SherrGold taking care of mine start-up woes

Gold recoveries fall below feasibility study estimates and gold production tumbles below start-up expectations. The patient is heard to babble “Where has all the yeller went?” Diagnosis — the start-up blues. Treatment — increase mill head grades by improving grade control and recovering coarse gold lost in the mill.

At SherrGold Inc.’s MacLellan gold mine near Lynn Lake, Man., the start-up blues were quickly diagnosed and treated. The patient is today doing quite well, according to G. M. Hughes, president. Speaking at the annual meeting, Mr Hughes said that “we underestimated the impact of coarse gold on metallurgical recoveries.”

That miscalculation translated to a difference of 0.02 oz gold per ton in the mill from the blasted mine grade, Peter H. Goodwin, vice president of operations, told the meeting. To counter the dilution problem, SherrGold has added a gravity circuit to the mill which will recover coarse gold. The gravity circuit is scheduled to enter production on June 1.

The start-up phase was also hampered by erratic gold distribution within the main zone. In order to solve the problem, SherrGold has started a detailed sampling program across each blast face. The extra work, although improving grade control, has reduced the amount of tons available for mining. Current operations mine 900 tons per day or 450 tons from each mining level. This is down from 500 tons per day from each level which was initially planned.

To help boost output to the forecast 1,000 tons per day, a third mining level is being prepared. This will be operational by October, Mr Goodwin says.

The improvements and changes have enabled the mine and mill to approach their design parameters. In March, mine and mill throughput exceeded 28,000 tons, or 91% of design capacity. Direct operating costs were $56.58 per ton; up 13% from the $50 used in the initial design calculations but down markedly from the quarterly average of $69.72 per ton. Improvements have been so effective that of the 8,400 oz of gold produced during the first quarter, 46% came from milling in March alone. The mine entered commercial production on Jan 1.

Underground exploration is also yielding positive results. At the east main zone, believed to host 180,000 tons grading 0.21 oz gold per ton, an exploration drift has opened up a 13-ft-wide section across 200 ft of strike. The grade averaged 0.25 oz gold. Total mineable reserves in the main zone stand at 1.55 million tons grading 0.2 oz gold to a depth of 1,500 ft. When in full production, the MacLellan mine is expected to yield 60,000 oz of gold per year.

After the meeting, SherrGold Chairman and Chief Executive Officer, A. R. Latham, told The Northern Miner that one offer has been received for the control share block in the company. Sherritt Gordon Mines which holds a 60% interest in the company, has said the stake is up for sale. The proceeds would be used to reduce Sherritt’s burdensome debt.

When asked by a shareholder if the company was ready to close a deal, Mr. Latham replied, “I don’t know.” He later implied, after the meeting, that Sherritt is waiting to see if more competitive offers come in before making a decision.