New Hecla Gold Mine Gets Off To Strong Start Nevada Operation Could Be Company’s Lowest Cost Gold Producer

Hecla Mining Co.’s new Nevada gold mine has started under budget, with encouraging amounts of gold and good prospects for the future, the company reported Wednesday.

The Rosebud mine co-developed with Alburquerque-based Santa Fe Pacific Gold Corp., looks to be Hecla’s lowest cost gold producer.

With the startup budgeted at about $25 million, Rosebud began production at about $3 million below that total, said Vicki Veltkamp, manager of corporate communications.

Mining at Rosebud began in February, and processing of rock brought to the surface started last week. Early results show the ore contains slightly more gold - .46 ounces per ton - than was projected by Hecla geologists, though Veltkamp cautioned that it was early in the mine’s life.

Even more encouraging for Hecla was that the cash cost at Rosebud - what the company spends to produce each ounce of gold - appears to be less than $180 an ounce, making it the company’s lowest cost gold mine. Gold sold Wednesday for $341 an ounce on the New York spot market.

Hecla splits the gold from Rosebud with Santa Fe, which processes the ore at its facilities at the nearby Twin Creeks Pinon mill. Santa Fe also funds the majority of the exploration at Rosebud.

The mine has enough gold to produce about 100,000 ounces for five years, so both companies are eager to find more gold to keep Rosebud running. Early drilling at the site suggests there is reason to keep looking for more gold.

Veltkamp attributed the strong start for Rosebud to experienced management. The project manager there had worked for Hecla at its successful Republic gold mine near Republic, Wash., she said.

Hecla’s last pure gold mine, Grouse Creek in central Idaho, started off strong, but geologists there soon found that the mine held only about half as much gold as originally thought. The company took a nearly $100 million charge against earnings from Grouse Creek.

Hecla’s stock closed Wednesday down 13 cents at $5.50 a share.

, DataTimes