MacLellan turns a profit

Operations at the troubled MacLellan gold mine near Lynn Lake, Man., appear to have taken a turn for the better. Under the direction of a new management team put together by Hayes Resources (TSE), the mine is generating an operating profit following the introduction of a new mining method earlier this year.

Hayes acquired control of the mine after purchasing a 58% interest in SherrGold Inc. (TSE), the project owner, from Sherritt Gordon Mines in February.

With the implementation of the new mining method in March, the mine’s performance has improved. In April, with more than 45% of ore coming from open stopes, the mine produced 5,300 oz of gold at a cost of less than $270(US) per oz. Based on this rate and on higher rates in future months, SherrGold is forecasting gold production of more than 56,000 oz this year and 65,000 oz in 1898. This is in marked contrast to the 40,000 oz produced last year at a much higher cost per oz. In fact, the mine has never made any money until April, when an operating profit of $700,000 was generated.

Although the mine is essentially operated by the same ex-Sherritt Gordon staff, a different mandate came with the new owners, Bernard Haystead, vice-president mining at Hayes, explained to The Northern Miner. “We were prepared to suffer some costs for conversion to this method (open stope). And it’s paying off,” he said.

Credit for the operational changes goes to the engineering staff of American Barrick Resources (TSE), which with DCC Equities controls Hayes. Engineers from Barrick recommended the change to long hole open stoping from cut and fill after finding similarities between the MacLellan deposit and the Camflo mine which Barrick operates in Quebec.

The improved performance has continued into May. During the first two weeks, the mill has exceeded its rated capacity of 1,000 tons per day, processing 1,161 tons of ore per day. Grade averaged 0.18 oz gold per ton. “If anything, the operation should stabilize and get easier,” Haystead said, commenting on the current operating level.

By the end of June, two additional mining blocks will be opened up in the East Main and Nisku deposits; both immediately east of the underground workings. The East Main hosts 194,000 tons grading 0.19 oz whereas the Nisku holds 206,000 tons of a similar grade. Both will be connected to the main mine workings this summer. Reserves in the Main zone total 1.1 million tons grading 0.19 oz.

The Nisku, which is accessed via a decline ramp, will also provide an operational edge. The ramp will provide alternative access to the mine for men and materials thereby freeing up the main shaft for hoisting ore. With more stopes developed and pressure taken off the shaft, the operation is expected to have a record second half, Haystead added.

A major source of future mill feed is the Rainbow deposit, immediately west of the mine workings. An exploration success story, reserves in the Rainbow have been increased this year from 150,000 tons grading 0.16 oz to 594,000 tons grading 0.25 oz. All four deposits, — the Main, East Main, Nisku and Rainbow — are associated with the Rainbow trend, an iron formation unit which strikes for more than 25 miles.

Another potential ore source is located 10 miles southeast of the mine on the Wasekwan property. Shared with joint venture partner Trans America Industries (VSE), the property protects two deposits. The latest discovery, known as the Burnt Timber, has open pit potential. The best section intersected 24.3 ft grading 0.236 oz.