City’s $110-million plan: B.C.’s boggest gold mine

Proving it has what it takes to make a mine, City Resources Canada plans to bring what will be British Columbia’s largest gold producing mine on stream by October, 1989. The aggressive Australian-controlled company has turned things around for the once problem-plagued Cinola gold project in the Queen Charlotte Islands.

On-site construction will begin in June or July next year at a cost of $110 million. The operation will process 6,600 tons per day of ore to produce 175,000 oz gold in the first year, increasing to 192,000 oz in the second year and averaging out at 114,600 oz for the remaining 10 years of mine life.

A feasibility report just completed by Wright Engineers says operating costs will vary from $207(US) per oz for the first two years of production to $322 per oz in the following years.

“We are currently working on completing government permitting, detailed engineering and financing for the project,” says Ron Longstaffe, president and chief executive officer.

The company plans to raise about $90 million by way of a gold loan. The after-tax cash flow rate of return for the project is 19.18% at a gold price of $450 per oz and an exchange rate of $1(C) to 76 cents (US). Under these conditions, if the project is financed on a 20% equity-80% debt basis, the debt can be repaid within two years.

Open pit mineable reserves are 27.3 million tons averaging 0.062 oz gold per ton, using a 0.032-oz cutoff grade. An additional 220,000 tons grading 0.055 oz have been classified as possible reserves. Over- all waste-to-ore stripping ratio will be 2.08:1.

The average grade of ore milled during the initial three years will be 0.08 oz. Lower grade ore averaging 0.048 oz will be stockpiled and fed to the plant in the following four years. New treatment process

The metallurgical characteristics of Cinola ore are difficult and detailed studies have been done to find the most efficient treatment process.

Graham Balderson, City Resources’ executive vice-president (technical) explains that the ore treatment will utilize a new proprietary Arseno process which uses nitric acid to catalyse the oxidation of the sulphide minerals which otherwise render the gold refractory to conventional cyanidation.

The process, developed and tested by Bacon, Donaldson Associates and Hazen Research in Colorado, has not previously been used commercially but has proven to be the most cost-effective way of treating Cinola ore because of the pyrite and marcasite content on the ore. Essentially it is a low temperature, low pressure oxidation process as opposed to pressure oxidation, Balderson explains.

The ore also has minor concentrations of arsenic and about 10 ppm mercury but only a small portion of the gold is tied up in the arsenic and the mercury is said to occur in a halo adjacent to the deposit, which will not be disturbed. Many other epithermal deposits have the same refractory problems as Cinola and the new Arseno process will generate much interest, Balderson says.

Gold recovery is anticipated to be 90%, for total gold production over the mine life of 1.5 million oz.

Balderson notes that recent drilling has indicated that there is higher grade mineralization below the bottom of the pit which could be mined by bulk underground methods, thereby extending the life of the mine. There is also potential for similar mineralized zones within the claim group and the company will be investigating both possibilities by drilling next year. Waste management

Control of potential acid mine drainage, control of water quality and protection of the fish habitats of the Yakoun River are key environmental issues in project design.

The majority of the pit waste rock is acid generating or acid releasing. This material will be stockpiled adjacent to the pit for the first six years of operation and the run-off combined with the pit water for treatment prior to discharge. Waste produced in years seven to 12 will be conveyed to the tailings impoundment and stored underwater to inhibit the acid generating reaction. Non-acid generating rock will continue to be stockpiled adjacent to the pit. At the end of the mine life, the acid generating rock from the first years of mining will be placed back into the pit below groundwater level and covered with a layer of non-acid generating material. Mill tailings will be subjected to a cyanide destruction process and discharged to the tailings impoundment.

The mine will employ about 188 people, with 225 needed during the construction phase.