Hycroft Mine

REOPENED IN 2008, THIS NEVADA GOLD MINE IS NOW IN THE MIDST OF SIGNIFICANT EXPANSION

Hycroft Mine turns to Komatsu 930E haul trucks

Good as gold. The gold standard. Go for the gold. Throughout history, gold has held a special place in people’s hearts, minds and investment portfolios, but the price fluctuates tremendously, determined largely by the overall economy and the mood of the country. In good times, the price of gold goes down, while in times of crisis, it goes up. Never has that been truer than during the worldwide recession of the last few years.

Five years ago, in November 2005, the price of gold was about $500 per ounce. By November 2008, the price had risen to a little more than $700 an ounce. Fast forward to Dec. 6, 2010, when the price of gold set a record at $1,426 an ounce.

As the price of gold has gone up, more gold mines have opened or reopened. One such operation is the Hycroft Mine, located about 50 miles west of Winnemucca, in northwestern Nevada. Owned by Allied Nevada, the property has been mined on and off for more than 100 years — initially for sulfur, then silver, and later for gold. The site produced more than a million ounces of gold from 1987 through 1998, but was shut down for a decade due to low gold prices. It reopened two years ago.

“When the mine reopened in late 2008, the original plan was to run it for just a few years,” said Hycroft Operations Manager Todd Sylvester. “The owners knew what was here from when it was mined previously and with the higher price, they figured it would be cost-effective to reopen the property. But in the process of doing that, they did some drilling and exploration, and found much more gold here than they originally thought.”

As a result of finding more gold on the property, the Hycroft Mine is in the midst of a significant expansion that’s expected to more than triple production in the next few years.

“This year, by mining the gold everybody knew was here, we’ll process about 25 million to 26 million tons of material,” said Mine Superintendent John Cavener. “When our expansion is complete in about 2013, we intend to be at about 80 million tons annually (37 million tons of ore and 43 million tons of waste).”

Employees are key

The Hycroft Mine runs 24/7, 365 days a year. There are about 200 employees at the mine now. That number is expected to more than double, reaching 400 to 500 in the next two to three years.

“One of the challenges of growing like we are is finding the large number of high-quality workers we’ll need,” said Sylvester. “We’re very pleased with the people we have, but we’re always on the lookout for talented and conscientious employees.”

In addition to Sylvester and Cavener, other key management personnel at the mine include General Manager Warren Woods and Maintenance Supervisor Glenn Stursa.

Komatsu 930E haul trucks

The Hycroft Mine currently uses six Komatsu 730E haul trucks, in addition to four Komatsu wheel loaders (two WA1200s, a WA900 and a WA380); five Komatsu dozers (two D475s, two D375s and a D65); a Komatsu HD785 water truck; two Komatsu skid steers (an SK1026 and an SK1020); and a Komatsu PC220 excavator.

“The 730Es have been excellent trucks,” said Sylvester. “We bought five, low-hour, used 730Es from a mining operation in Utah when we restarted here. Availability has averaged about 90 percent and that includes some component change-outs. For a 24-hour-a-day operation like ours, that’s very good. The trucks have also held up well and fuel economy has been good.”

As part of the expansion, the Hycroft Mine is upgrading its equipment and truck fleet.

“Regarding trucks, we had a decision to make,” said Cavener. “We liked the Komatsus, so we wanted to stay with the brand, but we knew we wanted trucks larger than the 730Es (200-ton capacity) to boost productivity. The next step up, the 830E (240-ton) was a possibility, but we decided to go all the way to the 930E (320-ton) as the best way to get the production we were looking for. It would also allow us to standardize our truck fleet, which makes maintenance easier.”

The Hycroft Mine recently put its first 930Es into production. The facility will continue adding to the truck fleet as production ramps up during the next couple of years. Eventually, Hycroft intends to have 16 Komatsu 930Es in operation by the end of 2012.

“That shows you the type of production we’re looking for down the road,” said Sylvester. “Going from six 200-ton trucks to 16 320-ton trucks more than quadruples our top-end capacity.”

Partnership with KEC

Maintenance Supervisor Glenn Stursa is responsible for keeping all the mobile equipment at the Hycroft Mine, including haul trucks, up and running.

“Maintenance-wise, we really like the Komatsu electric-drive trucks,” said Stursa. “There are fewer moving parts on them compared to mechanical trucks, so it’s actually easier to do the 250-, 500- and 1,000-hour PM service intervals.”

Stursa has 16 mechanics on staff and also oversees the efforts of four Komatsu Equipment Company technicians who are based at Hycroft. At least one KEC technician is at the mine at all times.

“We have an excellent relationship with Komatsu Equipment Company,” said Stursa. “Project Manager Troy Lane, who’s in charge of KEC’s efforts out here, and Elko Branch Manager Travis Mullins take good care of us. And the on-site Komatsu technicians pitch in wherever they’re needed. Obviously, they’re the experts on the Komatsu machines. They’ve received a lot of training on the trucks and other Komatsu machines we have, plus they help train our guys. It’s been a good partnership.

“Between the Komatsu techs and our own men, we’re fairly self-sufficient,” he added. “About the only time the equipment goes in to KEC’s shop is for a rebuild or a high-hour component change-out or something like that. Otherwise, we take care of everything here.”

Future looks “golden”

Unlike the days of the California or Klondike gold rushes, gold nuggets are no longer found floating in stream beds. Today, it’s in ore and is invisible to the naked eye. For example, at the Hycroft Mine, the yield is about .02 ounces of gold/per ton of ore. Mining it and producing it is a complex, costly and equipment-intensive process that requires significant amounts of financing and expertise.

The process at Hycroft includes hauling the ore to a leach pad where a cyanide solution is put on it to dissolve and pull out the gold and silver. This solution with the gold and silver in it is then pumped through a plant where zinc is added, which in turn causes the gold and silver to precipitate out and form into particles. These gold, silver and zinc particles are then filtered out, put into a furnace, melted and poured into doré bars.

As mining at Hycroft grows in the coming years, gold production is expected to increase from about 100,000 ounces per year in 2010 to more than 300,000 ounces per year in 2013 and 2014. Average annual silver production is projected at more than one million ounces.

According to Allied Nevada’s most recent exploration estimates, current oxide reserves are sufficient to support that mining rate until 2015; however, management believes that ongoing exploration will continue to convert oxide resources, thereby extending mine life well beyond that.

“We have about eight exploration drills out there working full time, day and night, so there are many new areas opening up here at Hycroft,” said Sylvester. “And beyond the oxide ore, it appears there’s a huge sulfide deposit below it, which we think is going to be really big. Bottom line, we hope and intend to be here mining gold for a long, long time.”