Gold prices to determine Round Mountain mine’s future
Back in 1946 when Bugsy Segal famously rolled into Las Vegas with a view to scoring it rich in the casino business, he might just as easily pointed his Packard Limo 430 km to the north. Gold at Round Mountain Mine had been a mainstay of Nevada’s economy since Segal’s birth 40 years earlier, producing 350,000 ounces by 1969 and helping to make the state one of the world’s largest gold producers.
Since then, of course, far more reputable forces than Segal have been at work in Nevada. Among them is Toronto-based mining company Kinross Gold which acquired a 50% interest in Round Mountain in 2003 in a joint venture with Barrick Gold that, to date, has seen the mine produce nearly 5.75 million ounces of gold. Still in sight for the duo’s Smoky Valley Common Operation are proven and probable gold reserves of 1,200,000 ounces.
Not surprisingly, the challenge here, as elsewhere, is the recent drop in the price of gold – and where it will go in the future? Where prices once topped $1,800 per ounce, mining execs like Randy Burggraff worried when it plummeted as low as $1,200, then breathed more freely when it eventually stabilized – this year to around the $1,300 mark. Burggraff, Kinross’s Vice-president and General Manager at Round Mountain reminds us that mining companies everywhere live or die on the basis of changes like this.
“There’s an incredible difference between getting $1,300 per ounce and $1,500 an ounce. Production costs are relatively high and really this affects the health and growth of any operation,” said Burggraff.
The challenge becomes even greater when the resource is a highly disseminated deposit as it is at Round Mountain. This has compelled Kinross to expand operations outward to exploit an increasingly diminished ore grade “feathered out into the country rock.” Fortunately, the dip in the price of gold has not stalled the operation. Unfortunately, says Burggraff, “we’re about at the end of the rope. We have about five years of mine life.”
“Now there’s still a lot of gold here yet, but it’s very very deep and the price will have to go up considerably to make that mineable.”
However, that hasn’t stopped Kinross from exploiting gold deposits closer to the surface. A large tonnage open pit operation, Round Mountain runs approximately 8,200 feet long north-west and south-east and 5,000 feet wide in the north-east to south-west direction. Mining is done by electric shovels, two large Komatsu 1200 loaders and two Cat 993K production loaders working along 35-foot high benches and supported by 150, 190 and 240 ton capacity haul trucks. All of it, Burggraff says, “will take us through mine life.”
“The loading machinery is three P&H 2300 rope shovels. They’re very old machines but run very, very well. And we have as good a maintenance group here as I’ve ever been associated with.”
Hot, dry, with a chance of rain…
The first thing that strikes you flying over Round Mountain country is the look of it. The topography along the floor of the Big Smoky Valley and as far as the 12,000-foot ascent up the adjacent Toquima Mountain Range is very dry and arid. From the main facilities at the foot of Toquima, mining operations spread out into a very large, epithermal, volcanic-hosted precious metal deposit of gold and silver. Pre-stripping the overburden, the result of millions of years of erosion off the mountain range, says Burggraff, “is the single substance that increases the mining cost.”
“The ore zone depths and the surface is relatively flat so that means the overburden gets deeper and deeper as we progress down the dip of the ore zone. The eluvium is anywhere from zero to a thousand feet thick.”
Despite very dry conditions, the mine does not suffer from a lack of water (the site sits on a fairly ample ground water table). In fact, quite the opposite problem arises on those days when the sky decides “to dump a lot of rain in a very short time.” Flash floods, says Burggraff, are the bane of operations at Round Mountain. “I would say we probably have up to five of those events a year and they can be very difficult to deal with, very damaging.” Never, Burggraff adds, is the company’s investment in Cat graders and dozers more valuable than when they’re dispatched to keep the mine’s roads open in the midst of biblical rains.
Another challenge: Round Mountain’s bench widths. Because they’re mining on the edges of the ore zone, men and equipment have a relatively narrow ledge of 100 to 300 feet of bench width to operate within. “For such a massive place we have tight mining conditions,” says Burggraff. At times, operators have had to drop to single-side loading of the shovel. At other times benches are so narrow Kinross is forced to dispatch loaders instead of shovels, a much less efficient option.
“It’s 200 miles to Walmart…”
Gold at Round Mountain is recovered using four separate processing operations. Seventy five per cent of the ore is heap leached with lower grade, oxidized ore placed directly on the dedicated pads and higher grade oxidized ores crushed, placed on the reusable pad before transit to the dedicated pad. A gold sludge produced from the recovery circuit is then smelted into ore. Burggraff estimates that two to three times a year crews hit high grade pockets “loaded with nuggets and a lot of coarse gold. That’s probably one per cent of our total material and it’s most effectively addressed with a gravity plant.”
Crushing the high grade and leaching the low grade oxide ores doesn’t address the sulphide ores. Pyrite in sulphide ore inhibits leaching, which requires milling to ensure the cyanide can reach the gold. A 70-80 per cent mill rate is more than acceptable, Burggraff says, as is a mill throughput of approximately 13,000 tonnes. The mine’s total throughput capacity is up to 240,000 tonnes a day. Finished bullion is transported to North America refineries for further processing.
Equipment operators and engineering staff must remain behind, of course, and that in itself poses a problem. How to get qualified people to work in barren, isolated conditions where the nearest town of any size is more than 200 miles away in any direction? “That makes manning a workforce of 800 people extremely difficult,” says Burggraff. “That’s by far my biggest challenge. We’re recruiting outside all the time.” The mine is situated near the small, local communities of Hadley and Carvers, which provide much of the housing for mine personnel. How staff get to the mine is another matter altogether.
“When we hire, getting to work is their responsibility. We have people who live in Las Vegas and Reno 250 miles away. They tend to come up here, work their turn and then go back home on the weekend.”
Contrary to what you might think, the mine’s relative proximity to one of the world’s premier gambling cities has had little or no impact on Kinross’s efforts to recruit staff or to maintain discipline on the job. These are serious people. Many have families, so that the main draw at Round Mountain is the operation itself.
“It’s kind of ironic, I struggle to get people while Nevada kind of leads the nation in unemployment. So our biggest attraction is that we’ve got a good paying job.”
Still, turnover remains high and while most of the equipment is state-of-the-art with comfort-controlled technology, the work load for maintenance and processing personnel is very hard, says Burggraff. That said, he’s quick to defend the working conditions. Below-zero temperatures are
a bigger issue than extreme heat and easily preferable to temperatures experienced at mines in Wyoming and Alaska. “Our weather normally runs between 20 and 90 degrees F here. The weather is very favourable.”
Burggraff is hoping that will entice more new personnel to Round Mountain, notably electricians who are in constant demand keeping facility lighting, electric shovels and drills in good working order. As for mining, metallurgy and geological engineers, he’s hoping career opportunities will be a major draw – and not just here in Nevada. Kinross has a presence on four continents. “We promote our people and we move them around so the opportunity to grow in your career is very good.” And if that’s not enough to swell the ranks at Round Mountain, then, says Burggraff, there’s the mine operations itself, “very clean, very safe and very healthy.”
“The roads are in good shape, the facilities are in good shape, you don’t see trash lying around. It’s a neat, clean operation for such a huge place. People take pride in what they do here.”
Meantime, Burggraff’s eye remains trained on the price of gold. While price dips so far have had minimal impact on operational expansion at Round Mountain, no-one has a crystal ball on where things will stand six years from now. That’s when the next potential additional expansion – approximately 1,500 feet beyond the current pit – is expected to proceed. Expansion would also mean increasing the depth and width of the pit, as well as its capacity for related mining and mineral processing infrastructure.
“We’ve got rough designs, we’re getting permits, but definitely, it requires higher gold prices.”
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