Wednesday, August 25, 2010
Ruby Hill & Homestake Mining Memories
It is 5:52 AM. Ruby T dropped off Old Miner Woden early this morning on her haul back from Bald Mountain. He and I are having the best time looking at some old time photos of Homestake Mining that a good friend and reader of the Report slipped under the break room door last night. Pour yourself a cup and join us.
My memories of Eureka, Nevada, are organized around who did the big local mining of the day. Mariana and I first passed through this wonderful town after the nearby Windfall Mine had closed but we thoroughly enjoyed the rough and tumble days of the Atlas Gold Bar Mine in the late 1980s and early-1990s (Atlas Mine Memories, 11/2/09). Today we have Barrick's Ruby Hill Mine and tomorrow promises to be a very long stretch with General Moly's Mt. Hope molybdenum project which begins mine construction next summer.
Homestake Mining Comes to Eureka
Sandwiched between Atlas and Barrick was another memorable period when Homestake Mining reopened the Ruby Hill Mine in the late 1990s. They employed a lot of local folks and had their first gold pour November 6, 1997. In those days gold prices were stuck in a range between $300 to $400/oz; at the time of the pour gold was trading mid-range at roughly $350/oz. To put this in some perspective here is a 15-year chart of gold prices - we've come a long way, pardner:
I found a news story from those days that you may find interesting:
Homestake's Ruby Hill Mine Announces its Initial Gold Pour (Business Wire, 11/10/1997)
Jack E. Thompson, President and CEO of Homestake in those days said, "Ruby Hill will be Homestake's lowest cost mine and will make an important contribution to the Company's bottom line even at current gold prices." Ruby Hill showed enough promise that the operation was taken over by Barrick Gold Corp. in 2001. At that time, Ruby Hill produced 134,747oz of gold, but was closed during 2002 following the exhaustion of mineable reserves. Operations at the mine restarted in 2003 with a decision to reopen and explore the East Archimedes gold ore body, found below the original open pit towards the east. Last year Barrick poured its millionth ounce and Ruby Hill is still going strong.
Homestake Mining Company's Colorful 126-year History
Homestake Mining merged with Barrick Gold and their big Homestake Gold Mine in Lead, South Dakota, was closed in 2002 - at that time it was the oldest, largest and deepest mine in the Western Hemisphere, reaching more than 8000 feet below the town of Lead. Today's photographs are from the early heydays of Homestake, many of which are on display at the Visitor's Center in Lead:
Homestake Visitor Center
They depict not only the miners life and working conditions of those days but also a colorful company history. Mining magnate, George Hearst, formed Homestake Mining Company toward the end of the famous Black Hills gold rush. Please visit this link on your lunch break and you can catch up on the 126-year history of this historic mining company that also made an important contribution to Eureka's history and economy. The Report will feature more of these photographs over the next several weeks and gives a hats off to our friend and contributor that made this possible.
Homestake Firemen in Leather Face Masks
Ellison Hoist Room
Horses Were Important to Early Mining at All Levels
Daily Market Roundup
Enough talk, let's walk the walk:
The Eureka Miner's Index(EMI) is back in sub-par country at 96.13; a further step down from yesterday's 98.64 but still a big improvement from the 6/7/10 low of 50.7. Today's number confirms a trend reversal to the downside, a bearish sign for our metals & miners. Remember an EMI greater than 100 is good times (or at least better times) for this sector.
4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners are return to shaky timber with bellwether Freeport-McMoRan (FCX) falling back to the mid-$60s well below its 200-day average of $75.3 (our new warning level, 8/05 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment but there is some deflationary caution now that we are sub-3%.
The YELLOW light is turned back on for Commodity Reflation. Although copper is trading above $3/lb, the 10-yr T-Note is solidly below 3.00%
The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)
The YELLOW light is turned on for Inflation/Deflation Watch as the Federal Reserves resumes buying back Treasurys and the 10-yr T-Note remains below 3.00%
The YELLOW light is turned back on for Investor Confidence as the bond markets signal trouble ahead
The GREEN light is turned on our Fuel Gauge with oil below $80
A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
NYMEX/COMEX: Oil is down $1.28 in early trading to $71.50 (October contract, most active); Gold is up $8.8 to $1241.0 (December contract, most active); Silver is up $0.392 to $18.770 (September contract, most active); Copper is down $0.0390 to $3.2020 (September contract, most active)
Western Molybdenum Oxide is $14.75; European Molybdenum Oxide is $15.75; LME moly 3-month seller's contract is $16.33, LME cash seller is $16.10
The DOW is down 54.72 points to 9.985.73; the S&P 500 is down 7.24 to 1044.63 The miners are mixed:
Barrick (ABX) $44.00 up 0.50%
Newmont (NEM) $57.32 up 0.35%
US Gold (UXG) $4.79 up 0.84%
General Moly (Eureka Moly, LLC) (GMO) $2.87 down 2.71%
Thompson Creek (TC) $8.14 down 1.21%
Freeport-McMoRan (FCX) $66.26 down 1.18% (a bellwether mining stock spanning copper, gold & molybdenum)
The Steels are down too, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $27.85 down 2.62% - global steel producer
POSCO (PKX) $100.95 down 2.04% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is down 0.78% to $1,315,774.64 (what's this?).
Write Colonel Possum at firstname.lastname@example.org for answers to your questions or to request e-mail updates on the market
Headline photo: Homestake Mine in Lead, South Dakota. The headline and story photos can be seen at the Homestake Visitor Center on 160 West Main Street, Lead, South Dakota. Please pay them a visit on your next pass through.