Cameco sits on top of the world with Kumtor

Saskatoon-based Cameco (CCO-T) has been in high spirits since production began recently at its Kumtor gold deposit in Kyrgyzstan.

One of the world’s largest gold deposits, Kumtor is situated, at an elevation of 4,000 metres, in the Tien Shan mountains. At last report, reserves there stood at 80.5 million tonnes grading 3.58 grams gold per tonne, for 9.26 million contained ounces. The deposit also hosts an additional resource of 32.4 million tonnes of 3.75 grams gold, for 3.9 million contained ounces.

Despite a temperature of -30 C, Bernard Michel, Cameco’s president, and Kyrgyzstan President Askar Akaev marked the opening of the Kumtor gold mill with a ribbon-cutting ceremony. Michel described the event as “the culmination of four years of commitment, perseverance and international co-operation.”

Cameco first starting looking at the mineral potential of Kyrgyzstan following the country’s independence in 1991. Although the company’s original intent was to secure uranium deposits, it turned its attention towards gold.

Deciding that the Kumtor project warranted further inspection, the company obtained in 1992 the right to evaluate the deposit. The following year, Cameco presented the government with a feasibility study, which was followed in early 1994 by a development agreement between the two.

Under the terms of the agreement Cameco earned a 33% interest in the project by investing the first $45 million and arranging loans for the remaining costs. The agreement also calls for the Kumtor Operating Company, a subsidiary of Cameco, to act as mine operator. The remaining 66% interest in the mine is held by the government.

Development costs have escalated to US$450 million from an original estimate of US$360 million. Despite the US$90-million increase, however, Cameco never doubted the project’s viability — the gold price used in the company’s evaluation is lower than current forecasts.

The 14,000-tonne-per-day mill will initially process 300,000 tonnes of ore that has been stockpiled since mining began in July. Commercial production is expected to begin sometime in the next few months. By the end of 1997, Cameco expects to have produced 400,000 oz. Once at full production, the mine will produce 500,000 oz. gold at a cash cost of US$200 per oz.

The milling process will employ a flotation circuit to concentrate gold-bearing particles, which will then be removed using cyanide solution and a carbon-in-leach circuit. Gold is recovered through electrowinning.

Open-pit mining methods, at a stripping ratio of 5-to-1, will be used at Kumtor over a minelife of 17 years.

Underground resources could increase the minelife to 31 years.