New mines open in 1997

The year past won’t be remembered as much for its mine openings as for its scandals, but several notable (and legitimate) projects did come fruition both in Canada and abroad during 1997.

The Musselwhite mine in northern Ontario poured its first gold in March and officially opened in July. Production at the mine, situated 120 km north of Pickle Lake, is estimated at 200,000 oz. per year for the first ten years. Cash costs for the first year of operation are pegged at US$226 per oz.

Placer Dome (PDG-T) holds a 68% interest in the mine, with TVX Gold (TVX-T) holding the remainder.

Initially, the mine will operate as an open-pit operation, with processing through conventional gravity recovery and cyanide leaching, as well as a carbon-in-pulp circuit.

The pit is expected to operate for about a year while the underground mine is developed. Daily throughput is projected at 3,300 tonnes.

Proven and probable reserves at the mine are estimated at 6.6 million tonnes grading 5.6 grams gold per tonne, equivalent to 1.2 million contained ounces. Additional reserves, in the measured and indicated category, are estimated at 2.2 million tonnes grading 5.8 grams, equivalent to 420,000 contained ounces.

There are three subvertical access points, including a exploration shaft sunk in 1983, a backfill raise and a ventilation raise. Placer Dome intends to develop the fresh-air raise as a skipping shaft for later underground development, though equipment and crews would still use the decline.

The deposit is hosted in a steeply dipping zone with a shallow northward plunge. The deposit’s width, which often exceeds 12 metres, makes it amenable to longhole stoping mining methods. Smaller stopes are backfilled with waste rock; larger ones, with cemented rock fill.

The mill can process 3,300 tonnes of ore per day, with conventional crushing and grinding circuits feeding a carbon-in-pulp plant. The mill reuses about 40% of its cyanide; the other 60% is destroyed in a sulphur dioxide-sodium hydroxide destruction plant.

Also in March, DiamondWorks (DMW-V) began mining alluvial diamonds at its Luo project in Angola, following the commissioning of a floating dredge with a capacity of 120 tonnes per hour.

Limited mining of diamond-bearing gravel from the Chicapa River Valley, where the Luo River flows over a section of the Camatchia kimberlite pipe, began in mid-March.

The 27.9-ha Camatchia pipe contains proven and probable reserves estimated at 26 million tonnes grading 0.11 carat per tonne (to a depth of 96 metres), equivalent to 3 million carats. An additional inferred reserve of 10 million carats exists below that depth.

Camatchia is one of the world’s largest diamond pipes, and but one of five pipes known to exist on the Luo concession.

Gravel recovered by the dredge is being processed using an interim system of pans and grease tables. All tailings are being stockpiled for reprocessing through the new dense media separation (DMS) plant, which will soon be airlifted from South Africa.

The DMS plant can concentrate diamonds from alluvial material at a rate of 100 tonnes per hour.

In April, Rouyn-Noranda, Que.-based Richmont Mines (RIC-T) entered commercial production at its Nugget Pond gold mine, situated on Newfoundland’s Baie Verte peninsula. The mine officially opened in June.

Startup of the mine was completed on schedule and capital costs, at $27 million, fell within budget.

In 1997, the 360-tonne-per-day operation is expected to produce 32,000 oz.

gold from 81,600 tonnes grading 12.2 grams. Estimated cash costs for the year stand at US$153 per oz. Proven and probable reserves there are estimated to be 442,600 tonnes grading 12.2 grams.

Annual production during the mine’s life is projected at 46,000 oz. at a cash cost of US$153 per oz. Existing reserves will last about five years.

The mine is exempt from provincial sales tax for the first 10 years of operation. It is also exempt from income tax for at least as long.

The Nugget Pond deposit is accessible by a 4-metre-wide, 900-metre-long decline driven at a grade of 16%. Three zones of mineralization are being mined from top to bottom with mechanized cut-and-fill methods.

Also achieving production in early 1997 was Greenstone Resources (GRT-T), which poured its first gold at the Cerro Mojon mine in Nicaragua in April.

By the end of 1997, the open-pit operation is expected to have yielded 54,000 oz. of the yellow metal. As a result of an unusually long rainy season, the company expects to heap-leach 1.3 million tonnes grading 2 grams gold, 200,000 fewer tonnes than planned. The weather also set construction of the mine back two months.

Cash operating costs for the year were estimated at $142 per oz., whereas capital costs rang in $15.7 million.

A second phase of expansion is expected to enable annual production to increase to 135,000 oz. from 2.25 million tonnes of ore. The second phase will add another $4.9 million to capital costs.

The deposit contains an all-category geological reserve of 38 million tonnes grading 1.42 grams gold. Of this total, 23.8 million tonnes grading 2 grams gold are in the proven and probable category.

Greenstone has also begun planning a third phase of expansion, which would increase production to 180,000 oz. gold from 3 million tonnes of ore.

Plans call for the incorporation of ore from the Zopilote zone into the open pit. The length of the pit would be increased from 2 km to 2.5 km. The cost of mining equipment necessary for this phase is estimated at $5 million, for a total capital cost $25.6 million. Construction for this phase is expected to begin in 1998.

Mineralization at Cerro Mojon is associated with multiple mineralized zones along structurally controlled and overlapping quartz-filled shears.

In June, Madsen Gold (MGF-T) began producing gold, for the first time in 21 years, at its namesake gold mine in the Red Lake district of northwestern Ontario.

The project is forecast to produce 40,000 oz. gold in the first year of production at a cash cost of US$260 per oz. and a total cost of US$300 per oz. Subsequently, the mine is expected to turn out 50,000 oz. per year at a cash cost of US$230 and a total cost of US$160 per oz.

Madsen is on target to produce 40,000 oz. gold this year and 50,000 oz. in 1998. Cash operating costs this year are projected at US$255 per oz.

Madsen spend $20 million to refurbish and reopen the underground mine.

Production at the mine can be expanded by an addition 1,000 tons per day through an expenditure of $5 million.

Proven and probable reserves there stand at 1.2 million tons grading 0.27 oz. gold, sufficient for seven years of production at current levels.

Also in June, the Brewery Creek gold mine in the Yukon was officially opened by Viceroy Resource (VOY-T).

Processing facilities at Brewery Creek include an adsorption-desorption recovery (ADR) plant, assay lab, generator site, pump station and office complex.

An open-pit operation, Brewery Creek was completed five weeks ahead schedule, though capital costs, at $60 million, were slightly higher than anticipated. The development of a 19-km network of haulage roads and the expansion of the pad will continue in 1998.

The mine is projected to produce an average of 85,000 oz. per year over a mine life of 7.5 years, making it the largest lode gold mine ever built in the Yukon. Production from Brewery Creek will nearly double the territory’s total annual gold production.

Although heap-leaching and the ADR plant operate year-round, mining is carried out seasonally, from April through to October, at a daily rate of roughly 35,000 tonnes of combined ore and waste. Cash operating costs over the life of the operation are expected to average US$200 per oz., or US$8.19 per tonne.

The eight near-surface gold deposits at Brewery Creek are scattered along a 5.5-km-long, east-west-striking structure known as the Reserve trend.

Gold mineralization is structurally controlled, occurring primarily in intrusive, as well as sedimentary, rocks in the hangingwall of reactivated thrust faults.

At last report, prove
n reserves there stood at 17.1 million tonnes grading 1.45 grams with a stripping ratio of 1.2-to-1.

Gold production for 1997 is forecast to exceed 100,000 oz.

In June, partners Teddy Bear Valley Mines (TBY-T) and Battle Mountain Gold (BMG-N) cut the ribbon on the Holloway gold mine, 60 km east of Matheson, Ont.

Ore is transported to the nearby Holt-McDermott mill of Barrick Gold, which has a 10-year contract to custom-mill two-thirds of the daily output of 1,200 tonnes. The remaining material will be shipped to Kinross Gold’s Macassa mine in nearby Kirkland Lake, which has a one-year contract.

Battle Mountain has an 84.6% interest in the mine and acts as operator; the remainder is held by Teddy Bear. During 1997, about 80,000 oz. gold were expected to be produced from Holloway’s reserves of 4.8 million tonnes averaging 6.7 grams. In 1998, the mine will mark its first full year of commercial production, and output is expected to increase to 97,000 oz.

Cash operating costs for 1997 are pegged at US$233 per oz.; total operating costs, at US$337 per oz.

The Mt. Polley mine, near Williams Lake, B.C., officially opened in September.

Imperial Metals (IPM-T) owns a 55% interest in the project, and acts as operator. The remainder is held by Japanese metal-trading giant Sumitomo Metal Mining.

Development was completed on schedule and within the $123.5-million budget.

Cash costs are projected to be US$170 per oz. gold. During the first four years of operation, the mine will produce 100,000 oz. gold and 11,000 tonnes copper per year.

The operation employs a conventional flotation mill with a daily capacity of 18,000 tonnes.

Reserves there stand at 82 million tonnes grading 0.3% copper and 0.42 gram gold. The resource is divided among three pits, including the Central, Bell and Springer, which have an average stripping ratio of 1.16-to-1.

Gold grades decrease and copper grades increase with depth, and operations will focus on gold mining, at least for the first four years. Copper production will increase in the remaining years of the mine’s life.

Lyon Lake Mines (LLL-M) joined the gold producers club in 1997, pouring its first brick at the Beta Vargas mine in Costa Rica in December.

The Montreal-based company reports that throughput at its wholly owned operation averages 400 tonnes per day, but has flirted with the 700-tonne mark.

Between Oct. 22 and Nov. 30, 12,852 tonnes of ore grading 2.28 grams gold were mined and placed on a covered leach pad. This grade represents a 21% improvement over that which was estimated in the feasibility study. As well, Lyon Lake reports that the cyanidation cycle is 35% shorter than expected.

Proven, probable and possible reserves at Beta Vargas stand at 2.9 million tonnes grading 1.33 grams. It is an open pit operation with a 2-to-1 stripping ratio.

The mine is expected to produce 10,000 oz. gold in its first year of operation, and 12,500 oz. per year over the next four years. At such a rate, current reserves will be sufficient for 11 years of production. Cash costs at Beta Vargas are estimated at US$256 per oz.