Rayrock sells interest in Pinson

A minority interest in Pinson Mining, held collectively by Rayrock Yellowknife Resources (RAY-T) and three private partners, has been sold to remaining partners Homestake Mining (HM-N) and Barrick Gold (ABX-T) for US$8.4 million and a small royalty.

Pinson Mining owns the Pinson gold mine, situated 200 miles northeast of Reno, Nev. Previous to the sale, Rayrock, Homestake and Barrick each held a 26.25% interest in Pinson.

The sale closed in mid-December, with Rayrock receiving approximately US$4.7 million. Rayrock has since resigned as mine operator.

The Pinson contains a small open-pit and 1,500 ton-per-day mill facility. The mine has produced approximately 1 million oz. gold since operations began in 1981. During the past several years, production has averaged about 50,000 oz.

per year. More recently, production figures have been affected by lower grades, despite higher tonnages of mined ore.

In a company release, Rayrock Chairman David Crombie stated, “Our minority interest in Pinson is not a strategic asset,” explaining that Rayrock will instead focus on expansion of its 100%-owned Dee mine and on reserve delineation drilling at its 66.6%-owned Marigold mine. Rayrock is also bringing its 35%-owned Daisy gold project to production, and will continue exploration in the western U.S. The Dee and Marigold mines, as well as the Daisy prospect, are in Nevada.

Homestake’s president, Jack Thompson, points to the deep potential of the Pinson property as the reason for the transaction. Homestake and Barrick have committed to a substantial exploration program over the next several years to test the deeper potential of the property. Below the bottom of the pit, five zones of high-grade mineralization remain unexplored.

The Pinson property is adjacent to the Getchell mine and the Turquoise Ridge deposit, owned by Getchell Gold.

Homestake expects to produce gold from the remaining reserves at a rate of 50,000 oz. per year, and estimated cash production costs of US$275 per oz.

The existing reserves include 1.6 million tons of mill-grade ore grading 0.098 oz. per ton and another 945,000 tons of heap-leach ore grading 0.026 oz.

The acquisition of the Pinson interest strengthens Homestake’s interest in Nevada after it announced its intention to merge with Santa Fe Pacific Gold (GLD-N) in a US$2.3 billion stock-for-stock deal.

Santa Fe shareholders would receive 1.1 shares of newly issued Homestake shares for every share of Santa Fe. The transaction is expected to close in April.