Vancouver — Market-watchers are optimistic the resurgence in the price of gold will help transform prospective properties into producing mines over the next few years.
During 2002, Canadian companies managed to start up only a handful of mines around the world, but by the same token, only a few operations closed shop.
The Diavik diamond mine in the Northwest Territories has not yet entered commercial production, though construction is nearly complete and the mill is processing kimberlite.
London-based
The mine began processing kimberlite ore from the A-154 South pipe on an intermittent basis in late November. The first diamonds liberated and recovered have been delivered to Yellowknife, 300 km to the south, for cleaning and removal of heavy mineral particles.
Rio Tinto is the operator and owns a 60% interest in the mine through its wholly owned subsidiary, Diavik Diamond Mines. Aber owns the remaining 40%.
Plans call for a 2-year ramp-up period, followed by annual kimberlite processing of 1.5 million tonnes. Diamond production would average 6 million carats per year. The mine plan envisages four pipes delivering 107 million carats of diamonds with an average value of US$62 per carat. The mine life is projected to be 20 years.
Proven and probable kimberlite reserves are estimated at 27.1 million tonnes grading 3.9 carats per tonne.
Meanwhile, in Ventersdorp, South Africa,
The so-called Tirisano operation is projected to produce 19,200 carats annually at an operating cost of US$2.74 per tonne of gravel treated. Existing resources will last 10 years, though the known deposit covers only a fraction of the targeted East Gravel paleochannel. Based on recent and historic records, the gems are expected to fetch an average US$400 per carat, which translates into US$7.7 million in annual revenue.
The company’s heap-leach operation is running at 1,400-1,800 tonnes per day using a carbon column recovery process. About 800 tonnes of ore per day are being processed (blended with existing leach pad material), with the balance sent to stockpile.
During the third quarter, the company posted a small loss of $37,217, notwithstanding positive cash flow from operations of $433,000. Gold production during the quarter amounted to 5,211 oz.
Santa Rosa is on the southern end of the Santa Rosa Dome, one of 17 mineralized targets on the property. The Open Pit zone hosts an indicated resource of 544,000 tonnes grading 4.23 grams gold and 80.73 grams silver per tonne. The inferred portion of the resource adds 1 million tonnes grading 3.85 grams gold and 86.4 grams silver. This resource was based on 143 reverse-circulation drill holes (14,000 metres) and calculated at a gold price of US$250 per oz.
Thunderbox
In December, after nine months of construction and development,
During its first year, Thunderbox is expected to produce 220,000 oz. gold while operating at full capacity of 2.5 million tonnes per year. Cash costs are estimated at US$110 per oz. in 2003.
Thereafter annual throughput slips to 2 million tonnes as mining encounters sulphide ore. Yearly gold production will then slip to 150,000 oz. at a cost of US$157 per oz.
In all, about 800,000 oz. gold will be produced over a mine life of eight years. Capital costs ring in at A$65 million.
About half of Thunderbox’s production has been hedged at US$293 per oz. through Macquarie Bank. That figure is US$35 per oz. better than assumed in the bankable feasibility study.
Reserves total 10.9 million tonnes averaging 2.43 grams gold, based on a gold price of US$254 per oz. and a cutoff grade of 0.7 gram for oxidized material and 1.1 grams for primary material.
LionOre owns 60% of the Wildara joint venture, which holds Thunderbox. Australia’s Dalrymple Resources holds the remaining 40%.
Cerro Bayo
The orebody hosts a series of parallel to sub-parallel vein systems. So far, the combined Cerro Bayo zone has been outlined over a 2.5-km strike length and a width of 1 km. At last count, the property held reserves of 530,000 tonnes averaging 6.2 grams gold and 333 grams silver per tonne, with an additional resource of 530,000 tonnes grading 2.7 grams gold and 171 grams silver.
Coeur expects Cerro Bayo’s annual production to climb to 80,000 gold-equivalent ounces by 2003.
At Cerro Bayo, wider-than-expected veins (primarily the Lucero vein) required expanded stope development and cut into production. Coeur d’Alene expects silver production to double and gold production to increase by 50% during the fourth quarter. Cash costs are expected to fall by about 30% to US65 per oz. silver.
For all of 2002, the mine is expected to produce 3 million oz. silver and 44,000 oz. gold.
Montreal-based
The open-pit operation, formerly known as Jean Gobele, was built at a cost of US$12.4 million. Managem, a Moroccan company that owns a 50.5% equity stake in Semafo, covered the bill.
Miners are extracting 888 tonnes of ore daily at a stripping ratio of 9-to-1, which translates into annual production of 60,000 oz. gold. Reserves are expected to last four years, with stripping ratios pegged at 9-to-1.
The life-of-mine cash cost is expected to be US$168 per oz., or US$11 more than originally predicted. Semafo has sold forward 160,000 oz. at an average price of US$292.50 per oz. Based on a 10% discount rate, the internal rate of return rings in at 50%; the net present value, at US$6.5 million.
Storliden
Near Skelleftea, Sweden, North Atlantic Natural Resources (NAN) commissioned the Storliden copper-zinc mine in September. It represents the first new mine in that country in more than a decade.
The underground mine was developed as a joint venture with Boliden at a budgeted capital cost of US$15 million. Boliden acts as the principal contractor and provided the startup capital in the form of a credit facility. North Atlantic will pay back the loan from 75% of the initial revenue generated from the project after mining, milling and marketing costs, as well as a $5-million sunk cost. Payback is anticipated in less than 18 months. Pretax profits after costs are split between NAN, with 66.6%, and Boliden, with 33.3%.
A volcanogenic massive sulphide deposit, Storliden hosts copper, zinc, gold and silver. Grades are as high as 33% zinc and 8% copper. The property was discovered by North Atlantic in 1997 during an airborne electromagnetic survey. Drilling defined a resource of 1.8 million tonnes averaging 10.3% zinc and 3.4% copper, plus 0.25 gram gold and 24 grams silver per tonne, with 20% dilution.
Dukat
silver concentrate was being produced as a result of both open-pit and underground mining.
Pan American says it will report production estimates only when mine production reaches sustainable levels and export approvals are received.
The mine is being managed by Serebro Magadana, which in turn is owned 80% by Russian-based Polimetall and 20% by Pan American.
During the third quarter of 2000, the silver producer wrote off its entire investment in Dukat.
The battle over the project began in late November 1999, when a package of fixed mine site assets, including the mill building, was auctioned off by creditors of the bankrupt Dukat mine. The Kaskol Group, a Russian machinery and aircraft builder, paid US$12 million for the package. Pan American Silver sought legal options and commissioned a study into the construction of a mill. The company’s legal sorties were unsuccessful, and the construction of a new mill, though technically and economically feasible, would have added US$30 million to the project’s capital cost.
Diluted proven and probable minable reserves at Dukat are pegged at 10.5 million tonnes grading 755 grams silver and 1.54 grams gold per tonne.
Kiena
During the third quarter, Kiena produced 9,511 oz. gold at a cash operating cost of US$258 per oz. and a total production cost of US$287 per oz. During the comparable period of 2001, the mine yielded 18,332 oz. gold at a cash cost of US$223 per oz. and a total production cost of US$270 per oz.
McWatters hopes to resume mining at Kiena, and toward that end recently spent $450,000 on a 5,000-metre, 38-hole drilling program in the hanging wall, between the surface pillar and the 330-metre level. Initial results are said to indicate the presence of significant mineralization 10-100 metres above the main deposit.
Inventory on hand amounted to 75,000 tonnes zinc-in-concentrate at the end of the third quarter.
The mine, a favourite with European smelters because of its high-purity zinc and lead concentrates, produced 4.4 million tonnes zinc and 900,000 tonnes lead from 21 million tonnes of ore between 1981 and 2002. Teck had already reserved $60 million to decommission and rehabilitate the site.
Nanisivik
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