http://www.nnbw.bizNorthern Nevada's top weekly business headlinesCopyright 2009 Northern Nevada Business Weekly. All rights reserved.Gold production in Nevada declined during 2008, and production costs rose significantly, but those aren't necessarily bad things. A new analysis prepared for the Nevada Mining Association says mining companies appear to be taking advantage of record-high gold prices to process lower-quality ores. Those ores couldn't be processed profitably when gold prices were lower, says John Dobra, director of the Natural Resource Industry Institute at the University of Nevada, Reno, and author of the study. Because Nevada's mining companies can process them today, it allows them to hold back on richer reserves for another day. "In the long run, it extends the life of ore bodies and enhances the sustainability of the industry," Dobra said in his annual analysis of the industry's financial health. "It benefits the communities that rely on mining." Nevada's mines - which rank fourth in production worldwide - produced 5.7 million ounces of gold in 2008, a decline of about 4 percent from the previous year's 6.04 million. The cash costs of producing an ounce of gold, meanwhile, rose by 11 percent and averaged $525 an ounce at Nevada's mines. (Cash costs, as calculated by miners, don't include depreciation or debt service.) Even so, the high price that miners received for gold - it averaged $872 during 2008 on its way to this year's $1,000-plus levels - gave mining companies ample headroom. Dobra said all of the state's gold mines appear to have generated positive cash flow during 2008, and he believes most - if not all - were profitable even after depreciation, exploration and other costs are folded in. Because mining producers have focused on processing lower-grade, higher-cost ores whenever prices have risen, Dobra said cash-flow margins have remained fairly stable in the industry year in and year out. Although the Nevada Mining Association study focuses on 2008 figures, some of the trends that were developing a year ago appear to be playing out favorably for the industry this year. Some of the increases in production costs that miners reported in 2008, for instance, reflected sharp increases in electricity and diesel-fuel prices. But those prices had declined by late 2008 and haven't spiked this year, Dobra noted. Another factor that drove mine costs sharply higher this decade - rising costs for steel, concrete and other construction materials - also abated with the economic slowdown. On the other hand, he said some of the cost increases for construction materials, chemicals, rubber tires and the like now appear to be permanently baked into miners' production costs. That might present a problem if gold prices decline. Payroll costs also rose in the Nevada mining industry during 2008. Dobra said the industry employed 14,600 statewide - up by about 130 positions from a year earlier - but payroll spending rose by 4 percent. Paychecks from Nevada's mining industry totaled $1.01 billion during 2008. The average pay of $69,313 in the mining industry is about 65 percent higher than the average pay for all workers in Nevada. Dobra said exploration investment appeared to remain at fairly high levels during the year, and the number of exploration claims staked on federal land has rebounded sharply. Known gold reserves at the end of 2008 stood at 70.4 million ounces - enough to maintain production at current levels for 12 years. Mining companies brought enough new reserves onto their books to replace the gold that was mined during the year. Nevada's gold production accounts for about 7 percent of the gold mined in the world. Copper and silver also made contributions to the $2.5 billion added to the state's economy from mining production during 2008. Silver production, Dobra said, amounted to about $119 million as higher prices offset the effects of mine closures and declining production in recent years. Copper production amounted to about $555 million, even though copper prices fell sharply during the last half of 2008. Major production from Quadra Mining's Robinson Mine near Ely and Newmont Mining's Phoenix Mine near Battle Mountain are adding to the state's copper production. Geothermal resources, meanwhile, play a greater role in the state's mining economy. The Nevada Department of Taxation says that geothermal producers generated revenues of $95 million in the state during 2008. That, Dobra said, is enough to rank geothermal as the fifth-largest geologic resource in Nevada.http://feedproxy.google.com/~r/NNBW1/~3/xvWuFMQQkRE/ArticleRead.aspxhttp://www.nnbw.biz/ArticleRead.aspx?storyID=14147Mon, 09 Nov 2009 00:00:00 GMThttp://www.nnbw.biz/ArticleRead.aspx?storyID=14147Business leaders in Pershing County are wooing agricultural producers from California as the result of a voter-approved measure in the Golden State that may negatively impact the state's poultry industry. The Prevention of Farm Animal Cruelty Act, a ballot measure that passed with 63 percent of the California vote a year ago, calls for expanded cages for egg-laying chickens. Proponents say the larger cages will allow chickens enough space to move without bumping into other animals or cage walls. California's poultry industry is estimated at nearly 20 million egg-laying hens, and although the law doesn't go into effect until 2015, it has caused much consternation among the state's poultry farmers. And that has folks in Pershing County making a pitch for poultry farmers to relocate or expand operations to Nevada. Kathy Johnson, economic development director for Pershing County, Tom Moura, a Lovelock-area alfalfa farmer, and Steven Foster, extension educator for the University of Nevada Cooperative Extension in Pershing County, recently touted the advantages of northern Nevada to a convention of California poultry farmers. The Lovelock area, they say, provides wide-open spaces, lack of stifling regulations, and availability of infrastructure to easily transport eggs to market - and of course Nevada's lower tax structure remains a constant business benefit. "Our biggest advantage here in Pershing County is population density," Foster says. "There is controversy when a poultry farm is located too close to the non-farming public or gets surrounded by urban sprawl. In Pershing County there is less than two people per square mile, and most are located in Lovelock." The Lovelock Greater Pershing Partnership circulated a brochure among California poultry farmers highlighting the reasons to relocate. But some farmers have questioned Nevada's ability to keep in check initiatives similar to the California measure. "Their biggest concern is that we haven't had issues of animal care come up in Nevada, Foster says. "The same thing could happen here unless we amend the state constitution to say that amendments need to be approved through a board of experts rather than having the public decide what can be done on farms." Johnson says the additional regulations may make it economically unfeasible for California poultry farmers to continue operations. And although relocation costs would run high, land prices in Lovelock are a farmer's dream compared to prices in California. "If they have to change their whole mode of caring for animals and comply with new legislation, they aren't going to be profitable," Johnson says. "That would be bad for everybody. All we are doing is giving them an option." A desire to plant the germ of an idea about Nevada locations led to the presentation to California's troubled poultry farmers, Moura says. They encouraged producers to give Nevada a thought before going bust or looking to other states to establish a farm. Johnson says it's too early to judge the results of the presentations made by the Pershing County team. Alfalfa currently is Pershing County's main agricultural crop, and the county also is home to some sheep ranches. For any farming operation, a key issue is an adequate supply of water - and it's an issue that Central California farmers are struggling mightily with, as years of below-average snowpacks have left reservoirs and watersheds depleted. Earlier this year, the Coalition for a Sustainable Delta and the Kern County Water agency filed suit against the National Marine Fisheries Service over water-pumping restrictions. Although Lovelock is hardly water-rich, the area is adequately fed through the Humboldt River and local aquifers, Foster says. Although the quality of the water, which contains a great deal of minerals and salts, won't sustain most crops, he says it is adequate for poultry or pig farming.http://feedproxy.google.com/~r/NNBW1/~3/cNdcTmtqRUU/ArticleRead.aspxhttp://www.nnbw.biz/ArticleRead.aspx?storyID=14146Mon, 09 Nov 2009 00:00:00 GMThttp://www.nnbw.biz/ArticleRead.aspx?storyID=14146To party or not to party? That is the question facing northern Nevada companies this holiday season in a cold economic climate. Like last year, holiday party plans are not what they were when the economy was booming. But while some parties are eliminated, most will go on as usual or be scaled down. "We're still seeing quite a few parties generally," said Ben McDonald of the Atlantis Casino Resort Spa. "But the larger parties, the larger organizations, 600 to 800 people, have fallen off drastically - that's last year and this year. "Most of the parties are smaller groups, smaller businesses. So there are still companies who are holding their holiday parties, but they're spending less money and they're on a much smaller scale. As Liz McNamara figured it, the holiday party business declined by about 30 percent last year, and it looks to be about the same this holiday season. "I know companies are definitely cutting back," said McNamara, who owns High Sierra Concierge with husband, Steve. "Usually people wait until the last minute to book anyway, but from what I've been hearing across the board ... people (caterers) are doing holiday specials and things like that, trying to round up some business." In some instances, discounts are being offered to companies that book a holiday party before a certain date. "I didn't see that last year, but I am seeing it this year," McNamara said. "I think last year everybody was still in a state of shock." Debbie Branby, president of The Cheese Board, says she is "cautiously optimistic" that her holiday party business can maintain the numbers from a year ago. To help minimize costs for businesses planning a party, Branby created affordable packages at her American Bistro and catering company in Reno. Still, she said company owners need to do what they need to do. "I do remember hearing the word potluck last year. A company that we generally would do their holiday party, they ended up doing an employee potluck," Branby said. "We have a line, 'There's always something to celebrate,' and I really believe that. Even a small little celebration is the way to say thank you. I do think that the over-the-top parties definitely will not be happening this year." That's true at International Game Technology in Reno. It typically holds an elaborate holiday affair with dinner and entertainment at a local casino. But not this year. Because of the economy, IGT will not be sponsoring any holiday events this season, according to Julie Brown, IGT director of marketing. "When determining the best use of allotted budget dollars for employee events in the fiscal year 2010, the decision was made to provide employee events that benefit employees and their families as opposed to just employees and one guest," Brown said. Last year IGT held a holiday party at the Grand Sierra, where an employee paid part of their ticket and a donation was made to Helping Hands. This summer, an event such as a family picnic will be planned instead. The staffing agency Hire Dynamics usually rents a banquet room and provides dancing and music in a formal setting. This year, the employees were asked what they wanted to do and opted for a less-expensive affair at Washoe Flats Steakhouse. "It was a great surprise," said Emily Ellison, regional manager of Hire Dynamics of Reno and Carson City. "We were prepared to do what we normally do because we feel Christmas parties are a really great way to cut loose and thank everyone for their hard work throughout the year." Going to restaurants is "just not us," KPS|3 marketing president Stephanie Kruse said. So her company plans a gift exchange and dinner at one of the staff members' houses, following the practice of past years. "Last year, the holidays were so close to when the economy fell off the cliff that we didn't do anything too terribly crazy," Kruse said. "We went out for a fun lunch together and went to a silly, fun, laugh-out-loud movie because the economy was pressing on everybody's mind so much that we thought we needed a good laugh." Colliers International in Reno plans to do what it did last year - a bowling event with pizza and appetizers. The only difference, managing partner Tim Ruffin said, is no open bar this year. IQ Systems in Reno will stick to its tradition of chartering a bus to Louis' Basque Corner Restaurant for dinner and cocktails, followed by a bus ride to the University of Nevada, Reno, to watch a basketball game. "Our business is doing well despite the economy," said Aaron Boigon, partner and vice-president of IQ Systems. "People still need IT services and what we do, so things have been fine for us." http://feedproxy.google.com/~r/NNBW1/~3/NdTU0_35Wbs/ArticleRead.aspxhttp://www.nnbw.biz/ArticleRead.aspx?storyID=14145Mon, 09 Nov 2009 00:00:00 GMThttp://www.nnbw.biz/ArticleRead.aspx?storyID=14145Altair Nanotechnologies, a Reno-based maker of energy-storage systems, lost $3.3 million in the quarter ended Sept. 30, the company reported last week. The publicly held company reported revenues of $1.7 million, a slight dip from the $1.8 million reported for the same period in 2008. However, its net loss for the quarter was substantially less than the $9.1 million it lost in the third quarter of 2008. It boosted revenues by selling shares of a pharmaceutical company for a profit of $900,000. Operating expenses of $5.9 million for the quarter were down $5.2 million from last year. The company slashed its research and development budget by $1.1 million and cut $750,000 in legal expenses. Altair Nanotechnologies increased its cash burn rate as it stockpiled inventory in anticipation of sales in the fourth quarter and the early part of 2010. Inventory levels are higher by $3.6 million and prepaid expenses rose $1.2 million from balances at the end of 2008, the company said, with prepaid expenses resulting primarily from payments to a Korean battery cell manufacturer. Altair Nanotechnologies saw a rise in requests for quotes and expects sales activity to pick up next year, company President Terry Copeland said. "We are hoping that this increased quote activity will lead to increase order activity in the coming months," Copeland says. "Overall sales are up slightly, but the activity level clearly has picked up. "Given the importance of establishing this revenue stream and having reference-able customers for other prospects to speak with, we need to be able to move expeditiously once we have these initial firm orders," Copeland said. Much of Altair Nanotechnologies' third-quarter business stems from two contracts with the federal government. The Office of Naval Research inked a $3.8 million development deal, and the Department of Defense signed a $1.8 million deal for development of nanosensors. Altair Nanotechnologies expects to work on both contracts through the middle of next year. "I believe we are coming out of the economic doldrums that have slowed down business for all of 2009," Copeland said in a conference call with investors. "We are clearly seeing more activity across the board. We are looking forward to a significantly better year in 2010." http://feedproxy.google.com/~r/NNBW1/~3/lBe-nNwcaJE/ArticleRead.aspxhttp://www.nnbw.biz/ArticleRead.aspx?storyID=14144Mon, 09 Nov 2009 00:00:00 GMThttp://www.nnbw.biz/ArticleRead.aspx?storyID=14144International Game Technology, the largest private-sector employer in Washoe County, had good news and bad news last week. The bad news: IGT lost $21.3 million in the quarter ended Sept. 30. The good news: Executives of the slot-machine company think things are getting at least a little better. IGT's revenues for the quarter fell to $514.6 million from $632.2 million a year earlier. It shipped about 12,100 slots to customers worldwide during the quarter, compared with shipments of more than 20,000 a year ago. And its gaming operations business - which links networks of slots together to create big payouts - posted revenues of $283.2 million compared with $331 million a year earlier as consumers held more tightly onto the quarters in their pockets. The quarterly loss also reflected a decision announced by the company to swallow the costs of a couple of soured investments. Last month, IGT said it was writing down the value of an investment in Walker Digital Gaming Inc., a developer of networks for casinos, by $78 million. IGT also said it was writing down an investment in Las Vegas Gaming International by $13 million. But the company's executives think they see a flickering of light at the end of the tunnel. Patti Hart, chief executive officer, said casino operators are feeling a little more optimistic, and they're more willing to talk about new machines for their slot floors. "We have been encouraged by modest upticks in spending by many of our casino operator customers over the past two quarters," Hart said. Replacement of existing machines is far more important these days than installation of slots in new casinos. Out of the 4,200 slots that IGT shipped to North American markets during its last quarter, for instance, 3,800 of them were replacement machines. And every one of the 7,900 machines that it sold internationally was a replacement. Consumer spending on gaming, meanwhile, appears to be stabilizing, Hart said. Revenues at the 61,400 units operated by IGT's gaming operations unit have been flat after posting sharp declines when the recession was taking hold. But IGT still isn't willing to bet on the timing or the extent of a recovery, and it's continuing to tighten its belt. A round of cost-cutting that began in late 2008 resulted in savings of about $135 million a year. Operating expenses during the most recent quarter ran about 16 percent below year-earlier figures, the company said. Hart, who took the reins at IGT this spring, said she's making headway toward her goal of ensuring that the company is focused on development of excellent products and moving quickly to meet customers' needs. A new sales structure, for instance, establishes a single account manager as the IGT point of contact with a casino customer. For the fiscal year that ended Sept. 30, IGT reported a profit of $149 million on revenues of $2.11 billion. This compares with a profit of $342.5 million on revenues of $2.5 billion a year earlier.http://feedproxy.google.com/~r/NNBW1/~3/xYpuXGJ-g3s/ArticleRead.aspxhttp://www.nnbw.biz/ArticleRead.aspx?storyID=14142Mon, 09 Nov 2009 00:00:00 GMThttp://www.nnbw.biz/ArticleRead.aspx?storyID=14142