WINNEMUCCA — It’s been a rocky year for Allied Nevada’s Hycroft Mine, but the company appears to have made a complete turnaround and the future is looking brighter with the recent announcement of record production in the third quarter.
In a statement released by Allied Nevada, President and CEO Randy Buffington said, “I am very pleased with the progress being made at the site by the new operating team. While I fully expected them to turn the operation around, I am impressed with the speed and efficiency with which they have been able to improve production.”
“This is a first-rate team with the systems, discipline and determination that give us the confidence we can continue to move forward with building a world-class operation,” Buffington said.
Buffington made the comments following the news that Hycroft achieved its metal production and sales expectations in the third quarter — producing a record 52,198 ounces of gold and 184,082 ounces of silver.
Despite the slow start to the beginning of the year, the record production may allow Hycroft to achieve full year production and sales goals of 175,000 - 200,000 ounces of gold and .9 million - 1.1 million ounces of silver.
It was welcomed news for Allied Nevada and signaled the turnaround it had been working toward since the beginning of the year.
Hycroft was in the middle of an expansion announced three years before when the price of gold began dropping from historic highs. Then came the announcement production was down due to inefficient solution management on the heap leach pads, which resulted in less-than-stellar metal recovery from late 2012 to early 2013. With production and profits in a downward spiral, Allied announced in the summer it was laying off 24 percent of its workforce.
One of the first actions undertaken by Allied Nevada to put Hycroft on a more sturdy footing was to bring in new leadership.
Allied’s Tracey Thom, vice president of investor relations and corporate communications, explained as the mine transitioned from being a smaller operation to a much larger gold and silver producer, it was necessary to bring in an operating team with experience in larger gold operations to effect the transition.
Thom said it was important to find people with the right skill set to ensure the mine plan was achieved on a daily basis and the all divisions were meeting their goals.
One of the first people hired last spring was Carl Waggoner, vice president and general manager of Hycroft, who came to the company with 30 years of experience and was previously the general manager at Coeur Rochester and before that was manager of construction and engineering at Barrick’s Turquoise Ridge Joint Venture.
Waggoner then replaced the entire management staff with people who had experience in larger gold operations.
However, in order for Hycroft to successfully transition to a large mining operation, it had to have the ability to move and process more ore and capture more gold and silver in the end. This has long been Allied’s goal, and in 2010 it announced they would be spending $212 million in equipment and capital outlay over the next several years.
To efficiently move more ore the company purchased two CAT 7495 electric rope shovels, weighing in at 1,500 tons. The first has been in use since May of last year; the second went to work in July of this year. The impressive CAT 7495s are capable of moving 100 tons in a single scoop.
Thom explained the previous shovels required seven to 10 scoops to fill the trucks. The new shovels can fill a truck with three or four scoops, which keeps the trucks moving. In addition to the shovels, larger capacity 320-ton Komatsu trucks have been added to the fleet, now totaling 33 trucks, to meet the increasing mining rate.
All that ore has to be processed and another of the important factors in the Hycroft turnaround was improvements to management of the heap leach pads.
Pumping capacity and access to water on a daily basis have increased so that flows to the heap leach pads now average 22,000 gallons per minute, an increase of 36 percent from the beginning of the third quarter.
However, remediation on the Lewis leach pads is ongoing. Allied Nevada has indicated all permits are in place and solution is currently being introduced to the leach pad at a rate of 1,500 gallons per minute. The company expects to begin recovering gold and silver from the pad in 2014.
Another important turning point for the mine was the new Merrill-Crowe plant capable of processing 21,500 gallons-per-minute, which went online in October. The Merrill-Crowe process is used for removing gold and silver from cyanide once the solution is recovered from the heap leach pads.
The old process, which included a 5,000 gallon per minute Merrill-Crowe plant and 6,500 gallon per minute carbon column could not process at the rate needed. In addition, the carbon columns were not efficient at recovering silver from solution, which was not lost, but continued to recirculate in solution until it was run through the Merrill-Crowe process. The carbon columns have since been discontinued at Hycroft.
Thom explained silver is the first metal captured by the carbon columns, but is “chased off” as gold is captured later in the process. Allied Nevada anticipates increase capture of silver with the new plant should increase to approximately 6 ounces of gold for every ounce of silver, as compared to the 1 ounce of gold for each ounce of silver captured in the carbon process.
In addition the the new Merrill-Crowe plant, the company is building a crushing system that will help to increase the gold and silver recoveries in the heap leach operation. It is expected that the crushing system will be completed and commissioned by the end of 2013 and fully operational in 2014.
Construction of a new mill capable of processing 130,000 tons a day and producing more than 500,000 ounces of gold and 21 million ounces of silver per year remains a key focus of the team.
The deferment of mill construction was announced earlier in the year when the price of gold dropped significantly; though, Allied Nevada has continued with the permitting process as well as the metallurgical program to determine the best and most cost-efficient method for extracting gold and silver from sulfide ore should the mill be built. Allied considered traditional autoclaving and roasting but is reviewing other traditional methods. The company has also considered concentrated sales; that is selling off the ore, to reduce spending on capital projects.
The tests to date indicate that the processes being reviewed work well with Hycroft ore and the focus is now to optimize that process. The company expects to complete a pre-feasibility in the first quarter of 2014 and a feasibility study in the fall of 2014 which will lead to a decision to build the mill.
Communities in Humboldt and surrounding counties will be closely watching developments as construction of the new mill would represent more jobs - a positive benefit for both miners and the health of mining towns.