Production up, profits down, in Nevada mining

Thursday, Aug. 27, 1998 | 11:09 a.m.

Still, industry experts say mining companies have done a good job of cutting costs to keep operation expenses within the confines of the lower prices.

"The report shows the industry has done a very good job trying to adjust their operations to the lower gold price," said Russ Fields, president of the Nevada Mining Association. "But the price has fallen enough that we will really see some marginal operations start to suffer."

The report by John Dobra, a University of Nevada, Reno economics professor and director of the Natural Resource Industry Institute, said Nevada mines produced a record 7.8 million ounces of gold worth $2.6 billion in 1997. That compares with 7 million ounces produced in 1996 with a value of $2.7 billion.

Despite higher production last year, its value was worth less because of lower gold prices.

Eighteen major gold companies in Nevada posted a combined loss of $1.6 billion last year as the average price of gold fell to $331.29 per ounce, down from $387.87 in 1996, the report said. Gold fell to an 18-year low of $278 per ounce in January.

Nevada is the dominate gold producer in the United States and third worldwide behind South Africa and Australia. But production here is more efficient than in those two other nations, the report said.

Gold in Nevada was produced at an average cost of $214 an ounce, compared with South Africa at $301 an ounce and Australia at $261 an ounce, the report said.