This year will be busy one for Alexis Minerals (AMC-T) as it continues to fix the operating Lac Herbin gold mine in Val-d’Or, Que., and moves the Snow Lake gold mine in Manitoba closer to production.
“2012 will be the year of consolidating the [Lac Herbin] operation, the company’s CEO and president Francois Perron says, explaining that he plans to take Lac Herbin from a struggling operation to a profitable mine.
To get to there, Alexis is working through a roughly $6-million plan it devised last year to turnaround the Val-d’Or operation.
Since June 2011, the mine has seen a “development blitz” to reposition the underground development with more flexibility, Perron says.
“We’ve done extra development so we could have more production stopes open at all times. This will give us flexibility so we would have time to adjust to the mining conditions as we open up new areas by having that extra flexibility.”
By March 2012, two more stopes will be added to bring the total number of stopes to five. As part of the plan, Alexis will bump the Aurbel mill’s recovery rate to 92%, up from 89.3%.
Work at Lac Herbin is “tracking nicely,” Perron says, adding by late 2012 the mine should become cash flow positive.
Last year, the company estimated Herbin would produce 15,000-20,000 oz. gold in 2012. Perron says he will refresh that guidance later this month.
“The biggest objective I have and the focus of the company is to complete the financing to get the Snow Lake Mine project up and running,” he says.
Alexis recently completed a $10-million bridge loan to help it get through the next couple of months, while it secures funding for Snow Lake.
The bridge loan will also be used to repay an outstanding $2.1-million convertible debenture. Alexis anticipates closing the loan by the first half of 2012.
Perron says he’s targeting first production at Snow Lake in 2013, given he receives financing this quarter, and construction goes as planned.
“The construction [at Snow Lake], it’s more of a development effort underground because the mill that was operating in 2005 is still there and it’s in very good shape,” says Perron. “So there’s a refurbishment of surface infrastructure, but it’s not as extensive as building a whole new operation.” Alexis estimates it will cost $40.7 million and take 12-18 months to upgrade the past-producing operation.
Kinross Gold (k-t, kgc-n) and High River Gold (hrg-t) ran Snow Lake, formerly known as the New Britannia mine, as a joint-operation from 1995-2005. In that time it produced 822,550 oz. gold. (Kinross gained its 50% stake through the 2003 merger with TVX Gold.)
Snow Lake has a total historic production of 1.44 million oz. gold from 12.1 million tons grading 4.67 grams gold per tonne. Those ounces were recovered from the main mine, No. 3 zone and Birch deposits.
Based on an October 2010 feasibility study on the main mine and No.3 zone, Alexis aims to mine 83,000 oz. gold a year for five years.
Alexis expects the mine’s life would increase with the drilling it completed last year.
The company spent $8 million in 2011 to explore around the mine and examine “what opportunities arise from consolidation of Snow Lake properties.” It drilled a total of 42,786 metres.
On Jan. 12, the company reported results from another approximately 13,700 metres from that program.
Commenting on the recent results, Perron says the drilling continues to support Alexis’ proposed mining plan in the Upper Main mine area, and has located additional extensions to the targeted mining areas.
“I still think there is a lot of potential in exploration. But the most value to be unlocked in the near-term is by fixing the Val-d’Or operation, which is underway and on schedule and getting the Snow Lake Mine off the ground,” says Perron.
The company will soon release resource updates for both projects.
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