Goldcorp and Probe Mines announced on January 19 an agreement whereby Goldcorp will acquire Probe in exchange for Goldcorp shares valued at approximately C$526 million. In addition to Goldcorp shares, Probe shareholders will receive an interest in a new exploration company (New Probe) that will hold Probe’s mineral properties in the Ring of Fire in northern Ontario and certain other assets currently owned by the company.

Goldcorp will capitalize New Probe with C$15 million in cash and will own approximately 9.3% of New Probe following completion of the transaction.

Probe’s principal asset is the 100% owned Borden gold project near Chapleau, Ontario, approximately 160 km west of Goldcorp’s Porcupine mine. The Borden project currently has indicated resources of 1.6 million oz of gold in 9.3 million mt grading 5.39 g/mt and inferred resources of 400,000 oz of gold in 3 million mt grading 4.37 g/mt at a 2.5-g/mt gold cut-off grade. The deposit remains open along strike and at depth.

Coeur Mining plans to buy Goldcorp's Wharf mine, shown here, for $105 million. (Photo courtesy of Goldcorp)
Coeur Mining plans to buy Goldcorp's Wharf mine, shown here, for $105 million. (Photo courtesy of Goldcorp)

COEUR BUYS WHARF MINE FOR $105M
Coeur Mining has entered into a definitive agreement with a subsidiary of Goldcorp to acquire 100% of the Wharf gold mine in the Black Hills mining district of South Dakota for cash consideration of $105 million.

Wharf is an open-pit mine that has been in production for more than 30 years. It has produced more than 2 million oz of gold and has a current reserve base of 560,000 oz. Production during 2015 is forecast at 85,000 to 90,000 oz at all-in sustaining costs of $800 to $875/oz.

Wharf processing consists of crushing followed by heap leaching, providing gold recovery rates of around 80%. The mine has an experienced and stable workforce of approximately 190 people, with a strong safety record.

The purchase agreement is subject to United States antitrust approval and other customary closing conditions and is expected to close by the end of the first quarter of 2015.

GOLD AND SILVER PRODUCTION UPDATES
During the first three weeks of January 2015, many midtier and smaller gold and silver mining companies from around the world reported their 2014 production results and provided guidance as to their 2015 production outlook. Here are brief summaries of some of those reports:

Centerra Gold produced 620,821 oz of gold in 2014, 567,693 oz from the Kumtor mine in the Kyrgyz Republic and 53,128 oz from the Boroo mine in Mongolia. For 2015, Centerra is estimating its consolidated gold production will be in the range of 480,000 to 535,000 oz, including between 470,000 and 520,000 oz from Kumtor.

Centerra’s 2015 Kumtor production forecast does not make any assumptions regarding possible changes in the structure and management of the project, including without limitation the level of ownership resulting from ongoing discussions with the government of the Kyrgyz Republic and Kyrgyzaltyn JSC, Centerra’s largest shareholder.

Centerra is continuing to study the impact on the Kumtor SB Zone of a buttress constructed early in 2014 in response to increased movement of the Davidov glacier, as well as the Kumtor block model, each of which may result in adjustments to Kumtor’s reserve and resource estimates. Centerra is also evaluating the significance of lower than expected metallurgical recoveries experienced at Kumtor.

Endeavour Mining produced 465,770 oz of gold from its four mines in West Africa in 2014, a 44% increase over the 324,275 oz produced in 2013. The increase was the result of the Tabakoto mine in Mali and the Nzema mine in Ghana exceeding their prior-year production levels and the addition of the Agbaou mine in Côte d’Ivoire during the year as Endeavour’s newest operation. Endeavour also produces gold at its Youga mine in Burkina Faso.

Endeavour is providing 2015 gold production guidance of 475,000 to 500,000 oz. The company’s non-sustaining capital expenditures during 2015 are planned at $20 million, mostly related to the completion of 2014 projects. During 2013 and 2014, Endeavour invested approximately $300 million in new mine construction and improvements to its operating mines, including approximately $90 million in 2014.

Detour Gold produced 456,634 oz of gold at its Detour Lake mine in northeastern Ontario, Canada, in 2014. The mine poured its first gold in February 2013 and reached commercial production in September 2013. Production during 2013 totaled 232,287 oz.

Detour Gold is forecasting 2015 Detour Lake production in the range of 475,000 to 525,000 oz. Gold production is expected to increase gradually over the first three quarters (110,000 to 120,000 oz per quarter), with the fourth quarter forecast to be significantly higher (up to 155,000 oz) due to access to higher-grade ore during that period. Total cash costs are therefore expected to be relatively consistent in the first nine months of 2015, at approximately $900/oz sold, and to decline to below $700/oz sold in the fourth quarter.

Tahoe Resources produced 20.3 million oz of silver in concentrates at its Escobal mine in Guatemala in 2014 after reaching commercial production in January 2014. Year-end production was particularly strong, resulting in a December surplus of unsold concentrates, increasing normal inventory by approximately 1 million silver oz. This inventory surplus was scheduled to be sold to customers in the first quarter of 2015.

Tahoe is forecasting production from Escobal during 2015 in the range of 18 million to 21 million oz of silver in concentrates. Total production during the year will rely on midyear completion of an expansion of mine and mill production from 3,500 to 4,500 mt/d, which remains on track.

First Majestic Silver’s five silver mines in Mexico produced 15.26 million silver equivalent oz in 2014, a 19% increase over 2013. The equivalent silver production consisted of 11.75 million oz of silver, 12,283 oz of gold, 39.2 million lb of lead and 13.1 million lb of zinc.

For 2015, First Majestic is forecasting production of between 11.8 million and 13.2 million oz of silver and between 15.3 million and 17.1 million silver equivalent oz. A majority of the projected increase will be achieved following an upgrade and expansion of the crushing and grinding area at its La Encantada mine in the first half of 2015 to increase ore processing capacity to 3,000 mt/d. First Majestic’s other Mexican mines are La Parilla, San Martin, La Guitarra and Del Toro.

Hecla Mining announced preliminary 2014 production results of 11.1 million oz of silver, a 24% increase over 2013, and 186,994 oz of gold, a 56% increase over 2013. Silver equivalent production totaled 34.5 million oz in 2014, a 50% increase over 2013 and a 142% increase over 2012.
Hecla’s production derives from three mines: Greens Creek, Alaska; Lucky Friday, Idaho; and Casa Berardi, Quebec. In 2014, Greens Creek produced 7.8 million oz of silver and 58,753 oz of gold, Lucky Friday produced 3.2 million oz of silver, and Casa Berardi produced 128,241 oz of gold.

G-Resources’ Martabe mine on the Indonesian island of Sumatra produced 275,515 oz of gold and more than 2.2 million oz of silver in 2014. The company is forecasting production of 250,000 oz of gold and 2.2 million oz of silver in 2015.

The Martabe resource base stands at 8.1 million oz of gold and 73.8 million oz of silver in six known deposits within a 30 km2 area. The project is expected to produce more than 250,000 oz/y of gold and 2 million to 3 million oz/y of silver for a minimum of 10 years.

Golden Star Resources produced 260,788 oz of gold at its Wassa and Bogoso mines in Ghana in 2014. Bogoso accounted for 147,957 oz, and Wassa accounted for 112,831 oz.

Prior to year-end 2014, the Wassa mine received permits to begin construction of an exploration decline that will facilitate definition drilling and bulk sample collection of higher-grade ore below the Wassa main pit. A feasibility study of a combined open-pit and underground mining operation at Wassa is ongoing and is scheduled for completion before the end of the first quarter of 2015. If the study has a favorable outcome and the necessary underground mining permits are received, the decline will form the primary access to the underground operation.

Semafo Inc. produced 234,300 oz of gold at its Mana mine in Burkina Faso during 2014, a 48% increase over the 158,600 oz produced in 2013. Production during 2015 is forecast to be in the range of 245,000 to 275,000 oz of gold.

Alacer Gold produced 227,927 oz of gold at its Çöpler heap-leach mine in eastern Turkey in 2014 and is forecasting 2015 production in the range of 180,000 to 200,000 oz.

Alacer has announced plans to increase the capacity of the current heapleach pad at the Çöpler mine by 14% and extend oxide ore production beyond 2017. Alacer is also working on plans to mine and process the Çöpler property’s sulphide ores. The sulphide project is forecast to produce a total of 3.2 million oz of gold over a mine life of 20 years.

Rio Alto Mining produced 222,255 oz of gold at its La Arena mine in Peru during 2014 and is forecasting production of 210,000 to 220,000 oz during 2015.

The company plans to start construction at its Shahuindo gold project 30 km from La Arena during 2015. Shahuindo will be a shallow, open-pit, heap-leach mine, with initial mine production planned at 10,000 mt/d and gold equivalent production forecast at 90,000 oz/y.

Crocodile Gold produced 222,312 oz of gold at its three mines in Australia during 2014, up 5.5% from production during 2013. The company is forecasting production of 205,000 to 220,000 oz of gold during 2015.

Crocodile Gold is a Canadian mining company, which operates the Cosmo mine in the Northern Territory and the Fosterville and Stawell mines in Victoria state, Australia. Fosterville produced 105,342 oz of gold in 2014, up 7% from 2013, and achieved a record annual mill recovery rate of 86.4%. Cosmo produced 77,740 oz during 2014, up 4.9% from 2013. Stawell produced 39,230 oz during 2014, in line with forecast production guidance.

Allied Nevada increased gold production from its Hycroft mine in Nevada to 214,345 oz in 2014, up from 190,831 oz in 2013. Silver production from the mine increased to 1.8 million oz from 882,225 oz. The company anticipates that its 2015 operating results will be very similar to those in 2014.

The increase in Hycroft gold and silver production in 2014 resulted primarily from a higher mining rate year-over-year and the resultant additional ore tons placed on the leach pads, together with increased processing capacity at Hycroft’s North Merrill-Crowe plant.

Silver Standard produced 8.7 million oz of silver and 30 million lb of zinc in concentrates at is Pirquitas mine in Argentina during 2014. The company is forecasting 2015 production in the range of 9 million to 10 million oz of silver and 10 million to 12 million lb of zinc in concentrates.

Silver Standard acquired the Marigold mine in Nevada in April 2014. From April through December 2014, the mine produced 129,615 oz of gold. The company is forecasting Marigold production of 160,000 to 175,000 oz of gold during 2015.

Endeavour Silver produced 7.2 million oz of silver in 2014, up 6% from 2013, and 62,895 oz of gold, down 17% from 2013. Silver equivalent production totaled 11.6 million oz at a 70:1 silver:gold ratio.

Endeavour silver’s production derives from the Guanaceví mine in Durango state and the Bolañitos and El Cubo mines in Guanajuato state, Mexico. At Guanaceví, higher recoveries and higher grades, mainly from the Porvenir Cuatro orebody, helped the mine achieve record annual production of 3.6 million oz of silver in 2014. Exploration drilling successfully delineated new zones of high-grade silver-gold mineralization in the Porvenir Centro area.

Fortuna Silver Mines produced 6.6 million oz of silver in 2014, up 42% in comparison with 2013, and 35,316 oz of gold, up 66% in comparison with 2013, at its two underground silver mines in Latin America. The San Jose mine in Oaxaca, Mexico, mine produced 4.4 million oz of silver and 33,496 oz of gold. The Caylloma mine in Arequipa, Peru, produced 2.2 million oz of silver and 1,820 oz of gold.

San Jose production for 2014 is forecast at 4.3 million oz of silver and 33,300 oz of gold. Caylloma production is forecast at 2.2 million oz of silver and 1,900 oz of gold. Fortuna is expanding plant capacity at San Jose by 50% to 3,000 mt/d, with construction due for completion in mid-2016.

McEwen Mining produced 38,224 oz of gold and 25,872 silver oz of silver at its El Gallo 1 heap leach mine in Sinaloa state, Mexico in 2014 and had attributable production of 46,139 oz of gold and 3.2 million oz of silver from its 49% ownership of the San José underground mine in Santa Cruz province, Argentina. Production at El Gallo 1 is forecast at about 50,000 oz of gold and 20,000 oz of silver in 2015, while attributable production from San José is forecast at about 46,500 oz of gold and 3.1 million oz of silver.

The San José mine is 51% owned and operated by Hochschild Mining.

Wesdome Gold Mines produced 52,747 oz of gold from its two Ontario mines during 2014, 48,190 oz from its Eagle River mine and 4,567 oz from its Mishi mine. Production for 2015 is guided in the range of 55,000 to 57,000 oz.

Wesdome expects Eagle River to deliver robust grades from 2015 through to at least 2018, with three high-grade parallel zones in development and production during this period. These zones are located close to existing infrastructure, allowing for rapid mine development without material increases to current sustaining capital rates at the Eagle River mine.

Atna Resources sold 33,150 oz of gold in 2014 and anticipates producing between 55,000 and 65,000 oz from its Pinson mine in Nevada and its Briggs mine in California in 2015. Atna began test mining at the Pinson underground mine in June 2014 and expects the ramp-up of Pinson operations to add materially to its overall gold production in 2015.

Atna has agreements to sell Pinson’s oxide and refractory sulphide ore production to Newmont Mining’s nearby Twin Creeks operation. The agreements include provision for sale of small lots of ore, reducing Atna’s working capital requirements.

Great Panther Silver produced 3.2 million silver equivalent oz in 2014 at its two wholly-owned Mexican silver mining operations: the Guanajuato mine complex in Guanajuato state, which includes the new San Ignacio satellite mine, and the Topia mine in Durango state. Silver production increased 11% to 1.9 million oz, and gold production increased 5% to 16,461 oz.

The Guanajuato mine complex produced 1.2 million oz of silver and 15,906 oz of gold in 2014; the Topia mine produced 667,635 oz of silver and 555 oz of gold. The San Ignacio satellite mine at the Guanajuato complex reached commercial production in June 2014.

SilverCrest Mines produced 1.16 million oz of silver and 27,609 oz of gold from its Santa Elena mine in Sonora, Mexico, during 2014. Prior year production totaled 779,026 oz of silver and 31,099 oz of gold. Production during 2015 is forecast at 1.6 million to 1.8 million oz of silver and 36,000 to 39,000 oz of gold.

A new 3,000-mt/d mill was commissioned at Santa Elena in August 2014. During the year, the mine successfully transitioned from an open-pit, heap-leach operation to an underground mining and milling operation.

For additional coverage of the industry’s top 10 gold producers, see Gold: New Fundamentals? starting on p. 32.

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