Rush mill building at Madeleine

Madeleine Mines has a major program in hand here that will see Canada’s first platinum-paladium mine in full scale production within a year. A big open pit orebody, this will be an extremely low cost operation that should prove quite profitable, The Northern Miner believes. Indeed the skeptics (and there were many) are getting fewer.

The company’s 3,000-ton mill and crushing plant at its permanently closed copper mine in Quebec’s Gaspe area has been dismantled and readied for shipment to the new mine site, now that an access road has been completed. In fact the first truck loads are scheduled to arrive within 10 days in a transportation job that itself will require three months to complete.

Rejecting participation from any of the major mining companies, Bay Street’s maverick mining engineer J. P. Sheridan, who has zealously held on to this ground for many years, has elected to “go it alone” — right through to the refined metals. And this includes total financing.

“He’ll put this mine into production at half the cost and in half the time that any of the majors would require,” says his operating staff. (And we have few doubts on this point.)

Cost and profit estimates may well prove something of an eye- opener. Here’s how the capital cost stacks up — $25 million for mine and mill, $5 million for a reduction facility ( metal matte) to be built at Thunder Bay and $5 million for a refinery to be built in Calgary.

Mr Sheridan says that mining and milling costs will be in the order of only $9 per ton, pointing out that the pit operation will require just a 5-man crew on a single shift basis to feed the 3,000-ton plant, operating one hydraulic drill, one 3 1/2/-yd hydraulic shovel and three 50-ton trucks. There will be virtually no waste rock removal for the first year at least, with only a 1,500-3,500-ft ore haul to the crusher.

The mill will operate seven days a week with three men per shift in the concentrator and two in the crusher house.

Refining costs are calculated at $180 per ton of concentrate, which works back to $6 per ton of ore milled for total operating costs of $15 per ton

Gross value of the ore at current metal prices is calculated at $65 per ton while the actual recovered value will be about $48 including $10 per ton from gold, as well as 2 lb of nickel and 2 lb of copper per ton. It is expected that there will also be a small but recoverable amounts of rhodium, iridium, osmium and ruthenium, all platinum group metals, as well as the palladium and platinum itself.

There is, then, an indicated operating profit of $33 per ton. On the basis of the planned milling rate of one million tons annually, this translates to an operating profit of some $32 million per year or about $110,000 per day. Cost-cutting features

A number of cost-cutting features were noted in the plans. Power, for instance, will be generated from a 10,000-h.p. gas-fired turbine. This gas will be trucked under pressure from the main Trans- Canada pipeline 10 miles away which will require seven round trips daily in a specially designed truck. Cost of this, especially the capital cost, will be much lower than bringing in Ontario Hydro.

Concentrate from the mill, amounting to 100 tons daily, will be trucked the 40 miles to Thunder Bay via the all-weather Spruce Lake road which will soon be linked to the mine site through a 12-mile link being built by the company with a $450,000 grant from the Ontario government.

This is where the hydrometallurgical treatment of the concentrate will be carried out, while the matte that is to be produced there, amounting to about 300 lb daily, will be flown to Calgary where the refinery is to be built.

Both of these plants will be fully modern, employing a modified circuit to that used at the big Impala platinum operation in South Africa.

The company’s geological offices, assay office and truck overhaul depot will also be established at Thunder Bay, requiring a minimum of staff to be located at the mine site.

James Vernon, a mining engineer who has been with the Sheridan Group for years, has been appointed general manager and he too will reside at Thunder Bay.

An unusually large 10,000-ton fine ore bin is to be erected, with this material dropping to an underground conveyorway to the mill. And the tailings disposal area, close by the mill site, will be gravity fed.

The pit area, which covers some 700 acres, has already been cleared of timber and stripped ready for mining. Most of the heavy equipment has been purchased, with much of it already on site including two 8-yd front-end loaders, a huge D-9 Caterpillar tractor and all trucks. Pouring of the foundations for the mill and crusher will commence shortly.

By-products will certainly be a big factor in the profit picture, especially gold. Initial production will be drawn from the newer Roby zone, the discovery of which changed the whole Lac des Iles picture.

Technical data from the some 150 holes that have been drilled on this deposit show it to be in excess of 2,000 ft long and maximum width of 375 ft. It lies almost vertically and is still wide open at depth and soon to be drilled to depths of 3,000 and 4,000 ft.

This zone makes about 12,500 tons of ore per vertical ft averaging 0.186 oz of platinum group metals and 0.02 oz gold. There is evidence of zoning within the deposit itself, with higher grade sections in gold. (One hole shows a 120-ft width grading 0.04 oz gold while hole No P-51 returned a continuous 110-ft section assaying 0.470 oz in the platinum group metals). The ratio of platinum to paladium, too, seems variable.

The Ontario government has a geological party camped on site, its third season on this job.

Immediately west of the Roby zone is the newer but lower grade Halo zone, which would give a combined ore width of over 1,000 ft. But there are no plans to mine this at this time.

Over-all recovery from the metallurgical work carried out to date approximates 75%, but this will be defined more clearly from a 10,000- ton bulk sample soon to be shipped to Sheridan’s new Diepdaume mill at Timmins. Financing

The property itself is held under option from The Platinum Group Mines Ltd, a private company owned 10% by Mr Sheridan and 90% by Boston Bay Mines which in turn is 40% owned by Belleterre Quebec Mines.

Plans are to amalgamate the Madeleine and Platinum Group companies to give Madeleine 100% ownership, providing it meets with the approval of minority shareholders in each of the companies involved. But the basis of this marriage will not be determined until all financing is completed, Mr Sheridan tells The Northern Miner.

At the present time Madeleine has about $11 million in its treasury, the latest financing of which was carried out at $10.50 per share. In addition, it holds a direct 7% interest in Zenmac Zinc which is becoming a valuable asset (see separate story in this issue).

But Madeleine will, of course, be carrying out additional financing. Too, it is seeking substantial assistance from both the federal and provincial governments (Ontario and Alberta).

The company’s shares are currently listed on the Toronto, Montreal and Alberta Stock Exchanges and are in the throes of being listed on both the American and London Exchanges.