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The year in mining

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Heritage Fund combines employee donations with company match

In 2019 the big story in mining in Nevada was Barrick and Newmont agreeing to form the Nevada Gold Mines joint venture. In 2020 the big story was the Covid-19 pandemic and its effects on everything, including mining. In 2021, we continued to see the ongoing developments from the changes of the previous two years, along with negotiations over mining taxes and the arrival of some new companies promising further exploration.

There was also lots of news about attempts to develop lithium mines for a greener future, and the pushback against these projects from environmentalists. A look back at the lithium news of 2021 will be covered in a separate story.

Dealing with the pandemic

People were saying they were tired of this whole pandemic thing in the spring of 2020, and now here we are approaching the end of the second year, and still the pandemic carries on.

Barrick Gold Corp. CEO Mark Bristow discusses COVID-19 on Oct. 25, 2021, at Dalling Hall in Elko, Nevada.

This far into the pandemic, the mining industry is still working on figuring out the best ways to handle its effects. Newmont President and CEO Tom Palmer said the company expects gold production to be roughly 5% higher in 2022 compared to 2021 now that the company “better understands the impacts from the pandemic.”

Mining wasn’t hit nearly as hard as many other sectors, since miners were classified as essential critical infrastructure workers vital to the national effort against the pandemic, and they were able to continue working.

In February 2021, Elko County’s unemployment rate was 3.6%. Statewide, unemployment was about 8%.

In November 2021, Elko County’s unemployment rate was down to just 2.3%, while the seasonally adjusted statewide unemployment rate was 6.8%.

Even with so many people out of work in other sectors of the economy, mines still scrambled to look for workers.

Barrick CEO: Nevada Gold Mines is investing in education

NGM said in the fall that “like many other industries, currently we are seeing evidence of workforce shortages. We are lucky to be experiencing unprecedented growth in our business; however, this also adds to the challenge from a workface perspective.”

The Nevada Mining Association, in collaboration with Nevada Partners, created the Mining Vegas for Talent initiative to spread the word about careers in mining.

“Hundreds of Nevadans have now been introduced to mining as a career possibility,” NVMA President Tyre Gray said.

Along with workforce shortages and an effect on workforce attitudes, the pandemic and changes in world markets have led to some rising costs and supply chain troubles. However, as 2021 wound toward its close, executives said during their earnings reports that so far, overall their companies have been managing the pinch.

With the mining industry staying quite strong as it rolls through the pandemic years, mining companies have been taking extra steps to help out by investing in their communities. Barrick said company-wide it had spent more than $30 million on Covid-related community support measures and prepaid more than $300 million in taxes and royalties.

In 2020 NGM partnered with Rural Nevada Development Corporation to form the I-80 Fund to give low-interest loans to Northeastern Nevada businesses that need a hand to get through the rough times. NGM contributed $5 million to the fund, and six industry partners added a little more than $250,000. As of October 2021, 33 loans totaling $3.5 million had been approved for funding, creating 64 jobs and retaining another 143 jobs.

The I-80 fund was originally set up to help during the pandemic, but now is carrying on to help cover business needs for any reason.

“The I-80 fund has been a great economic driver for the region,” RNDC CEO Mary Kerner said.

NGM has made many contributions throughout 2021 to benefit education and enhance the communities in Northeastern Nevada. To help bring high-speed broadband internet service to Elko and the surrounding area, NGM made a $30 million loan to Anthem Broadband. That money will be paid back in the years ahead, with $10 million going into the I-80 fund and $20 million going into NGM’s Heritage Fund Endowment, which will be used to benefit this region of Nevada years from now.

Part of NGM’s philosophy is that helping to make enhancements to the local communities will make it easier to attract prospective employees to the area in the future.

NGM celebrated the one-year anniversary of its Heritage Fund employee charitable giving program on Dec. 1, 2021. In its first year, the Heritage Fund has contributed over $780,000 to more than 580 nonprofit organizations. This includes donations by more than 1,900 NGM employees along with matching funds from NGM.

In the middle of 2021, as the pandemic was at a low ebb, people in the mining industry were happy to have the opportunity to get back together again at mining conventions that had been cancelled in 2020. The events were generally smaller than in 2019, but those who made it out were glad to be there.

The 35th Elko Mining Expo in June was one of the first major networking events for mining since the start of the pandemic.

“I think everyone is happy to be out in the public,” said Rusty Hufford of the Wood Group.

MINExpo 2021 was held in Las Vegas in September, and about 22,000 people attended.

“With a show like this, the importance of the in-person experience cannot be overstated,” said Ashley Burke, National Mining Association head of communications.

Covid vaccinations

In October when the federal government announced an emergency temporary standard requiring Covid vaccination and testing, Jeannette J. Galinas of the Mine Safety and Health Administration said “The executive order for vaccines did not cover MSHA or any mines,” since MSHA is not under the jurisdiction of the Occupational Safety and Health Administration.

So it has been up to mining companies whether to mandate vaccinations.

Newmont announced that its global workforce will be required to be fully vaccinated. “At Newmont, we firmly believe that the Covid-19 vaccines are critical in combating the spread of the virus,” Newmont President and CEO Tom Palmer said.

But in Nevada there has been a lot of resistance to vaccines and mandates, and NGM has not required that its employees be vaccinated.

“I think a lot of it is education and mature conversation rather than banging the table and demanding obedience,” Barrick President and CEO Mark Bristow said in late October.

Bristow said it was a terrible tragedy that six people in the NGM workforce have passed away from Covid complications.

“This pandemic can be managed,” Bristow said. “We’ve demonstrated that within Nevada Gold Mines and also across the northern part of Nevada, where we led the nation in our response when it arrived, adhering to protocols and making sure that we were responsible not only to our work colleagues but our own families. For us now the challenge is how do we deal with this and how do we get rid of these masks. Because we need to get back to normality.”

Gold prices

The pandemic has brought uncertainty to the markets, and that has brought higher gold prices.

The price of gold rose quite steadily through the first half of 2020, going up 32% from the start of the year. Gold climbed above $2,000 per ounce for the first time ever on Aug. 5, and reached an all-time high of $2,067.15 on Aug. 7.

Adjusting for inflation, gold prices were higher a few times in the past, reaching above $2,067 several times in 1980, late 2011, and 2012. Gold reached a peak of $2,422.39 in January 1980 according to some inflation-adjusted estimates. However, the current high gold prices are still right up there.

After reaching a peak in August 2020, gold prices settled down a bit, staying right around $1,800 an ounce and ranging from around $1,700 to $1,900 throughout 2021. The average gold price in 2021 of about $1,798 is a little higher than 2020’s average gold price of $1,773.73.

High gold prices are both good news and bad news. High metals prices bring more money to the mining companies, and may help to inspire and support more exploration. But mining companies can’t use current high prices in future budgeting. And ongoing high prices mean continuing uncertainty and volatility, and can be a sign of trouble in the markets.

“I would like for gold prices to go down in some ways, because if it goes down it means we are past Covid-19 and we are getting back to normal,” NGM Director of Operations Greg Walker said in the spring of 2021. “Part of me wants it to stay at $2,000 and the other part of me wants it to go back to $1,400, which is where it was before COVID-19 started.”

Mining fatalities

Safety is always a core message of every mining operation, but unfortunately in spite of all the efforts to keep everyone safe, the number of mining deaths in the United States in 2021 climbed from previous years.

According to MSHA, in 2015 the total number of mining deaths in the United States fell below 30 for the first time since the records began. Since then, the number of mining deaths per year has ranged from 24 to 29. In 2021, however, the number of mining fatalities climbed back above 30, totaling 37 fatalities as of Dec. 29.

The states which saw the highest number of mining deaths were Texas and West Virginia, which each had five fatalities.

One mining fatality was recorded in Nevada in 2021. The fatality was at the Sierra Ready Mix quarry site, a surface industrial sand mine near Jean in Clark County. Nine miners worked at the site. On Feb. 25 Angel Mariscal-Robles, a 26-year-old plant operator with three years of mining experience, died after he entered a cyclone discharge box.

Nevada tops the list

In February 2021 the Fraser Institute released its annual survey of mining companies from 2020. The survey ranks the best places for investment based on mineral endowments and public policy factors such as taxation and regulatory uncertainty. Nevada moved up from third place to top the list for mining investment attractiveness.

In 2019 the top three places on the Fraser Institute list were Western Australia, Finland and Nevada. The top three on the 2020 list announced in 2021 – Nevada, Arizona, and Saskatchewan – are all in western North America.

NGM synergies

When Barrick and Newmont formed the Nevada Gold Mines joint venture in 2019, they said there would be a lot of benefits and synergies from taking down the fences and uniting the operations of the two big mining companies in Northeastern Nevada.

“The integrated leadership team has continued to realize the value-creating synergies presented by the joint venture through reallocating resources between mine sites, and sharing skills and equipment to maximize returns,” Barrick stated in its 2021 first quarter report.

Now NGM can explore all of its property throughout the massive and complex ore body on the Carlin Trend to find the best opportunities without being held back by the boundaries which used to run between the Barrick and Newmont properties.

There are a lot of exciting prospects for NGM as exploration and expansion continues, Bristow said during Barrick’s report on the 2021 second quarter.

The Fourmile deposit contiguous to Goldrush is one of the best gold discoveries worldwide in recent years, Bristow said, and he said an area between Robertson and the Pipeline open pit at Cortez is promising.

Exploration also continues at the Leeville underground mine north of Carlin, and Bristow said there have been particularly strong results from resource drilling at North Leeville.

“Goldrush, a world-class project in its own right, heads up a long pipeline of quality prospects” for NGM, Bristow said in October.

The Draft Environmental Impact Statement for the proposed Goldrush underground mine is anticipated to be available for public review and comment in early 2022.

The Goldrush mine is expected to provide about 495 jobs during construction and 570 jobs when in operation, along with 364 indirect jobs. Mine life is expected to be around 24 years.

New companies & exploration

Along with all of NGM’s activity in the region, many other companies have also been pursuing exploration projects, and there have been some new names arriving on the scene through company purchases and spin offs.

A new company called i-80 Gold Corp. was born in March as a spinoff when Equinox Gold Corp. acquired Premier Gold Mines.

Later in the year, i-80 Gold traded its 40% share of the South Arturo mine property to NGM, giving NGM further consolidation of its property in the Carlin Trend. i-80 received the Lone Tree Complex and the Buffalo Mountain property west of Battle Mountain. In a separate deal, i-80 took over the Ruby Hill Mine outside the town of Eureka.

“The recent transactions to acquire Ruby Hill, Lone Tree and Buffalo Mountain not only make i-80 one of the largest holders of gold and silver resources in the United States, but also positions the company to become one of Nevada’s most prominent producers with substantial processing infrastructure, including an autoclave,” said Evan Downie, chief executive officer of I-80.

“This is a win-win transaction for both Nevada Gold Mines and i-80,” said NGM’s Greg Walker.

Coeur Mining’s major expansion project at the Rochester mine northeast of Lovelock has stayed on schedule throughout the year. The project includes the construction of a new leach pad and a crushing facility. The project is expected to be largely completed by late 2022.

First Majestic Silver acquired the Jerritt Canyon Gold Mine north of Elko in Elko County from Sprott Mining Inc. on April 30, 2021.

“We do plan on growing over the next two to three years,” said Mani Alkhafaji, Jerritt Canyon’s acting general manager.

Small Mine Development mines the Lee Smith and SSX underground mines at Jerritt Canyon, and has been drifting underground to connect them for the exploration and mining potential.

Steve Holmes, First Majestic’s chief operating officer, said the connection “opens up incredible potential,” and surface drilling on the large land package also shows potential.

Some setbacks

Mining ended – at least for a couple of years – and 109 people out of a workforce of 209 were laid off Nov. 10 at the Hycroft Mine west of Winnemucca. Hycroft Mining Holding Corp. said they were reducing costs while planning for the mine’s future.

Hycroft Mining President and CEO Diane Garrett said the high cost of consumables, including cyanide and fuels, “really skyrocketed,” which had a big impact on the cost of mining for the run-of-mine, heap leaching operation for oxide ores that had been underway at Hycroft.

The company has decided milling is the best bet for the Hycroft Mine. It could take two to three years before a mill can be built, although mining could resume before the mill is completed.

A mill breakdown at the Goldstrike roaster north of Carlin on May 26 was a significant challenge for NGM in 2021. Bristow said a giant bearing that had been running for about 33 years began to leak, and it took almost four months to repair. During this time the production at the processing facility was reduced by about 40%. Bristow said, however, that NGM still got close to their guidance for the year, “which is an exceptional achievement for the Nevada team.”

At Kinross’ Round Mountain Mine in Nye County, weakness in a pit wall was detected in the first quarter of 2021. While proactive steps were taken to stabilize the wall, lots of work was done at the mine, including retrieving more gold from the leach pads and moving waste material at the top of the pit, which resulted in gold recoveries that hadn’t been planned.

“We’re turning lemons into lemonade,” Kinross President and CEO J. Paul Rollinson said.

The wall was successfully stabilized in the second quarter of the year.

Mining taxes and permitting

With a new federal administration getting started in January, the mining industry was faced with a few immediate changes, and the possibility that more changes could be on the way.

A Trump Administration executive order required the BLM to complete an Environmental Impact Statement for mine projects within one year of the publication of a Notice of Intent. That timeline requirement is no longer in effect with the new administration.

On Jan. 20 the U.S. Department of Interior paused permitting for mining projects for 60 days, a standard procedure at the start of a new administration.

On Jan. 27 President Joe Biden issued an executive order placing a moratorium on oil and gas leasing pending the completion of a review of permitting and oil and gas leasing.

On Feb. 11 a federal judge overturned a Trump administration action that allowed mining and other development on 10 million acres in parts of six western states. The land is primarily in Nevada and Idaho, and in parts of Montana, Oregon, Utah and Wyoming.

The Trump administration lifted the ban on development in 2017, saying an analysis showed mining or grazing on the land would not pose a significant threat to sage grouse. U.S. District Judge Lynn Winmill said this year that the analysis cited in 2017 was incomplete and ignored prior science.

Michael Saul of the Center for Biological Diversity, one of the environmental groups that sued over the Trump administration’s actions, said he was not aware of any major mining projects that had moved forward in the affected areas.

In October, the House Natural Resources Budget Reconciliation Act proposed changes to the 1872 mining law, including an 8% gross royalty on new mines, a 4% gross royalty on existing operations and a 7-cent-per-ton tax on dirt and rock moved during the extraction process.

U.S. Sen. Catherine Cortez Masto, D-Nev., said she would not support a bill in the Senate that included these mining royalty provisions, and they were removed.

Cortez Masto’s office said the senator “knows that Nevada’s mining industry is critical to our economy, and she is working on solutions that support the many jobs and businesses it sustains while also investing in our communities.”

In December, Cortez Masto was successful in her push to remove a provision in the Build Back Better bill that allocated $3 million to the BLM which could be used to update mining regulations.

On the state level, when the 81st Nevada Legislative Session convened in February, they began discussing three resolutions to increase mining taxes that were passed during the 2020 special legislative session. Two of the resolutions would increase mining taxes by 400% or more.

“NVMA launched into action and established the Stand Up for Nevada Mining grassroots campaign,” NVMA President Tyre Gray wrote in his column for Mining the West magazine. “Over 1,000 members of our mining family answered the call to correct outdated and misinformed perceptions … 30,000 contacts were made to Nevada legislators asking them to find a commonsense solution, and they listened.”

After 117 days of negotiations, the Legislature introduced a compromise piece of legislation, Assembly Bill 495. AB495 was passed in the final hours of the Legislative Session on May 31. The bill will approximately double the taxes paid by the state’s largest producing gold and silver mines.

Mines currently pay taxes on net proceeds capped at 5%. AB495 adds an excise tax of 0.75% on mines with gross revenues between $20 million and $150 million and 1.1% on mines making more.

This is expected to generate more than $75 million annually, which will go into a newly created education fund for K-12 students called the Mining Education Fund.

Money from the mines’ net proceeds tax which has been going to the state’s general fund will also go into the Mining Education Fund. A total of around $160 million a year should be going into the fund.

That is a “significant, significant gift,” Gray said.

“We’re really pleased about the outcome of those negotiations,” Barrick President and CEO Mark Bristow said. “It’s one of the few approved legislations out of Carson City that was so broadly supported. It just shows you how much education is needed in this state.”

"We are lucky to be experiencing unprecedented growth in our business; however, this also adds to the challenge from a workface perspective.”

 

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The I-80 revolving loan fund marked its one-year anniversary in July, with a $5 million contribution from Nevada Gold Mines and additional support from area businesses. 

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