Friedland back at Bakyrchik mine

Not for nothing has the huge Bakyrchik gold mine in northeastern Kazakstan been called “the money-pit of the steppes.” The Russians, the Australians, and then a North American company all tried to make it a commercial success in the years leading up to, and following, the collapse of the former Soviet Union. The project has been inactive for almost five years, which speaks to the mining and metallurgical challenges that have thus far prevented gold from being produced at a profit.

Mining financier Robert Friedland was the last to have a go at Bakyrchik, through Indochina Goldfields. The plan, as envisioned in the mid-1990s, was to re-activate the dormant mine in two phases. The first phase was based on mining two underground lenses to produce about 100,000 oz. annually, while the second was an expansion to 270,000 oz. annually. Paste-fill technology was expected to reduce challenges associated with bad ground conditions, and whole-ore roasting, followed by conventional carbon-in-leach extraction, was viewed as the preferred process to overcome the complex metallurgy. However, for various reasons, including deteriorating gold prices, those plans did not come to fruition.

Summer production

Friedland is back at Bakyrchik, this time with Ivanhoe Mines (IVN-T) and more realistic expectations. The goal is to resume production this summer, albeit at a modest rate of 20,000 oz. annually, with the possibility of expanding to between 40,000 oz. and 50,000 oz. a year.

Initial mining of 500 tonnes per day will target two million tonnes of outcropping oxide ore in the Globoki Log and Sarbas deposits, which average 3 grams gold per tonne. Material grading 4 grams will be selectively mined in the initial stage, along with existing stockpiles containing 117,000 tonnes of oxidized material. The surrounding land package covers several oxide exploration targets that will be mapped and sampled in preparation for subsequent drilling programs.

“This approach allows us to begin fulfilling Bakyrchik’s potential with a modest rate of production from the oxide deposits while we continue to explore options to place the large sulphide gold deposits into commercial production,” Friedland says.

Ivanhoe holds a 70% interest in Bakyrchik, with the Kazakstani government holding the remainder. However, the company will receive 100% of all cash flow until it has recovered all its invested capital.

Startup costs are estimated at US$200,000, including US$50,000 for local construction of four steel leaching tanks. Ore will be crushed, milled and processed at the existing facilities, to produce dor on site. Cash costs are expected to be US$110 per oz. Ivanhoe notes that the estimated cash margin of US$3.4 million will more than offset the current annual holding costs of US$2.5 million.

Large overall resource

Based on a previous feasibility study, oxide resources are pegged at:

– 3.5 million tonnes grading 8.2 grams (or 1.2 million oz.), classified as measured;

– 7.8 million tonnes of 7.68 grams (1.9 million oz.), as indicated; and

– 35 million tonnes of 6.56 grams (or 7.38 million oz), as inferred.

These resources represent only a small percentage of the overall (predominantly sulphide) resources outlined at Bakyrchik. At last report, these stood at 57 million tonnes grading 7 grams gold per tonne, roughly equal to 12.9 million contained ounces.

The deposit consists of a series of mineralized lenses within a large shear zone. The mineralization is hosted within sheared, carbonaceous sediments of the fault zones, and in association with quartz stockworks. The sulphides and carbon are oxidized to depths of 20-40 metres, with a sharp transition to unoxidized rocks.

Looking ahead, Ivanhoe intends to investigate new processing technology to treat the refractory gold mineralization, which is contained in disseminated arsenopyrite. The goal is to improve recoveries and reduce production costs to enable large-scale commercial production.

In the meantime, the company believes small-scale underground mining of the sulphide resources could be feasible, producing 40,000 oz. annually from material grading about 10 grams per tonne.

The company says the existing crushing, grinding and concentrator circuits could be used to produce a high-grade sulphide concentrate. Toward that end, a study recommended installation of a Waeltz rotary kiln to remove arsenic, sulphur and carbon from the concentrate before gold extraction in a carbon-in-leach plant, or in a smelter.