MINING IN CANADA — Development work places New Britannia back on track

First-quarter gold production at the New Britannia mine, situated 128 km east of Flin Flon, Man., has surpassed expectations by 7%. Moreover, cash costs continued to decline and underground drilling indicates good potential for augmenting resources.

The mine, which is owned equally by TVX Gold (TVX-T), the operator, and High River Gold Mines (HRG-T), cranked out 23,369 oz. gold during the 3-month period and is projected to produce 92,500 oz. for the calendar year.

Cash costs during the quarter averaged US$251 per oz. gold, well below the 1998 full-year target of US$260.

High River attributes the reduction in costs to an aggressive 1997 development program that succeeded in developing a year’s worth of ore prior to production.

The development program, which focused on the 3,000-ft. level, confirmed that the mine’s three ore zones not only continue at depth, but increase in both grade and width. At present, underground drill crews are endeavoring to upgrade this mineralization into the resource category. As a result, the mine life, previously estimated at seven years, is expected to increase.

Last year’s development program consisted of 1,641 ft. of drifting and 49,563 ft. of diamond drilling in 88 holes. The Dick and Ruttan zones were found to continue at depth, from the 2,300-ft. level down to the limit of drilling on the 3,150-ft. level.

The best of the 12 key holes that defined the Dick zone were: * hole 43, with 0.4 oz. gold per ton over 24 ft.;

* hole 24, with 0.21 oz. over 33 ft.;

* hole 81, with 0.23 oz. over 15 ft.;

* hole 25, with 0.31 oz. over 18 ft.;

* hole 93, with 0.24 oz. over 17 ft.; and

* hole 20, with 0.24 oz. over 20 ft.

Five key holes that intersected the Ruttan zone contained the following intercepts:

* 0.18 oz. gold over 23 ft. in hole 71;

* 0.23 oz. over 12 ft. in hole 202;

* 0.24 oz. over 30 ft. in hole 42;

* 0.15 oz. over 40 ft. in hole 201; as well as

* 0.11 oz. over 33 ft. in hole 39.

New Brittania, which entered production in November 1995, is now understood to be a relatively thick deposit with good vertical and horizontal continuity. The mineralized structures remain open at depth and show every indication of continuing well below the 3,000-ft. level, High River reports.

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Development problems

In its first year, the mine was planned to operate at an annual rate of 100,000 oz. gold, with cash costs averaging US$210 per oz. Operators experienced some development problems and, as a result, New Britannia produced only 70,000 oz. in 1996 at around US$315 per oz.

According to a report by the brokerage firm T. Hoare & Co., the development problems and production shortfalls are attributable to two factors: first, although the mine was well-developed at the surface, TVX failed to carry out sufficient underground development work; and second, an insufficient amount of definition drilling was completed, and thus, the location of some of the ore was incorrectly inferred.

However, as the first-quarter production figures attest, these and other problems have been overcome through development drilling, and the operation is now on track to reach its production targets.

New Britannia is the second mine to have operated on the same property, and from the same orebody. The Nor-Acme mine operated from 1949 and produced 620,000 oz. gold. But by 1958, costs had risen to meet the gold price and leasehold operator Britannia Mining & Smelting closed the mine. It left the property to Nor-Acme Mines, which tried diligently over the succeeding 30 years to prove more tonnage. Nor-Acme’s careful preservation of drill logs and other development information from those years turned out to be important in later exploration.

In 1987, Nor-Acme dealt an option on the property to High River, which set about dewatering the workings and drilling from the lowest accessible levels of the mine. The holes intersected enough mineralization to interest the gold exploration subsidiary of Inco, which took an option from High River.

But after delineation work was completed, the deposit was abandoned.

Nor-Acme was merged into High River late in 1988.

When TVX took over Inco Gold’s interest in 1991, the option was allowed to lapse, but a 1994 joint-venture agreement between TVX and High River took the deposit to the feasibility stage. TVX’s decision, in January 1994, to buy equipment from Asamera Minerals’ Cannon mine in Wenatchee, Wash., helped to make New Britannia a profitable producer.

The purchase of the Cannon mill, including a grinding and flotation circuit, saved the project about $4 million and six months of construction time. The deposit went from feasibility to production in 16 months, and the first ore was hauled in August from a decline at the No. 3 zone, an orebody on an adjacent property acquired from prospector Bruce Dunlop and consolidated with the Nor-Acme property.

To develop the new Nor-Acme zones, the existing 1,960-ft. shaft was deepened to 3,300 ft. Extensions of the new shaft were driven at the 3,000-ft. level for development and at the 3,100-ft. level for a crusher station. A pair of used hoists from the Denison mine at Elliot Lake, Ont., was bought for about 20% of the cost of new equipment. They can handle 4,000 tons per day from a 6,000-ft. depth — about twice the capacity New Britannia requires.

At last report, in late 1995, minable reserves were estimated at 4.2 million tons grading 0.17 oz. gold per tonne.

The gold deposits at New Britannia are in quartz-carbonate replacement zones in volcanic rocks. The replacement zones, which can be up to 100 ft. thick, are developed near northerly dipping faults that splay off a relatively shallow reverse fault that strikes roughly southeasterly. The gold occurs as free gold grains with arsenopyrite and other sulphides.

The deposit is chiefly mined by open-stope longhole blasting.