SB shows that small mines can make a profit

The SB gold mining venture was small and short-lived, but it was profitable and an operating success for 50-50 partners, Westmin Resources (TSE) and Tenajon Resources (VSE).

“We’re pleased that everything came out as planned,” said Tenajon President Don McLeod. “That’s almost unheard of these days with small gold mines.” The SB property is about six miles from Westmin’s Premier gold mine complex near Stewart, B.C., where SB ore was processed after being trucked from the mine site.

Tenajon explored and developed the property on its own in the late 1980s, and after lengthy negotiations, entered into a 1990 agreement with Westmin to go into production on a joint venture basis. As McLeod recalls, it was a deal that made obvious sense for both sides.

The SB deposit was too small to warrant its own mill, and Westmin needed higher grade feed to improve the overall economics of its Premier gold mining operation where grades were found to be lower than expected. SB ore was also found to be well-suited to Westmin’s mill, with no modifications required. Field operations began in early May, 1991, and the SB project was demobilized in early November of the same year. During this period, 113,000 tons of ore were shipped to Westmin’s carbon-in-leach mill to produce 27,101 oz. gold and 81,653 oz. silver. Recoveries averaged 92.5% for gold, and 44.8% for silver. Total revenues were $11.18 million, costs were $8.34 million, which resulted in a profit of $2.84 million for the partners. These results closely matched Westmin’s in-house feasibility projections which estimated revenue at $11.6 million, costs of $8.47 million, for an estimated profit of $3.13 million to the joint venture.

When Westmin took over as operator in early 1991, the mine was party developed with two portals, an access drift and crosscuts, but more development work was required before mining began in earnest. Once this was accomplished, the Facecut/35 deposit was mined primarily by sublevel retreat blasthole with a minor amount of benching. The mining was done by Tonto Mining under contract to the joint venture. Overall, the partners say the production phase of the project went better than the development phase.

As for the milling side, recoveries were slightly better than expected, although head grades of 0.26 oz. gold and 1.6 oz. silver were marginally lower than projected in the feasibility study. The amount of gold and silver produced was near target for gold, and over target for silver. More importantly, the milling was done on a batch basis to the satisfaction of both parties.

“We never had a dispute during the whole joint venture,” McLeod said. “We had meetings every other week, and both sides worked well together. The milling exceeded our expectations and Westmin was so fair we don’t have a single axe to grind.”

Westmin spokesman Bruce McKnight said the operation was also successful because a tremendous amount of attention was paid to detail, particularly grade control, by the operating team led by Westmin project co-ordinator, Dave Cawood.

A small amount of reclamation work still remains to be done at SB, with this work involving returning about 2,200 tons of potentially acid generating waste underground, and recontouring the site. The two portals will be plugged with cement.

Westmin is currently involved in discussions with a number of other companies interested in custom milling their gold deposits at the Premier mill.