Stable gold prices allow Nevada miners to invest in exploration, technology

ELKO, Nev. — A relatively stable price for gold — the precious yellow metal has hovered above $1,200 an ounce for much of the year, and over the past three years it’s swung no more than a few hundred dollars north or south of that benchmark — is pushing Nevada’s largest gold miners back into exploration mode.

Nevada has more mining activity than any other state in the country. The Silver State leads the Bureau of Land Management with more than 180,000 active mining claims, and there currently are 282 exploration notices active in the state. Nevada miners produced more than 5.64 million ounces of gold and 8.47 million ounces of silver in 2017.

That steady price — just three years ago, the average annual price for gold was $1,160 per ounce — means miners are able to shed three years of stiff cost-cutting measures in favor of exploration and mine-site growth, says George Fennemore, growth and feasibility manager for Barrick Nevada.

“Back in 2015, there wasn’t a whole lot confidence in the gold price, and there were some other financial pressures,” Fennemore says. “Things have balanced out, though. We are starting to see some investment in new mines. Barrick and most and other companies have got their debt situation stabilized and under control, and at $1,200 the gold price looks pretty stable — stable enough to start to making some investment decisions.”

Dana Bennett, president of the Nevada Mining Association, says that Nevada is globally known as a favorable place for exploration investment.

“Nevada has a lot of diversity in its geology and geography, and exploration is a key part of the mining industry to extend existing mines and also to find new deposits of precious metals and minerals,” she says. “There’s also been a lot of exportation in lithium in Nevada, and Nevada has the only operating lithium mine in the U.S. ... There are some interesting projects coming online, and we do anticipate some growth in the industry over the next couple of years, especially with some of the smaller mines.”

Exploration investment and expansion opportunities

Barrick operates three large mines in Nevada: Goldstrike, Cortez and the Turquoise Ridge joint-venture project north of Winnemucca that it operates with Newmont Mining Corp. Newmont, meanwhile, operates 11 surface mines and eight underground mines in the state.

Newmont is reaping the benefit of the years of work that went into bringing its Long Canyon project east of Wells online — in 2017, Long Canyon added 174,000 ounces of gold to the company’s Nevada production total of 1.8 million ounces.

Newmont is expected to record a decrease in production in 2018, however, due to a slide at its Gold Quarry pit that has suspended operations there as well as at the Chukar underground mine.

The company’s largest expansion projects are in Africa and South America. Barrick, meanwhile, is making significant exploration investment at mine sites in Nevada to expand its operations here.

Barrick’s Deep South project will extend underground mining operations at Cortez by chasing ore another 1,500 feet down from current mining operations at about 2,200 feet below ground level.

While the targeted 3,500 feet below surface level is far from some of the world’s deepest gold mines (the Mponeng gold mine in South Africa is more than 10,000 feet below ground level), it’s still among the deepest mines in Nevada.

“We have been chasing that ore body at depth and have had good exploration success in that area,” Fennemore says, “as well as in the near-mine areas around our open pits at the Cortez mine.”

Barrick also plans to make additional laybacks at its Cortez open pit mine, the largest open pit mine in the state. The laybacks allow Barrick to make the existing pit wider and deeper to extract additional ore.

Both exploration projects are working through the permitting stages, and Barrick expects to begin building out those sites in the second half of 2019, Fennemore says.

They are expected to increase production to about 300,000 ounces per year for a projected six years, with further on-site exploration plans waiting in queue that would extend that timeline.

Technological advances keeping miners ahead of the curve

In addition to a stable price for gold that’s helping miners better plan for exploration expenses, advances in mining technologies and infrastructure are another reason why Barrick is able to mine roughly three-quarters of a mile underground.

In Nevada, underground mining activity often is constrained by water-bearing material that makes it more challenging to mine at depth. However, Fennemore says recent advances in well technologies are allowing miners to build deeper pumping wells that open the door for exploration and mining operations much further underground than in the past.

Automation and big data also are revamping the industry. Mining companies are tasked with finding ways to incorporate new methods of automation, as well as incorporate advances in data management and data analysis to shave the overall cost structure of mining. These savings can make mining a wider range of ore types more profitable.

Fennemore says automation brings key workforce challenges that require shifting duties and responsibilities for miners.

“We have been operating these mines in a fairly labor-intensive manner, and the question is, how to get the people who have been operating equipment directly into a situation where they can operate better, remotely and more efficiently using the new technologies that are available to us,” he says. “Some of the tasks we do are very repetitive. Instead of running a single drill, we are looking at having one operator run multiple drills, as well as what else we can do to automate those repetitive tasks to improve the cost structure and make some more ore bodies economically viable for mining.”

Nevada, he adds, is not constrained by the amount of gold in the ground but rather the people required to bring it to the surface.

“We still have good grades and good deposits here in Nevada,” Fennemore says. “We don’t appear to be gold-limited in Nevada. Our industry seem to be more limited by our ability to get enough people to do the work that needs to be done -- we are more people-constrained than gold-resource constrained.”

Bennett of the Nevada Mining Association says the association will key in on any legislation that constrains access to exploration or mining operations when the 80th Legislative Session begins in February.

“There is a lot of (exploration) work still to do,” she says. “There’s still a lot more to look for and discover. … Voters just designated who will be in all those various seats, with a new governor and new constitutional officers. Many new and existing legislators have been on mine-site tours and understand the importance of this industry to the state as a whole and also to its rural communities.

“I am confident that the people voted into these offices understand this industry is foundational to this state’s economy.”