Montreal, Que. — When December rolls around, the former Copper Rand copper-gold mine, near Chibougamau, Que., will once again be in production, says Campbell Resources’ (cch-t) president and CEO Andr Fortier.
A feasibility study projects output at Copper Rand at 1,450 tons per day over a mine life of five years, which translates to an annual output of 15 million lbs. copper and 35,000 oz. gold. Fortier believes that’s a conservative estimate.
“We’re confident and optimistic. We think that we’ll be able to extend over three million tons of materials over eight years,” says Fortier.
Fortier says the surging prices of copper and gold had no bearing on the decision to re-open the mine, stressing that the green light was granted based on sufficient amounts of exploitable resources and existing infrastructure.
The increase in gold prices, and copper prices in particular over the previous year, is considered by Campbell as a bonus that will have a positive impact on its bottom line.
The company has spent about $57.5 million renovating and upgrading Copper Rand. Campbell has deepened shafts, drove the decline down to 4,730 ft. below surface and rehabilitated a few buildings, including the mill.
“We started to do some definition drilling underground from the 4,730 level,” says Fortier. “To date, we’ve essentially defined reserves of about 100,000 tons, which we knew were there. The good news is that we are getting a better copper grade than originally expected.”
While there are no nearby satellite operations that could augment the feed into the Copper Rand mill, Campbell plans to eventually develop the nearby Cedar Bay mine, which can be accessed via the Corner Bay mine site, situated 40 km away by truck.
Explains Fortier: “We just completed a campaign of definition drilling at the Corner Bay project. We are going to be doing some engineering work there during the next few months and we are very confident of possibly driving an exploration ramp in the second quarter of 2005, with the possibility of starting up production later this year.”
Back at Copper Rand, initial estimates place the copper grade at about 2.2%, but Fortier says the grade should average above 3%. “Obviously a fifty per cent increase in copper content will help us tremendously in the first few months of operation,” says Fortier.
Ore from Copper Rand will be transported to the surface via a 4,000-ft. conveyor belt. Structures supporting the belt are nearly completed and work on splicing the belt will begin in late September. Once installed, the belts will be put through a series of tests to ensure efficiency.
At full capacity, the mine will operate seven days per week with two 10-hour shifts, whereas upon startup, the mill will operate on 8-hour shifts over five days a week.
Campbell expects to have a total workforce of 160 miners and service personnel operating the mill and other machinery at Copper Rand. This will include some people who worked on driving down the ramp, as well as a core group of miners.
The concentrate from the mill will be shipped to
Fortier, a former chairman of the Conseil du Patronat, a Quebec lobby group representing employers, says that although he publicly supports the Quebec Liberal Party, which is currently in power, his connections had no impact upon the negotiations to re-open Copper Rand.
“All of the negotiations that we did for the financing of the mine were done prior to the Liberal government (being elected),” he says.
Through existing provincial programs for infrastructures and capital investment in underground operations, Campbell qualified for slightly less than $1 million in subsidies.
And the local unit of the United Steel Workers of America was supportive throughout the planning process to re-open Copper Rand and agreed to a 5-year contract ending in April 2009.
Last year, Campbell made a significant discovery, known as the West Zone, at its Joe Mann gold mine, situated 60 km south of Chibougamau. The West Zone added about 500,000 tons in resources to the operation, including 150,000 tons of reserves. The average grade from the West Zone is 0.34 oz. per ton.
“This allows us to continue operations at Joe Mann,” he says. “We also resumed surface exploration on a contiguous property — the Meston property. This was done in late winter and early spring and we had some very good intercepts in an area that is about 3,000 feet away from the existing infrastructure, which could be very accessible from these infrastructures.”
He adds: “We’ll be resuming drilling in October to confirm the initial results by infill drilling between the holes where we were most successful last spring. One hole has given us the equivalent of two ounces per ton over more than twenty feet (68 grams gold over 6.3 metres) which is very exciting and hopefully we’ll be able to define the potential economic zone and add years to the existing operation.”
Fortier noted that the Joe Mann operations have been below expectations.
“We’ve had difficulty generating profits at the Joe Mann mine to date,” he admits. “In fact, we had a few months where we were successful, but otherwise we were operating at a loss. But we expect that the improvements and changes that we put in place will lead to a profitable operation at Joe Mann.”
As Copper Rand returns to production, Fortier is fully confident of the mine’s ability to generate solid, long-term revenue.
Fortier says cash flow from Copper Rand is expected to be in the range of $15 million per year, adding that the income generated from the mine will be a key part of the plan designed to restore Campbell’s health. The company recorded a loss $3.9 million in the first six months of 2004, or 4 cents per share, compared with a loss of $4.4 million, or 10 cents per share, over the same period in 2003.
Says Fortier: “Based on current prices, we should be able to produce gold at less than US$190 per-oz. when we include the copper credits. Or conversely, we should be able to produce copper at less than US42 per lb. So, at current prices, with the margins that we have, Copper Rand will bring good returns to the company.”
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