Big discovery by Barrick Gold gets industry attention

Barrick Gold Corporation's two new gold discoveries in Nevada represent the biggest mining story in the state for 2011, says Alan Coyner, administrator for the Nevada Division of Minerals.

In September, Barrick said it had found estimated resources of nearly 3.5 million ounces of gold at its Red Hill and Goldrush claims a few miles southeast of the company's flagship Cortez mining operations 75 miles southwest of Elko.

Barrick is conducting further drilling on the claim area to determine the full scope of the discovery and to move the estimated, or inferred, resource amount into proven reserves.

"It is the story of the year because of its size," Coyner told a standing-room crowd of top-level mining executives last week at the annual Northwest Mining Association conference at John Ascuaga's Nugget.

"It is obviously going to be big you can tell from the cross-sections and the drill intercepts that they have published," Coyner said. "It further strengthens Barrick's position in Nevada outside of the Carlin Trend. Their biggest deposits are Goldstrike and Meikle, and now they have another anchor."

Barrick acquired the property in January of 2006 when it purchased Placer Dome Inc. of Vancouver. Placer Dome had existing mining operations basically one ridge away on Mount Tenabo, prompting Coyner to joke that Placer Dome geologists should have simply walked down the hill to find a major new discovery.

Rob Krcmarov, Barrick's senior vice president of exploration, said earlier this year that geologists drew on their extensive knowledge of Carlin-type deposits to find the hidden Red Hill and Gold Rush deposits. Further drilling will help expand the scope of the resources, Krcmarov said.

"The mineralization in both deposits remains open in multiple directions. We have more work to do, but these discoveries have the potential to become truly world-class deposits," he said.

Discoveries such as Red Hill and Goldrush are crucial to keep the pipeline of new mining projects full, Coyner adds. There currently are 20 major gold mining operations in the state, and without new discoveries those mines would eventually play out especially at the current annual production rate of about five million to six million ounces.

Other significant discoveries in Nevada over the past few years include Newmont Mining Company's Long Canyon prospect in the Pequop Mountains between Wells and Wendover, and Midway Gold's Spring Valley project in the Humboldt Mountains near Lovelock in Pershing County, which has proven resources of two million ounces and an inferred resource estimate of an additional two million ounces.

The Long Canyon project is especially important for Newmont, Coyner says, because it gives the company another major footprint in the state. Newmont purchased the property from Vancouver-based Fronteer Gold in April for $2.3 billion. At the time, the property had an estimated resource of 2.2 million ounces of gold.

"Newmont is basically housed on the Carlin Trend, and secondarily on the Battle Mountain, or Getchell Trend," Coyner says. "This is a new area, and it is a very positive thing because it opens up an area that until now had not received a lot of geologic investigation."

The current mining boom in Nevada far outstrips any historic gold mining boom in the state.

Since the 1980s, more than 240 million ounces of gold have been mined in Nevada, says Jon Price, state geologist. The Carlin Trend alone has produced more than 76 million ounces and should exceed the 100-million-ounce mark by 2021. The region accounted for 41 percent of total gold production in the state for 2010.

Annual production in the state has dipped the past few years from its peak in 2004, but that is primarily because companies can mine lower-grades ores at profit because gold prices are high.

Nevada mines produced 5.3 million ounces of gold in 2010 at a total value of $6.54 billion. The state produced 5.03 million ounces in 2009 at a value of $4.9 billion. Nevada miners produced 7.9 million ounces of gold in 2004 and nearly 8 million ounces in 1997.

To keep the pipeline of new mining projects full, companies are expected to spend in excess of $300 million on exploration in 2011 alone, Coyner says.

Barrick Gold will spend upwards of $100 million in exploration in Nevada in the coming year, says Lou Schack, Barrick's Elko-based director of communications. Barrick spent approximately $26 million in 2011 to define the resources at its Red Hill project.

With exploration budgets booming and a crop of new discoveries, the current mining boom has no signs of slowing.

"Everyone is busy drillers are busy, assayers are busy, permit files are full with the BLM and Nevada Division of Environmental Protection," Coyner says. "The mining companies say stuff and give out press releases, but the ancillary information that you can get from the assay labs and drillers, that helps underpin the impression that things are growing."

The Northwest Mining Association conference brought more than 2,600 mining executives, equipment manufacturers, assay companies and other mining-related companies to Sparks, says Mike Heywood, marketing and information manager for the Northwest Mining Association.

There were about 220 company exhibits at the weeklong conference, which returns to Spokane, Wash. next year, Heywood says.