A pit-wall failure that killed a miner at the Kumtor gold mine in Kyrgyzstan will reduce this year’s production by 200,000 oz., says part-owner
The rock slide, which happened in early July, brought 7.5 million tonnes of rock down into the bottom of the Kumtor pit and killed miner Almaz Jakishev, 25. Two blasthole drills were destroyed and a third was severely damaged.
Plans now call for 500,000 oz. to be produced, down from 700,000 oz. About 300,000 oz. had been produced up to the time of the accident.
Mining resumed in mid-July, having been moved to parts of the Kumtor pit that were not affected by the wall failure. Grades are lower in these safe areas, which will bring production down and force costs up.
The new mining plan anticipates an average millhead grade of 3.5 grams gold per tonne, down from 4.9 grams in the original plan. Recoveries are also expected to fall, to 77% from 81%. Cash production costs at Kumtor, which had been forecast at US$147 per oz., are expected to rise to US$210.
Cameco now expects its 2002 earnings to be cut by about $35 million as a result of the accident, including $2 million for rolling existing hedge contracts into the future. There may be some insurance payments to mitigate the costs of the damage, but they have not figured in Cameco’s new projections.
Cameco says the operating company, Kumtor Gold, will be able to make the next principal payment on its senior debt, but that it will let Kumtor defer US$10-million against principal and current interest on a subordinated loan Cameco had made to the operation. That payment was to have been made in December.
The fallen material all came from inside the planned pit envelope and would normally have been mined in the normal course of production, so no reserves were lost. But the slide did bury a zone of high-grade ore that would have been mined in the last half of this year and early in 2003. Cameco now expects to mine this material starting in mid-2003, but geotechnical assessments are continuing, and it is not yet certain if the area will be safe to excavate by that time.
The government of Kyrgyzstan, which owns a two-thirds interest in the mine, is investigating the incident. Cameco estimates it will take “several months” to devise a safe removal plan and clear the slide.
Cameco also announced it had signed an agreement with three U.S. electrical utilities, plus Westinghouse Electric and British-based uranium enrichment company Urenco, to develop a uranium enrichment plant in the U.S. A final partnership between the signatories is still under negotiation.
The plant would cost about US$1.1 billion and ultimately have a capacity of 3 million separative work units. The current U.S. market for enriched uranium takes about 11 million separative work units annually, about two-thirds of which is supplied from plants outside the U.S.
Once approval from the U.S. Nuclear Regulatory Commission is in place, Cameco expects to hold a 25% interest in the partnership. Provided the plant can be approved within three years, Cameco expects it could be operating by 2007 or 2008 at about one-third capacity, and reach full production by 2012.
Cameco has also restarted production from its uranium mine at Rabbit Lake, Sask., where mining had been suspended since 1999.
The new production comes from the property’s Eagle Point deposit, which is expected to ship about 1,100 tonnes of U3O8 over the rest of 2002, and about 2,700 tonnes annually for at least another three years.
Reserves at Eagle Point are currently estimated at 711,000 tonnes grading 1.2% U3O8, but further exploration drilling is under way at several targets on the property.
The Rabbit Lake mill, which was shut down in 2001, will restart next month to process Eagle Point ore, and will be ready for feed from Cameco’s larger Cigar Lake deposit in 2005 or 2006.
Cigar Lake, where Cameco owns a half-interest, is a joint venture with
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