Williams Lake, B.C. — Whether ramping up a new mine or reviving an old one, mining companies typically encounter problems in the first few months of production. In the case of
Taseko and operator Ledcor, a contract miner, revived the former producer late in 2004, following a preproduction period that was compressed to four months from six as a result of the labour dispute. The dispute has since been resolved and 250 workers are back on the job.
At the same time, the joint-venture partners initiated a $1.5-million upgrade of the molybdenum circuit in order to benefit from buoyant prices for the metal. The new circuit was completed in January 2005; however, production was hindered by extreme weather variations during the month. Mill throughput and recoveries from October 2004 through to January 2005 were also lower than planned, owing to the treatment of wet, fine supergene and oxidized material.
In this year’s first quarter, Gibraltar produced 14.2 million lbs. copper in concentrate, or 84% of what was planned; in February and March, the mine produced 80% of the amount of molybdenum planned. Copper concentrate sales for the quarter came in at 88% of planned amounts, or about three times that of the previous quarter. The mill achieved all its planned monthly copper production in February, and Taseko notes that recoveries are improving now that mining of deeper primary ore is under way. Throughput is on target at 35,000 tonnes per day.
The original Gibraltar mine was built by Placer Development, a predecessor to Placer Dome, in 1971. The operation ran for 27 years, the last two under Boliden Westmin, until 1998, when mining ceased because of low copper prices. Placer initially mined higher-grade sections of the deposit, resulting in rapid payback of development costs in less than three years. Up to the time of its closure, Gibraltar had produced 305 million tonnes of ore, from which were extracted 1.9 billion lbs. copper, 20 million lbs. molybdenum, and 85 million lbs. cathode copper.
Taseko acquired the mine from Boliden in mid-1999, then kept it on standby.
“We’ve got a forty-month plan, which is for the Pollyanna zone, and that is where we’ve tied in our smelter contracts,” says Mine Manager Thomas Milner. “The next phase will focus on the Connector zone, the plan being to release some oxide resources so that we can put out a dump and fire up our solvent extraction-electrowinning plant to produce six- to seven-million pounds of cathode copper per year, which, when treated as a byproduct, will help lower our overall costs. Then there will be two phases in the Granite Lake pit.”
As one of the lowest-grade copper mines in the world, Gibraltar is highly sensitive to metal prices, which partly explains why Taseko has been aggressive in implementing new equipment, such as a new fleet of haulage trucks and a large main shovel.
On the other hand, every cent per pound in the copper price represents about a million dollars in cash flow, so trimming operating costs is a priority. Toward this end, Taseko has undertaken several initiatives designed to accelerate cash flow. For example, the mine is now in the landfill business through an agreement with the regional district, which was looking for a new dump site. Garbage disposal in a section of the old workings will bring the operation revenue as well as offset some of the environmental costs through a liability transference and bond release. Also, upgrades to the water pumping system will allow for some hydroelectric power generation, thereby reducing energy costs.
A study by Roscoe Postle Associates, tabled earlier this year, shows that the porphyry copper deposit has a proven and probable sulphide reserve of 148 million tonnes grading 0.31% copper and 0.01% molybdenum, based on a cutoff grade of 0.2% copper. Proven and probable oxide reserves total 15 million tonnes of 0.15% acid-soluble copper.
The company plans to build a hydro-metallurgical refining circuit, which would eliminate the need to ship copper concentrate to smelters. The construction cost is pegged at $110 million.
Taseko Mines has 102.7 million shares outstanding and a market capitalization of $154 million, based on the recent stock price of $1.50.
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