WINNEMUCCA - Hycroft General Manager Warren Woods spoke to Humboldt County commissioners Aug. 5 about last month's layoff of 115 Hycroft employees.
Woods said the layoffs resulted from some tough business decisions the company had to make after two disappointing quarters at the mine.
The price of gold alone would not have been enough to trigger the changes in operation that led to the layoffs, according to Woods.
He said, "Even if the price of gold stays where it is, moving forward we're in a very solid position."
In presentations to various groups over the past year, Woods has said the company is the lowest-cost producer, and as such will be "the last man standing."
However, the lower gold price coupled with lower-than-projected gold recovery from the Lewis leach
pad was a combination that put the mine in a tough cash-flow position.
Woods later said that it took months to determine the exact cause of the leach pad's failure to produce the amount of gold projected because application of the leaching solution to the top of the pad can take over a month to percolate through the ore and be collected for gold-recovery testing.
Woods said they originally believed the low-recovery problem was related to the chemical balance. A first effort to increase the lime content of the solution did not resolve the situation, but it took a month to determine that. A second effort to increase the percentage of cyanide in the solution also did not solve the problem, but again, another month had passed before that became evident.
A different diagnosis came with a number of test-drills into the ore on the pad. Woods said the core samples from the drills showed major areas of the ore that were dry; the leaching solution had never percolated through significant portions of the ore.
"We have a lot of gold tied up in that leach pad," he said. The good news is that the ore still contains the gold - the bad news is it's in a huge pile on the leach pad.
Hycroft officials believe they now have a method to introduce enough solution in a way that will ensure complete saturation through the ore and recovery of the gold.
In an Allied Nevada press release, new company President Randy Buffington said, "I want to reiterate, we have done an exceptional amount of work in the past few months to identify and mitigate issues at Hycroft and have ensured the right people and plans are in place so that these issues do not continue."
Buffington continued, "We have ample loading and hauling capacity, significant processing infrastructure coming online and a dedicated operating team in place."
Woods said the issues aren't insurmountable, but reprocessing the ore will be costly, so in addition to changes in operating procedures, adjustments also had to be made to operating expenses.
He pointed out that the three main costs for the mine are labor, fuel and commodities.
He said, "We've revised the mine plan. We ended up parking some of the trucks and we decided the best way to move forward was to do a layoff."
Woods said the layoff affected "everybody across the board, even in the Reno office." He added that no further layoffs are anticipated at this time.
Allied's decision to defer construction of the mill facility will remain in effect until a feasibility study is completed. Even without construction of the mill, both Woods and Buffington's Allied press release said the mining of existing heap leach reserves can continue through 2020. According to the company news release, no further exploration drilling is planned for this year.
As for those laid off at the end of July, Woods told the county commissioners, "We look forward to hiring most of those people back."
Woods said the mine has about 400 employees at this time, which is about the same number of employees at which they started the year.
Woods concluded with one last reassurance, saying, "We're not done expanding. We're not done building. We've just had to make an adjustment."[[In-content Ad]]
