Less than a year ago, the La Camorra gold mine in eastern Venezuela looked like an expensive hobby.
Operating losses and poor production at the mine had left operator
The mine, which opened in 1994, exploits two structures: a southeasterly striking shear called the Main zone carries most of the ore, and a northeast-striking vein in its hangingwall carries the rest. The Main zone veins dip steeply southward, whereas the so-called Betzy vein is essentially vertical.
Both structures cut a Proterozoic-aged greenstone sequence consisting largely of intermediate tuffs and agglomerates, some of which are remarkably well-preserved underground. Wall rocks show chloritic and propylitic alteration, along with quartz-carbonate-pyrite alteration closer to the veins.
The ground is generally good, with minor shedding of foliated rock on the sides of stopes but rarely any ground-fall problems. That makes it possible to mine out the vein with little dilution. La Camorra started life mainly as a cut-and-fill mine, but most stoping is now accomplished by shrinkage or blast-holing.
The Main zone’s shear-hosted mineralization is the less uniform of the two, forming narrow and often interlaced shoots of quartz-carbonate veins with pyrite and native gold. There is minor hematite and stibnite, and a little molybdenum, but, on the whole, the ore is metallurgically clean.
At the advanced exploration stage, mineralized intersections in the Main zone had often been combined into a wider block, with the expectation that the entire width could be mined. Once the zones were developed, though, it became apparent that narrower stoping (and less dilution) would be far more efficient.
Reinterpretation of the Main zone shows a series of shoots, all raking westward at 45-60. They occupy a strike length of 600 metres, and the deepest known mineralization on the structure is 975 metres deep. At its widest point, in the Main B shoot, the mineralized shear bulges to 16 metres, but it can vanish too, and averages 1-2 metres.
The Betzy, in contrast, is a highly consistent quartz vein rarely more than a metre wide, with high gold grades. The width varies, or, as mine geologist David Howe says, “it can open out as quick as it can close.” The results of recent drilling between the 200- and 400-metre levels of the Betzy vein tell the tale, returning grades of 1.9 to 144 grams gold per tonne over minimum widths of 1.4 metres (and, oddly enough, the 144-gram bonanza was in one of the widest intersections encountered in the program). Monarch has drilled mineralization as deep as 850 metres on the Betzy.
A resource calculated by consulting firm Micon International in November showed 988,000 tonnes grading 23 grams gold per tonne in the measured and indicated categories, plus an inferred 284,000 tonnes, grading 22.8 grams. About 40% of the tonnage is attributed to the Betzy vein.
So with grades like these, how did Monarch go wrong? And how did it go right in 1998, after the price of gold fell?
At the end of 1997, La Camorra looked as if it was headed for a cold, damp grave, with steadily mounting losses and a cash cost of US$366 per oz. in the year’s final quarter. The mine, and the company, were top-heavy, with unusually high overhead costs and a habit of spending money — except on maintaining and renewing the mining fleet, which was showing every sign of neglect.
Writedowns and provisions for restructuring costs, which amounted to US$20 million, had brought Monarch’s losses to US$29 million in the third quarter of the year. The mine was running monthly losses of US$500,000-700,000.
Some large shareholders, impatient with the losses, insisted on a cost-cutting effort that gave La Camorra a new mine manager, Peter Morton, and Monarch a new president, Hans Rheinheimer. The two took on the task of turning La Camorra around by cutting the operation’s workforce to 420 from 663 and by drastically scaling back overhead costs. Yet they still showed a willingness to spend money on production efficiencies, such as US$1 million on additions to the mining fleet.
At the same time, the operation began to be treated like a small narrow-vein mine — the kind the La Camorra deposit could support. Developed from a portal at surface, the La Camorra ramp suffered from too few workplaces, and the ore coming to surface was too low-grade to cover the production costs. To compound the problem, drifts were wider than they really needed to be.
Dilution of ore from stopes that were too wide, and hauling development rock from drifts that were too wide, both took away from the central task of finding and pouring gold.
Tighter controls on stoping improved the dilution picture, with average mill head grade rising to the 14-gram range from 11 grams at the beginning of the year. Essentially, the same zones are being stoped more carefully. “What brings the grade down now is not poor mining practice, but the development rock,” says Howe, who expects that a ramp extension project now being contracted will allow more stopes to be opened up, reducing the need to haul waste.
Another planned improvement is a shaft raised from the existing workings, either internally, to the upper levels of the mine for short-run hauling, or broken to surface. Hoisting from the deeper levels is expected to be more efficient than hauling, and the shaft will free up the ramp for better access between levels.
Renewals to the mining fleet have improved the mine’s performance. But their effect on morale may have been even greater, since the workforce was doubtful that there really was a turnaround. “When we sold the loader,” says Morton, “they thought we’d just get the same old stuff. When they saw the new loader, they noticed. When they saw the new truck, they talked. And when they saw the new jumbo [drill], they started thinking: maybe it’s happening.”
What was happening was a steady decline in costs. The mine’s cash cost fell to US$317 in the first quarter of 1998, dove to US$253 in the second, and settled at US$243 in the third. With the grades under better control, production climbed, even though actual mill throughput dipped in the first two quarters of the year.
Cash flow returned to the black in the second quarter of 1998.
Other cost centres were identified: the mine was paying for three or four motor-generator overhauls per year, at US$26,000 each. Bringing power from the national hydroelectric grid, first estimated to cost US$160,000, was finally done for US$16,000 — less than the cost of a single generator overhaul. Management is now looking at putting in a more efficient centralized pumping system to replace a piecemeal network of sumps, and at better control of steel and powder consumption underground.
There is also a move to shed extra responsibilities that had been imposed by earlier project planning. For example, there had been a permanent camp and kitchen, which is being phased out and replaced by underground lunchrooms and a daily bus to the mine from the town of El Callao. “For a small mine, we couldn’t do those things,” explains Morton.
Production is now scheduled to increase to an annual rate of 75,000 oz. by May of this year, which will demand about 600 tonnes of ore daily.
The La Camorra carbon-in-leach mill had been less of a problem, but closer attention to process control, especially reagent dosages, has trimmed costs there by 10% this year. Recoveries have held at near 95%.
To meet the greater production from the mine, the narrowest bottleneck at the mill will be in the leaching circuit, as the grinding system — two ball mills — had already proved to be able to handle
the expected 600-tonne throughput. Another one or two thickeners will be needed, and better aeration in the principal leaching tank is expected to speed up reaction kinetics and allow for less residence time in the system.
Fewer expensive expatriates are on staff, which has also decreased costs. Monarch had relied heavily on “expats,” who place a greater burden on company-provided services and often command a bigger paycheque as well. “The level of the Venezuelan miner is coming up,” observes Morton. “He’s learning, he’s watching.”
Over the longer term, the ramp is likely to be extended into the 600-metre level, and a mine plan for the resources at that depth is in the works. Monarch has US$14.3 million in debt that must be extended, but with the operations turning around, the refinancing can be done more easily. Morton, while cautioning that the mine is not out of trouble yet, sees reason for optimism: “I think we’ll do OK; it’s just a matter of time.”
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