Atna Resources acquired 100 percent of the Pinson mine in Humboldt County with the intent to begin underground mining operations within the next year, says Jim Hesketh, president and chief executive officer of the company headquartered at Golden, Colo.
Atna previously owned a 30 percent stake in the mine and acquired the remaining 70 percent from Barrick Gold Corp. for $15 million in cash and 15 million common shares of Atna stock. The company has arranged a $20 million credit agreement with Sprott Resource Lending Partnership of Canada to finance the monetary portion of the acquisition and expects to close on the acquisition in the next few weeks.
The Pinson mine is located on four square miles of land 30 miles northeast of Winnemucca along the Getchell gold trend.
Homestake Mining Corporation operated the Pinson mine as an open-pit facility and produced just shy of 1 million ounces of gold, but mining operations were shuttered in 2001 due to the low price of gold at the time. In 2004 Atna spent close to $14.5 million to acquire a stake in the mine, and Barrick, which merged with Homestake in 2002, has invested more than $30 million in the site, Hesketh says.
At today's gold prices in the $1,800s an ounce re-opening the project is a winning financial proposition, Hesketh says. Studies conducted by the company indicate the property still might have more than 1 million ounces of gold to be recovered, but Atna wants to update those estimates.
More than 4,000 feet of underground exploration work has been completed at the site, and a lot of underground infrastructure already is in place, Hesketh says. Atna plans on advancing engineering work, including a detailed mine design.
The company plans on producing gold from the mine in the next nine to 12 months, Hesketh says however, much of that aggressive timeline depends on the company's ability to secure a mining contractor and qualified labor to staff mining operations.
Hesketh says Atna is accepting resumes for engineers, geologists and underground miners.
"As soon as we can get a mining contractor available to put on site, we will start to initiate some of the driving of secondary access and activities permitted under the current permitting plan," he says.
The Pinson mine represents a strategic acquisition for Atna, which also operates the Briggs gold mine in Inyo County adjacent to Death Valley, Calif. That mine employs about 135 people and is generating positive cash flow, Hesketh says. The California facility netted $2.7 million during the second quarter, boosting Atna to its first-ever quarterly profit of $1.1 million.
"Pinson will help expand our gold production and gives us a stronger operating profile as a company at a time when the price of gold is at historic highs," he says.
Ore from the Pinson mine will be processed at Barrick's Goldstrike processing facilities. Barrick will receive a 10 percent royalty on the mine's profits after the first 120,000 ounces of gold are produced.
Atna's decision to move ahead with the Pinson project comes as the company is shedding most of its other interests, both in Nevada and elsewhere, either through outright sales or through joint venture agreements.
It agreed earlier this summer to sell 135 unpatented mining claims in the Atlanta District of Lincoln County to Meadow Bay Gold Corp. for $150,000 and 400,000 shares of Meadow Bay's common stock.
And Atna sold three properties in the Yukon and British Columbia to the privately held Mindat Research of British Columbia, and it's working to market about 850,000 acres of mineral properties it holds in Montana.
