hopes to continue toll milling for other companies.
