High fixed costs make volume key to Greens Creek success

Even though mesothermal vein-type gold deposits are most often associated with Juneau’s rich mining past, the district’s first new producer is a massive sulphide deposit that turns out significant amounts of silver, gold, zinc, lead and some copper.

The Greens Creek underground mine began production in early 1989 and is 53% owned and operated by a unit of Kennecott, with Hecla Mining (NYSE) and two other minor partners holding the remaining interests.

The project is on Admiralty Island, about 18 miles southwest of Juneau and within an area classed as a non-wilderness national monument. Work crews are transported to the island by a catamaran on a daily basis, a route taken by The Northern Miner and other guests during a recent tour of the property.

The operation is currently processing about 1,200 tons per day, and at that rate is targeted to produce about 8.7 million oz. silver, 44,000 oz. gold, 28 million lb. lead and 74 million lb. zinc this year.

These numbers reflect a gradual improvement in throughput and production over the past year as the operation was originally sized at 1,000 tons per day to annually produce 6.4 million oz. silver and 36,000 oz. gold plus base metals.

“This mine’s performance is very volume dependent because of our fixed costs,” said Cliff Davis, general manager. “The more volume, the better the place looks.”

Davis said the company is still looking at ways to increase production further in order to improve overall project economics. And to help accomplish this, he noted that exploration work has been “extremely successful” in boosting project reserves.

For example, reserves at the end of 1990 stood at 6.3 million tons grading 0.15 oz. gold, 15 oz. silver, 4% lead and 14% zinc. This represents a sizable increase from previously announced reserves (1989) of 3.5 million tons averaging 0.18 oz. gold, 24 oz. silver, 9.7% zinc and 3.9% lead.

“We’re still in the middle of an evaluation program to be finished in the next two months that will add even further to reserve base,” Davis said.

A number of process changes made in recent months have enabled the company to reach its goal of producing more zinc concentrates than bulk concentrates. A lead concentrate is also produced, and although gold and silver report to all three cons, the highest precious metal grades are in the lead concentrate.

Greens Creeks derives about 40% of its value from silver, a metal that declined substantially in price since the mine was put into production. But that wasn’t a consideration in the early days of discovery when silver prices were substantially higher than they are now.

The discovery of Greens Creek goes back to 1973 when a zinc stream sediment anomaly was found on Admiralty Island. Noranda was part of the joint venture involved in the project at the time, with the initial program designed and carried out by Watts, Griffis and McOuat. Ongoing work led to the detection of numerous base metal soil anomalies, but the most important find in 1974 was “Big Sore,” a brown- orange ferricrete zone which was later found to be the only location where the Greens Creek orebodies are exposed on surface.

The next summer, the first of three holes drilled in this area intersected nearly 80 ft. of fine-grained massive pyrite. This discovery hole was the first of well over 550 holes drilled on the property during the next 14 years.

In 1985, a land withdrawal effort began and the partnership ended up with only 17 of its original 440 claims. Today, because of its location, the mine is operated with a great deal of environmental sensitivity. (Fortunately, acid mine drainage isn’t a problem because of carbonate in the rocks.)

Ongoing exploration work led to the delineation of three main orebodies called the North, Central and South zones. (More recent exploration work has been focused on testing the depth potential of these zones.) They are about 200-700 ft. wide, 1,200-2,000 ft. long, average about 8 ft. in thickness, and are still open to depth.

But going underground did generate some surprises, according to on-site geologists. The deposit was found to be complex and more folded and faulted than originally thought. The mineralogy is also complex, with as many as eight different ore types found within the deposit.

This explains why grade control is critical, and why the operation’s mine geologists play such an important role in mining operations. Cut-and-fill is the primary mining method used, but in areas where the deposit flattens, more of a room-and-pillar or drift-and-fill approach is adopted.

Mining takes place five days a week, three shifts a day. Blasting is done at the end of every shift with everyone out of the mine. This is because of possible sulphide dust explosions, an unusual problem that has now been resolved.

The complex mineralogy also requires that ore be finely ground to 80% minus 400 mesh for optimum recoveries. The mill circuit currently features a SAG and ball mill and a conventional 3-stage sulphide flotation circuit. Column cells were recently added to improve the concentrate grade and the metal distribution in the lead circuit.

All the products, including the tailings, are filtered using the new Sala vertical plate air-plate filter. Tailings are filtered because they are deposited as dry compacted tailings on surface. (Some are used underground as fill.)

As mentioned earlier, low metal prices for silver and zinc recently forced some cost-cutting measures at Greens Creek. The non-union workforce was reduced slightly, productivity improvements are being sought, and management is looking at improving shipping-related costs which are currently a major cost item.