ELKO – The new owner of the Jerritt Canyon complex does not expect business as usual for the mine.
Jerritt Canyon Gold LLC, owned by Sprott Mining, wants to change how the site operates and its culture, said Jerritt Canyon Gold President and CEO Greg Gibson.
“I think the biggest change as compared to others that have come in is we are a private company,” Gibson said. “We’re not a public company, we’re private. For us to do that (buy Jerritt), we have to be very confident that we can do something with it, because the money is coming out of Mr. (Eric) Sprott’s jeans.”
Sprott, a Canadian billionaire, is one of the largest gold equity holders in North America, Gibson said.
“He is of the belief that there are a lot more ounces to come out of Jerritt Canyon,” Gibson said. “We’re of the belief that the mill and the roaster, although it needs a bath and a little bit of work, that it can turn into a business unit of its own. We’re going to have a combination of mining and custom milling, custom roasting.”
In the past, Jerritt Canyon has milled ore from mines owned by Newmont Mining Corp. and Klondex Mines.
He said Jerritt Canyon has a consistent grade, and he wants the site to be in the 150,000- to 200,000-ounce range each year.
“It has fabulous exploration potential,” Gibson said. “It has had zero exploration done in the last four or five years.”
Jerritt Canyon Gold bought the site Wednesday. The assets sold include the Jerritt Canyon facilities and the underground mines Saval 4, Smith, SSX-Steer Complex and Starvation Canyon. The site is about 50 miles north of Elko.
“It’s a completely new business model as to the old Jerritt Canyon,” he said. “It is a great facility and it’s got a whole lot of life left in it. We’re coming into it in probably the worst market anyone has ever seen in the gold mining sector.
“What we all have to understand is people made money at $350 gold,” he said. “People can’t make money at $1,200 gold. We have to figure out why.”
The sale of the site happened after a Canadian bankruptcy court ordered Veris Gold to sell its assets. Veris Gold had filed under Companies’ Creditors Arrangement Act in Canada, which is a type of bankruptcy protection, in June of last year. It was operating under the protection of the CCAA and the U.S. Bankruptcy Code since June 9, 2014.
Jerritt Canyon has had numerous owners through the years. It started out as a joint venture of Freeport McMoRan and FMC, then FMC Gold and then Meridian Gold. Freeport sold to Independence Mining Co., a subsidiary of Minorco, which later sold all its mining assets to AngloGold. AngloGold Ltd. and Meridian Gold then sold it to Queenstake Resource Ltd. in 2003. Yukon-Nevada, which became Veris Gold, was a subsidiary of Queenstake.
Jerritt Canyon Gold owns 80 percent of Veris Gold’s assets and the other 20 percent is owned by Whitebox Asset Management, Gibson said.
Gibson told the Free Press Wednesday that the majority of the 250 Veris Gold employees were kept on at the site. About 20 employees – all from the Saval 4 Underground – were laid off, but had the opportunity to be hired by Small Mine Development which is operating the other mines at the site.
When asked Thursday if existing management will remain at Jerritt Canyon, Gibson said “that’s up to management isn’t it. … Existing management, outside of a couple, have every opportunity to stay there. We have to figure out the reasons as to why the place went into CCAA (bankruptcy). I’m sure, as in any case, there were some ingredients that would have come from management.”
The site will have a new general manager and new mill manager. The Acting interim general manager is Bill Hofer and the interim mill manager is Mark Melanson, Gibson said.
One of the biggest killers of mining operations is complacency, he said.
“I think we as a company have to provide the tools, the environment to allow our employees to be safe and successful in what they do,” Gibson said. “That’s a challenge. The reason it’s a challenge is because we have to really put our money where our mouth is in providing that vehicle.”
While the company kept most of Veris Gold’s employees, Jerritt Canyon is looking for more people. Gibson said the site needs skilled labor, but the company will also be looking for summer students and will have an apprenticeship program.