Study supports reopening of Winnemucca-area mine

Higher gold prices might justify reopening a gold mine 54 miles west of Winnemucca, the mine's Denver-based owner said last week.

Vista Gold Corp. said consultants reported that a gold price of $550 an ounce it was about $568 last week indicates the Hycroft Mine could generate an internal rate of return of 69.6 percent. At $450 an ounce, the internal rate of return is projected at 29.5 percent.

The feasibility study was undertaken by Mine Development Associates of Reno.

The consultants estimated that Vista would need to invest $25.6 million for equipment and working capital to get the mine back into operation. That figure is based on $450 gold.

But if the price is $550, the working capital requirements drop, and MDA estimated the investment to reopen the Hycroft Mine at $18.5 million.

The mine makes sense, however, only if prices remain high.

The cash cost of producing an ounce of gold from the facility, MDA estimated, would be $351 an ounce a relatively high cost for a mine in Nevada.

Vista would need six to nine months to get the mine back into production.

MDA estimated the mine could produce 375,400 ounces of gold and 1.5 million ounces of silver within five years. In its history, the mine has produced more than 1 million ounces of gold. It's been closed since 1999.

Vista didn't say last week whether it plans to reopen the mine.

But Mike Richings, its president and chief executive officer, noted his company's acquisition of F.W. Lewis Inc. late last year cleared one hurdle toward reopening of the facility.

F.W. Lewis Inc., which owned 55 mining properties around the state, held a 5 percent royalty on gold production from the Hycroft Mine. Vista's acquisition of F.W. Lewis means that royalty no longer would be paid.