Canamax at Ketza River : Yukon gold mine taking shape

Mother Nature did a magnificent job concentrating the gold mineralization at Canamax Resources’ Ketza River project. And despite periods of heavy glaciation, she didn’t disturb the underlying oxide zone which is expected to be the basis of a production decision in early 1987.

Canamax and its joint venture partner, Pacific Trans-Ocean Resources, each have a 50% interest in the project which should be another significant gold producer for the Yukon where its history has been closely allied to the yellow metal.

The New Democratic government was quick to recognize the positive impact mining could have on the territory’s economy and has provided incentives to spur exploration and new mine development. On a national scale, the incentives are second to none and the government’s attitude towards mining has alleviated many fears the industry had about such socialist governments.

Canamax now is establishing tonnage, grade, and continuity in the Ridge and Peel oxide zones where reserves are estimated to be at least 500,000 tons grading 0.51 oz gold per ton. On a recent trip to the property, Vice-president H. Walter Selmer emphasized that both these zones are open to expansion so Canamax should have no problem meeting its threshold production requirement of 600,000 tons at a similar grade.

The company has done an exceptional job of evaluating the oxide potential at Ketza and has played its cards right from day one. Besides establishing reserves, the company is trying to determine which mining method would be most appropriate and what mining costs would be. It has established a best-worst scenario of $50-$100 per ton of ore and Mr Sellmer said a 100% extraction rate is being sought.

They are looking at a tight fill mining method where the orebody would be mined in panels. Broken fill is available on surface and only some minor sizing would be required.

General arrangement drawings have been made for a 350-ton-per- day CIP (carbon-in-pulp) cyanidation mill which would include one large SAG (semi-autogenous grinding) mill, conventional CIP circuitry and Inco’s cyanide destruction process. The grinding circuit will probably have a 600-ton-per-day capacity for oxide material so there won’t be any bottlenecks in the event lower grade material has to be run through the plant.

Geotechnical work has been completed in the tailings disposal area and a source of low permeability clay has been found for dam construction. About 5-8 years storage capacity is available in the proposed tailings area at “a reasonable cost,” he concluded.

The property was discovered by Conwest Exploration in 1955 and Conwest still holds a 20% net proceeds interest in the project. Canamax entered the picture in 1984 and attempted to get “a starter block in the oxide zone,” something that would supplement known sulphide reserves in any production decision. It expanded reserves in the Peel sulphide zone in 1984 and confirmed the Ridge oxide zone with two drill holes.

The following year the company completed 20,172 ft of drilling and drove 1,340 ft of underground adits and drifts in the Ridge zone. This led to the discovery of the Peel oxide zone and drill-indicated reserves there of 430,000 tons grading 0.51 oz gold. The reserve definition for the Peel and Ridge zones was improved this season and two new zones discovered.

Recoveries in the oxide zone are estimated to range from 94%-96% but they are considerably lower (63%-78%) for the sulphide material which is highly refractory. Roasting would improve the recoveries but there are environmental problems associated with this method, noted Mr Sellmer. “These sulphide reserves cannot carry the same capital load as the oxides,” he added. Mine payback in the early stages would be “very sensitive to grade,” he to ld The Northern Miner, adding that Canamax could finance the project through equity or debt. With a short payback period, debt financing is particularly attractive because no shares would have to be issued. The company expects to have a 5-year mine life and total cost to production for the joint venture should be approximately $14 million. That includes working capital, mine development, mill construction, access road, etc.

Canamax now is fan drilling the downward extension of the Ridge oxide zone where Mr Sellmer feels the chances of discovering a thick, high grade block are good.

Oxide ores extend to more than 400 ft which is quite unusual for glaciated terrain. Free gold occurs in limonite, scorodite, hisingerite and various amorphous iron oxides in the three main oxide zones. Sulphide reserves do not fit into present mine development plans because they are refractory. The sulphide ores are composed of pyrrhotite, pyrite, arsenopyrite and gold. Although more abundant than oxide reserves, the grade of the material is less and averages about 0.28 oz gold.

There has been good correlation between various sampling methods in the Peel oxide zone, suggesting a relatively fine distribution of gold. The grade profile is better in the hangingwall and although some higher grade sections exist within the zone, there is no over-all nugget effect.

The propery has some structural elements which are similar to the United Keno Hill property in the Yukon where orebodies are spread all over the place. So the chances of blocking out more reserves once the mine is producing appear to be excellent.

Canamax will have to spend $1.3 million to upgrade the road from Ross River some 50 miles to the north. The Yukon government has agreed to pay $250,000 of the cost but its commitment was based on a lower capital cost which has since increased. Negotiations are under way with the government to increase its contribution in line with actual costs.