Ketza ups Yukon gold output

Steeped in the folklore of the Klondike and the great gold rush of 1896, the Yukon Territory is once again making a significant contribution to Canada’s cumulative gold output. But this time the production is from hard rock sources rather than the traditional placer or alluvial variety.

Toronto-headquartered Canamax Resources (TSE) and its Edmonton- based joint venture partner, Pacific Trans-Ocean Resources (TSE) recently poured a 902-oz dore bar (mostly gold) at their Ketza River operation about 45 road miles from Ross River. The $24-million capital project (which excludes $8 million in exploration expenditures) should be running up to “spec” by June 1, Canamax President John Hansuld told The Northern Miner during a visit to the impressive gold mining operation.

The underground mining operation at Ketza is currently running at 75% of capacity and the mill at about 350 tons per day. Some of the feed is coming from an 11,000- ton surface stockpile which is development muck from the underground. Head grades are averaging about 0.2 oz gold per ton and low grade material is being fed into the mill until tuneup is completed; this will reduce losses until recoveries reach expectations.

Because the oxide orebodies are flat-dipping (10-35 degrees) and soft, extensive timbering will be required and probably three distinct mining methods: drift and fill, cut and fill and square set stoping. Despite the oxide nature of the ore, however, mine workings have held up well and several exploration drifts have been problem-free for years. So ground conditions may prove to be better than anticipated.

The plant, which is rated at 350 tons per day, was designed by Orocon Inc. of Vancouver, the same group that did the AGIP/Erickson Mount Skukum plant south of Whitehorse and the Erickson mill at Cassiar. The compact carbon-in- pulp (CIP) plant hasn’t had any serious start-up problems.

Like Canamax’s Hansuld, Pacific Trans-Ocean President Frank Agar is very bullish on the reserve potential at Ketza and, subject to increasing those reserves, he sees an eventual mill expansion to 500 tons per day. He said Pacific Trans-Ocean was concerned about the underground’s ability to supply the higher rate and agreed with Canamax on the lower figure. The joint venture expects to spend about $1 million on exploration at Ketza this year and $750,000 has been budgeted for contingencies.

While drifting towards the Break zone, a wide new oxide zone was discovered which The Northern Miner gathers is ore grade. It’s been exposed along a distance of 98 ft over the full width and height of the drift through most of its intersected length. These oxide zones are probably derivatives of lower grade refractory sulphide bodies which could be economic at some point in the future. For the moment, however, oxide material is the most attractive because it’s higher grade, environmentally cleaner and metallurgically simpler.

Many people see the Yukon as exhibiting higher grade potential than the rest of Canada which is not entirely true. Economic gold deposits in the Yukon need that grade advantage because exploration and development costs are higher there — at least in comparison to established gold camps in central Canada.

Even so, with oxide reserves of approximately 500,000 tons grading 0.45 oz (diluted), Ketza should yield (on paper anyway) a higher return than Canamax’s Bell Creek operation near Timmins which incidentally is less than half the grade.

Canamax was formed in 1983 and the company can take credit for initiating flow-through financing which is probably why Ketza is producing today. Five years ago, Canamax was looking at its Midway silver-lead-zinc project (24.5%) on the B.C./Yukon border when, according to Hansuld, company geologists decided to follow the gross stratigraphy north. “Maybe the best thing we got out of Midway was this,” he added.

They focused on the Ketza River area but arrived a few steps behind Pacific Trans-Ocean which had just optioned an attractive gold prospect from Conwest Exploration. A small sulphide reserve had been outlined by Conwest and an even smaller oxide reserve before work stopped in 1959. So Canamax optioned the ground from Pacific Trans-Ocean which played a fairly passive role until a bitter takeover dispute resulted in a change of management in late 1986.

Agar, who played a pivotal role in the development of the Nanisivik mine, is despite other business interests spending the majority of his time with Pacific Trans-Ocean. The company has 7-8 properties in its portfolio and a commitment from CMP Fund for $3 million in flow-through funding for the upcoming year. A large portion of this will be spent at Ketza.

Canamax is funding its participation in the Ketza project through a gold loan as is Pacific Trans- Ocean. Hansuld said that Canamax has drawn down $22 million of its gold loan which leaves additional funds for future expansion. Agar conceded that Pacific Trans-Ocean had more difficulty than Canamax did organizing its gold loan because it had no other production to back it up. But it managed to secure a 20,000-oz gold loan from New York.

Annual gold production from Ketza is expected to be about 50,000 oz at an average cost of $219(US) per oz which doesn’t include capital.