Elko-area mines still thriving despite continued slide in gold prices – by Sean Whaley (Las Vegas Review – Journal – June 21, 2014)

http://www.reviewjournal.com/

ELKO — Nevada’s mining industry might be taking a hit right now because of low gold prices, but walk through this city on any weekday about 6 a.m. and you wouldn’t know it.

Workers in pickups and mining rigs, most of them with the ubiquitous red warning flags called buggy whips, crowd Idaho Street, the main drag. Long lines of traffic roll in from the residential areas south of town along the Lamoille Highway as locals head to the mines for another workday.

Gold prices have plunged over the past 18 months, dropping from a high of about $1,800 an ounce in 2012 to about $1,315 Friday, but don’t tell the people of this mining-centric town in northeastern Nevada. Although some operations are struggling to stay open, here the boom continues for the most part unabated.

Mining is the ninth largest economic sector in Nevada based on gross domestic product, according to the U.S. Commerce Department. There were 12,600 direct mining jobs in Nevada in 2012.

Nevada Mining Association President Tim Crowley said the lower price for gold has forced companies to become more efficient, although the price is coming closer to the $1,100-per-ounce average where mining can become unprofitable.

The situation is different for each mine, however, depending on the richness of the ore being mined, efficiencies and other factors, he said.

Richness is a relative term in the era of modern mining. A ton of material will typically yield less than an ounce of microscopic gold.

One of these efficient mines is the Cortez Mine, operated by Barrick Gold Corp. One of the largest mines in terms of productivity in the world, it is in adjoining Lander County about 70 miles southwest of Elko. The mine has two open pits and an underground operation. Barrick is the largest mining company in the world and is based in Toronto.

MODEL OF EFFICIENCY

The mine, in the shadows of 9,100-foot Mount Tenabo, produced 1.3 million ounces of gold in 2013 but production will be down this year, estimated at 925,000 to 975,000 ounces. This compares with total gold production in Nevada in 2013 of 5.5 million ounces.

About 1,300 employees and another 250 to 300 contractors work on the site, making a big impact on the rural Nevada economy.

The operation’s efficiency can be seen in the cost of production. In 2013 it was $433 per ounce, but will rise to an estimated $750 to $780 per ounce this year because of lower production and other factors, the company said on its website.

On a recent tour of the facility, the efficiencies were clearly on display.

In one open pit, haul trucks standing two stories tall backed up next to a $30 million mining shovel that can move 140,000 tons a day. The operator was filling up the 300-ton-plus capacity trucks with just three to four massive scoops of dirt, sending them off to dump the material in a waste area.

“Everything is clicking really good right now,” said open pit manager Mark Rantapaa, looking down on the activity from higher up in the pit. “He’s going to make a lot of tons if this keeps up.”

The company has 25 of the Liebherr T282 haul trucks, the largest in the world. They cost as much as $5 million and a single tire costs $50,000 to $60,000. Drivers, 20 percent of whom are women, operate the trucks sitting more than 17 feet high in the cab.

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