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Sinking gold price changed US mining landscape during H1 – USGS

Sinking gold price changed US mining landscape during H1 – USGS

Photo by Bloomberg

4th August 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – The sliding gold price contributed to a significantly changed US gold-mining landscape during the first half of 2015, influencing a 9% year-on-year decrease in domestic output for April, the US Geological Survey (USGS) said in a new mineral industry survey on the yellow metal.

Gold output by US mines was 15 000 kg in April, a 5% decrease compared with the country's March output. Based on unrounded data, the average daily gold output for US mines was 500 kg in April, 509 kg in March and 576 kg for 2014, the USGS had found.

BUSINESS UNUSUAL
The USGS noted that several miners had filed for Chapter 11 bankruptcy protection, denting the nation’s gold output. The gold price had dropped nearly 17% since the start of the year, when it hit its highest price point at $1 303.50/oz on January 20, to its lowest level on July 23 at $1 086/oz.

Reno, Nevada-based Allied Nevada Gold filed for bankruptcy protection in March and its stock was delisted in April. Mining was temporarily halted at the Hycroft mine on May 28 after a miner fatality. However, soon after the mine restarted, the company again suspended mining operations on July 8 on the back of lower gold prices.

Allied would continue to recover gold and silver from the ore remaining on the leach pads. At the end of June, the remaining inventory of recoverable gold on the leach pads was about 8 000 kg, enough to maintain metal production for 12 to 18 months. Allied planned to continue construction of a 9 t/d demonstration plant for processing sulphide ores, which was expected to start in September.

Allied had also sold its exploration properties and related assets (excluding those at the Hycroft operation) to Clover Nevada, a subsidiary of Waterton Precious Metals Fund II.

Further, despite starting construction of the Pan mine, in White Pine County, Nevada, in January 2014, and pouring its first gold on March 27, this year, Englewood, Colorado-based Midway Gold had also in June filed for Chapter 11 bankruptcy protection and reduced output.

Canadian firm Veris Gold had filed for bankruptcy protection in June 2014 and the Canadian bankruptcy court had ordered the sale of the company’s assets. On June 25, Veris sold the Jerritt Canyon facilities and the underground mines (Saval 4, Smith, SSX-Steer Complex and Starvation Canyon) about 80 km north of Elko, Nevada, to Jerritt Canyon Gold, a subsidiary of Sprott Mining.

Meanwhile, Barrick Gold had been selling various noncore assets to reduce its debt load, in part, accrued from suspending mining at the Lumwana mine, in Zambia, after the Zambian government had raised the royalties, and the high costs associated with its Cerro Casale mine, in Chile, and the Pascua-Lama project straddling the border of Argentina and Chile.

As part of its cost reductions, Barrick ended its Gold Ridge joint venture exploration project in Nevada with Coral Gold Resources.

Further, Greenwood Village, Colorado-based Newmont Mining had on June 8, entered into a definitive agreement to buy the Cresson mine, in Colorado, from South Africa’s AngloGold Ashanti. Newmont had also announced the start of Phase 1 construction of the Long Canyon mine, in Nevada. Phase 1 consisted of an openpit mine and heap leach operation with expected gold output of 3 100 kg/y to 4 700 kg/y during an eight-year mine life.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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