Did I say something about the shareholders getting a screw job? That the buy was a sell out?
Friday July 20, 9:26 am Eastern Time
Press Release
SOURCE: Homestake Mining Company
Homestake Increases Gold Reserves at Veladero
WALNUT CREEK, Calif., July 20 /PRNewswire/ -- (Note: All financial information is reported in U.S. dollars unless stated otherwise)
Homestake Mining Company (NYSE: HM; Australia: HSM; Toronto: HCX) announced today the results of its second complete field season on the 60%-owned Veladero project in northwestern Argentina. Ore reserves on the property now contain a total of 8.0 million ounces of gold and 130.3 million ounces of silver, compared to 5.5 and 81.2 million ounces of gold and silver, respectively, identified after the first field season a year ago. Homestake's share of reserves now amounts to 4.8 million ounces of gold and 78.2 million ounces of silver, compared to 3.3 million ounces of gold and 48.7 million ounces of silver identified after the first field season.
The new reserves were developed on the basis of a two-year exploration and drilling campaign and a broad range of subsequent engineering studies. These studies currently envisage an operation treating ore from two open pits from the Filo Federico and Amable deposits, located on the Veladero property, in a combination mill and heap-leach facility. The northernmost pit, Filo Federico, extends north onto Barrick Gold Corporation's (NYSE: ABX, Toronto: ABX) property to capture the Filo Norte extension. With Barrick's Filo Norte, the total reserve would increase to 8.85 million ounces of gold and 138.9 million ounces of silver. The distribution of currently estimated mill and heap-leach ores is as follows:
VELADERO PROJECT (100% basis including Filo Norte)
Distribution of Proven & Probable Reserves
Imperial Units
Ore Type Tons Gold Grade Silver Grade Gold Silver
(Millions) (Oz per ton) (Oz per ton) (Millions (Millions
of Oz) of Oz)
Mill 12.7 0.205 1.41 2.61 18.0
Heap-leach 194.2 0.032 0.62 6.24 120.9
Total 206.9 0.043 0.67 8.85 138.9
Metric Units
Ore Type Tonnes Gold Grade Silver Grade Gold Silver
(Millions) (gm per (gm per (Millions (Millions
tonne) tonne) of Oz) of Oz)
Mill 11.5 7.04 48.5 2.61 18.0
Heap-leach 176.2 1.10 21.3 6.24 120.9
Total 187.7 1.47 23.0 8.85 138.9
The Veladero property is adjacent to Barrick's Pascua-Lama project with stated proven and probable reserves amounting to 17.5 million ounces of gold and 594 million ounces of silver (including the Filo Norte extension). On June 25, 2001, Homestake and Barrick announced their intention to merge the two companies.
``We are very encouraged by the continued growth of reserves at Veladero,'' said Jack E. Thompson, Homestake's Chairman and Chief Executive Officer. ``These reserves and the associated capital and operating cost estimates are based on a stand-alone project with no assumed synergies with Barrick's Pascua-Lama. Under the unified Barrick-Homestake ownership, these two major projects are expected to benefit from increased economies of scale and reduced capital and operating costs.''
Development
Veladero's second field season was completed in April, 2001. Subsequently, Homestake completed evaluation of a new mineral inventory and updated its earlier engineering studies.
Since the 1999 acquisition of Argentina Gold, Homestake has completed 350 reverse circulation (``RC'') and 45 diamond drill (``core'') holes totaling 385,200 feet (117,500 meters) and 26,600 feet (8,100 meters), respectively. In total, the Veladero drill-hole database now includes 500 RC and 50 core holes.
A variety of open pits, process design alternatives and operating throughput rates have been evaluated. The current preferred alternative is a large-scale pulp agglomeration process, which combines milling and heap leaching treatment methods. Ore feed to the plant would come from two open pits centered on the Amable and Filo Federico deposits. Following the announcement of the Barrick-Homestake merger agreement, the Filo Federico pit design has been modified to incorporate the Filo Norte extension of Filo Federico onto Barrick's property.
Proven and probable ore reserves within this open pit design were determined to be follows:
Imperial Units
Property Tons Gold Silver Gold Silver
(Millions) (Oz per ton) (Oz per ton) (Millions (Millions
of Oz) of Oz)
Veladero 185.8 0.043 0.70 8.01 130.3
Filo Norte 21.1 0.040 0.41 0.84 8.6
Total 206.9 0.043 0.67 8.85 138.9
Metric Units
Property Tonnes Gold Silver Gold Silver
(Millions) (gm per tonne)(gm per tonne)(Millions (Millions
of Oz) of Oz)
Veladero 168.6 1.48 24.0 8.01 130.3
Filo Norte 19.1 1.36 13.9 0.84 8.6
Total 187.7 1.47 23.0 8.85 138.9
The engineering study envisages a 11.5-year mine life with a mining rate of approximately 220,000 tons (200,000 tonnes) per day. Including pre-stripping, the life-of-mine waste-to-ore strip ratio is expected to average 3.2 to 1.
The current plan provides for a total of 12.7 million tons (11.5 million tonnes) of ore grading 0.205 ounces of gold per ton (7.04 grams per tonne) to be ground in a 3,860 ton (3,500 tonne) per day mill. After leaching, the ore would be stacked on a leach pad together with 57,300 tons (52,000 tonnes) per day of crushed leach-grade ore averaging 0.032 ounces of gold per ton (1.10 grams per tonnne). The mill recovery of gold is expected to average 94%, while heap leach gold recovery is estimated at 73%. Silver recoveries vary widely across the deposit and are expected to average 34%.
The total pre-production capital cost is currently estimated at $608 million. Average annual gold output is forecast to be 621,000 ounces produced at an average cash cost of $117 per ounce, after silver by-product credits. The engineering study, conducted on the basis of $300 and $275 per-ounce gold, and $5.00 and $4.75 per-ounce silver, yielded after-tax rates of return in excess of Homestake's cost of capital currently estimated at 7%.
Growth Potential
The above design does not include an enlarged Filo Federico pit that would incorporate the Cuatro Esquinas deposit situated halfway between Amable and Filo Federico, entirely within the Veladero property. An enlarged Filo Federico pit that incorporates the Cuatro Esquinas deposit has been designed, but further geological definition and metallurgical test work are required to verify that this material can be characterized as ore. This mineralized inventory contains an estimated 115.4 million tons (104.7 million tonnes) of mineralized material grading 0.030 ounces of gold per ton (1.02 grams per tonne). Silver content is estimated to average 0.53 ounces per ton (18.1 grams per tonne).
Next Steps
Homestake is continuing work on 100% heap-leach or dump-leach alternatives in an effort to further reduce Veladero's initial capital cost and to improve its project economics. A key element in this analysis is metallurgical test work that would require a large sample of the ore. The 2001-2002 program would include underground declines into both Filo Federico and Amable to obtain bulk-scale metallurgical samples required to optimize the flow sheet. Underground drilling would also add valuable geological and geotechnical information prior to final feasibility. Surface drilling activities would include in-fill, geotechnical and condemnation drilling. The anticipated duration of underground tunneling and drilling activities along with follow-up metallurgical test programs may necessitate operating through the 2002 winter season, and therefore substantial upgrades to the existing access road may be initiated during this field season. The cost of the 2001-2002 program is expected to range from $25 to $30 million (100% basis), depending on the final scope of activities.
Barrick and Homestake will continue to work on options to develop the entire district. This work would most likely lead to changes in the development scheme outlined in this press release.
Homestake Mining Company is an international gold mining company with operations and exploration activities in the United States, Canada, Australia and Chile. The Company also has active development and exploration programs in Argentina. Shares of the Company's common stock are listed on the New York Stock Exchange, the Australian Stock Exchange and the SWX Swiss Exchange. Homestake Canada Inc. exchangeable shares are listed on the Toronto Stock Exchange. Homestake began gold mining operations over 120 years ago, and is one of the oldest listed companies on the New York Stock Exchange still in its original business. It has received numerous industry awards for its responsible environmental health and safety management programs. Homestake has agreed to a merger with Barrick Gold Corporation subject to regulatory and shareholder approvals. For additional corporate information, please visit Homestake Mining Company on the Internet at homestake.com .
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
This release contains forward-looking statements that are based on management's expectations and assumptions. They include statements preceded by the words ``believe,'' ``estimate,'' ``expect,'' ``intend,'' ``will,'' and similar expressions; estimates of future production; cost estimates; and other estimates of future results or activity. Such statements are ``forward-looking statements'' that involve risks and uncertainties that could cause actual results to differ materially from estimated results. Among the important factors that could cause actual results to differ materially are the following. Production may vary from estimates for particular properties and for the Company as a whole because of changes in reserves, variation in ore mined from estimated grade and metallurgical characteristics, unexpected ground conditions, mining dilution, labor actions, and government restrictions. Cash costs may vary due to changes from reserve and production estimates, unexpected mining conditions, and changes in estimated costs of equipment, supplies, utilities, labor costs and exchange rates. Capital cost estimates are based on operating experience, reserve estimates and expected production rates, estimates by and contract terms with third party suppliers, expected legal requirements, feasibility reports and other factors. Factors involved in estimated time for completion of projects include the Company's experience in completing capital projects, estimates by and contract terms with contractors, engineers, suppliers and others involved in design and construction of projects, and estimated time for the government to process applications, issue permits and take other actions. Changes in any factor may cause costs and time for completion to vary significantly from estimates. There is a greater likelihood of variation for properties and facilities not yet in production due to lack of actual experience.
SOURCE: Homestake Mining Company |
