Historic Mine Shutting Down After Gold Price Drop
HELENA, Mont. (AP) -- U.S. Silver & Gold is shutting down its historic Drumlummon mine because it costs more to produce an ounce of gold than it's worth, the company announced.
During the first three months of 2013, the mine near Marysville produced just over 2,100 ounces of gold at a cost of nearly $2,300 per ounce. Gold closed at $1,431 an ounce on Wednesday.
The mine also produced just over 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, said Wednesday.
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 (http://bit.ly/17WTeMC) reported.
Employees were informed of the decision Wednesday evening.
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 non-budgeted 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.