Historic gold mine shuts down because of rising gold costs April 26, 2013

The rising cost of producing an ounce of gold has risen to a level that is unsustainable for the historic Drumlummon Mine in Idaho (USA). Mine owners U.S. Silver & Gold announced its plans to shutter the mine because it costs more to produce an ounce of gold than it's worth. During the first three months of 2013, the mine near Marysville produced just more than 2,100 ounces of gold at a cost of nearly $2,300 per ounce. The mine also produced a little more than 21,000 ounces of silver. The company has worked to reduce costs and increase productivity, but "current gold prices and forecast gold production do not warrant continuing our operations there." Darren Blasutti, president and CEO of the Toronto-based company, told the Associated Press. The shutdown will "preserve Drumlummon's gold and silver resources until economic circumstances merit further extraction," Blasutti said. Drumlummon spokesman Darryl James said the shutdown would begin immediately. The company will continue to process available rock at the mine but will not remove any more ore, he said. The company expected to lay off 107 employees at the mine and a milling facility in Philipsburg by June 28, the Independent Record reported. Gold was discovered at Marysville in the 1870s and work continued until the lower part of the mine flooded in 1953. RX Exploration Inc. announced in August 2009 that it planned to reopen the mine. In July 2012, U.S. Silver and RX Gold merged to form U.S. Silver and Gold. With the shutdown, U.S. Silver & Gold plans to move its equipment, inventory and supplies to the Galena Mine Complex, a silver, copper and lead mine in northern Idaho. To further cut costs, the company has initiated a hiring freeze at the Galena mine, eliminated nonbudgeted overtime and is seeking to refinance debt on more favorable terms. The Galena mine produced more than 577,000 ounces of silver during the first three months of 2013 after record production of 625,000 ounces in the final three quarters of 2012.

Peru to become significant uranium producer in five to six years TORONTO (miningweekly.com) Peru has the potential to become a significant uranium supplier within five to six years, when exploration junior Macusani Yellowcake (YEL) starts production from its 900 km2 complex of properties, located on the uranium-rich Macusani Plateau, in the south-east of the country. MD Dr Laurence Stefan is confident the trio of deposits comprising its flagship project has blue-sky potential to host more than 500-million pounds of uranium and could put Peru on the uranium map as a major South American producer of the radioactive metal. Following its merger with rival explorer Southern Andes Energy in April last year, the company owns about 80% of the entire Macusani Plateau, which includes the Colibri 2 and 3, Kihitian and Corachapi deposits. The company is stepping up exploration on these properties and would bring on line a sixth drill during April to speed up the exploration process over the next three to four months, before the Peruvian winter halts activities. Stefan said as soon as the current drill campaign had been completed, the company would complete a preliminary economic assessment (PEA), which it plans to publish soon afterwards. Speaking to Mining Weekly Online during the Prospectors and Developers Association of Canada's 2013 convention, Stefan pointed out that it is currently the only active explorer on the plateau. Together with a joint venture between Vena Resources and uranium major Cameco, the Macusani Plateau currently hosts about 110-million pounds of uranium, of which YEL owns between 60-million to 70-million pounds. However, Southern Andes had previous undertaken extensive exploration of the plateau, and with YEL currently working on reinterpreting the historical data from the eastern part of the plateau, Stefan is confident that the potential exists that its own resources could grow well beyond 300-million pounds. He noted that the western part of the plateau still remained underexplored owing to its inaccessibility, but, with that potential included, the Macusani Plateau could hold more than 500-million pounds of uranium. This did not compare with Canadas Athabasca basin in northern Saskatchewan and Alberta, which is the worlds top source of high-grade uranium, but would more likely be comparable with the resources of Namibia, Niger or Kazakhstan. Meanwhile, following the catastrophic nuclear meltdown of the Fukushima Daiichi nuclear power plant, in Japan, in 2011, uranium prices have been under pressure. Stefan believed $40/lb would be the stop sign and that demand increases and little additional supply coming on stream, should ensure rising prices by 2014. Stefan said the Macusani-complex had ores amenable to simple heap-leach extraction, placing YELs production costs among the lowest in the industry. A 2010 PEA estimated cash production costs of less than $22/lb. The deposits comprise large, near-surface deposits, suitable for openpit extraction, with metallurgical recoveries of more than 90%. YEL currently has 300 000 lb of uranium in the measured category, 11.5-million pounds in the indicated category and 27.6-million pounds in the inferred resources category for a total resource of about 40million pounds. As at January 31, the company had $6-million cash in the bank. Its stock traded at 12 Canadian cents apiece on the Toronto Venture Exchange on Thursday.