New mining projects expected to come on line

A year that saw the price of gold reach record highs helped Nevada gold mining companies expand operations and tackle ore bodies they might not normally pursue, and the momentum of $1,400-an-ounce gold is expected to continue through 2011.

And some new projects and mine re-starts should add to the state's production of precious metals.

Fronteer Gold of Vancouver is expected to commit $30 million to bring its Long Canyon mine in Elko County online, and Nevada Copper, also based in Vancouver, is well on its way to bringing its Pumpkin Hollow property near Yerington into production. Elsewhere, Allied Nevada Gold Corp. is expected to expand production at the Hycroft Mine in Humboldt County, and Coeur d'Alene Mines Corporation expects to begin production of silver at the Rochester mine in Pershing County in the fourth quarter of 2011. Coeur currently is leaching ore previously mined at the Rochester site.

John Dobra, director of Natural Resource Research Institute for University of Nevada, Reno, adds that there are exploration projects throughout Northern Nevada counties, from near the Utah border to the California state line.

"The mines themselves are doing very well financially, and we are seeing a lot of interest in exploration projects," Dobra says. "The difference is that it takes a long time to get one of these things going to get permitting and pulling together finances."

Dobra says gold rose to a record high primarily due to worldwide financial fears as well as the spectre of rising inflation.

Lou Schack, communications and community affairs manager with Barrick Gold of North America, says there is no reason to expect that the runup on gold prices won't continue through the coming year.

"We are pleased with gold prices the last few years, and it has opened up some opportunities that weren't there before," Schack says. "Costs, of course, are increasing as well, but we are enjoying pretty good margins right now."

Tom Kerr, senior vice president of North American operations for Newmont Mining, says Newmont remains bullish on the price of gold for the coming year mainly because the financial factors underpinning the runup in gold prices remain intact.

"The ongoing economic uncertainty in the world, weakness in currency around world and in the U.S. and ultimately the growing demand in China and India all put us in a position where we are very bullish going forward," Kerr says.

The increase in gold prices allowed Barrick to significantly expand mining operations at its Cortez Hills mine, which came online in the first quarter of 2010. Barrick also is in the middle of a $200 million expansion of its Bald Mountain mine in White Pine County, and it's working through permitting for its Artoro project north of its Goldstrike mine in Elko County. Barrick invested more than $500 million in Lander County at the Cortez Hills mine.

"The higher the price, the more opportunities we have because resources that were not economically viable at lower prices become so," Shack says. "Of course there are a lot of risks - we can't be sure the price will stay up."

Newmont also seeks to expand its Nevada operations, which account for 35 to 40 percent of Newmont's global mining portfolio. The company will advance expansion at its Leeville and Carlin underground operations, as well as at its Gold Quarry site. Newmont also will look at acquisitions or acquiring assets that have the right strategic fit, Kerr says.

"Nevada is a core asset in Newmont's global portfolio," he says. "We will continue to explore our most productive areas - why wouldn't you? It's one of the most prolific gold-endowed sectors in the world. We look at our business here and consider it a strategic place to be and will continue to reinvest in Nevada."

Though the price of gold has increased substantially, Newmont's employment in Nevada held steady at 3,500 to 3,600, says Mary Korpi, director of external affairs. The company doesn't expect to hire many additional miners in 2011.

"It really is ideal when you don't have fluctuations, and it is advantageous to communities as well," Korpi says. "When you have a steady, stable workforce there is a lot more consistency and you don't have any ups and downs."

Other commodities in the state - primarily those used in construction materials, such as aggregates, lime and gypsum - haven't done as well as gold the past few years due to the construction downturn. For example, the decline for demand in gypsum led to USG Corp. to halt production of gypsum and wallboard at its plant near Empire, a devastating economic blow to the tiny town of far-northern Washoe County. The plant opened in 1948.