Despite a sudden drop in the price of gold last week and the bankruptcy of smaller mines, Newmont Mining remains bullish on its North American operations in general and the Long Canyon Mine in particular.
Friday the price of the precious metal fell to a five year low to just over $1000 an once causing medium sized panic in the commodities market. In addition to the price plunge the bankruptcy of Midway Gold and the perhaps temporary closure of the Pan Mine in White Pine County illustrates that the business of mining gold is not a sure thing.
Midway Gold declared bankruptcy late last month the company announced that mining activity at it Pan site 50 miles south of Ely would be suspended and up to half of its work force would be laid off. It was less than two years ago that the Pan project broke ground and just this year when the mine celebrated its first pour of gold. But even as the celebration was going on rumors began circulating that despite the initial science Pan was not producing as much gold as was expected.
But while knees are shaking in the commodities markets Newmont is going full steam ahead in the construction of the Long Canyon Mine. Perhaps buoyed by a federal judge’s rejection to halt work on the mine from the Goshute tribe last week Newmont is doubling down.
Just this week the company issued a new call for workers, truckers, at Long Canyon and the company also announced a quarterly dividend of $0.025 per share of common stock, payable on Sept. 24 to shareholders of record at the close of business on Sept. 10. The company says the average London Bullion Market Association p.m. gold price during the second quarter fell below the company’s gold-price-linked dividend policy threshold of $1,200 per ounce. Still, the board authorized the company to maintain the dividend for the third quarter based on “strong year-to-date operating and financial performance,” Newmont says in its announcement. The company is the first major North American gold producer scheduled to report second-quarter earnings, with the report due out sometime after the market closes this week.
The Greenwood Village, CO-based company is expected to report earnings of 26 cents per share on revenue of $1.97 billion for the second quarter. Last year, Newmont Mining reported earnings of 20 cents per share on revenue of $1.76 billion for the 2014 second quarter. Newmont shares were up 2.86% to $18.68 in afternoon trading Wednesday. Newmont’s bullish activity both for its shareholders and its workers at a time when the rest of the gold mining industry is behaving at best skittishly could be explained by the richness of Long Canyon.
Literally a mountain of gold ore lies in the once long over looked Pequop Range now in advanced exploration.
Estimated to need 500 workers during construction and 250 miners once operations are ready, the Long Canyon mine could add at least 1,000 people to the area and that may be just the tip of a gold boom in eastern Elko County.
“We think this could have as much potential as the Carlin Trend,” Geologist Moira Smith said four years previous. “It is truly remarkable.”
In addition to having ‘smoking hot’ ore, the area is a stones throw from Interstate 80, has no endangered species living anywhere near it and does not have any significant archaeological sites located on it. Despite the contention of the Goshutes, ancient Native Americans also apparently ignored Long Canyon.
“The Wells Band of the Western Shoshone believes we can have preservation and economic development at the same time,” said Gracie Begay tribal chairwoman. “We have been meeting with the BLM, Newmont and the Ibapah Goshutes for months now. We had no idea that they would do this now.”
side in the coming fight is disputing whether there have been artifacts discovered in the construction process.
The disagreement is whether those finds have been ‘significant’.
Even according to Johnny while there have been finds of ancient hearths, tools and poetry shards there have been no discoveries of petroglyphs, permanent or even semi-permanent hunting or agricultural sites in the area.
The death of those finds could be devastating to the Goshutes case both in and out of the court room. While an ancient hearth can have archaeological significance especially if it is so old that it could add to understanding the peopling of the Americas it is still just a charred hole in the ground.
The mine has the potential to radically alter the economy and the lives of eastern Nevada, residents of Wendover and Wells. The two cities who once looked with jealously at the boom in Elko and Carlin could soon have a mine to call their own.
Long Canyon Mine project cleared its final hurdle to begin construction with Bureau of Land Management issuing its Record of Decision this April. The decision allows the mining operator to construct and operate a new heap leach gold mine that would consist of one open pit, one heap leach pad, a waste rock storage facility, a tailings storage facility, a natural gas pipeline from the existing Ruby Pipeline, on-site power generation plant and other ancillary facilities. The associated disturbance would be approximately 1, 707 acres of public land, including 480 acres of split estate lands of federal surface and private subsurface.
According to a Newmont press release the first phase of development consists of an open pit mine and heap leach operation with expected gold production of between 100,000 and 150,000 ounces per year over an eight year mine life at an estimated all-in sustaining cost of between $500 and $600 per ounce. At current gold prices, the project is expected to generate around $100 million annually, beginning in 2017.
