Vancouver — As the venerable Con and Giant gold mines, near Yellowkife, N.W.T., inch their way toward depletion, owner
Development of Hope Bay’s Doris North zone is expected to result in low-cost gold production, from which cash would be generated for exploration.
An independent feasibility study of Doris North calls for a 668-tonne-per-day operation and production of 311,693 oz. gold over a mine life of two years.
“We believe Doris North provides potential for high-grade, high-return and low-risk gold production commencing approximately two years from now,” says Miramar President Anthony Walsh.
The study suggests that at a gold price of US$325 per oz., the mine could pull 467,157 tonnes daily at a projected grade of 21.9 grams gold per tonne. Capital costs are pegged at US$39.3 million and cash operating costs, at US$109 per oz. The pretax rate of return on investment would be 136% with a payback period of 6.6 months.
A ramp would provide access to the underground operation, with mining focused on the Doris Hinge zone and portions of the Central and Lakeshore veins in the limbs of the Doris Hinge. Also, some 9,000 tonnes grading 19.5 grams gold stockpiled at the Boston deposit would be hauled to the mill for processing.
The study proposes a combination of mechanized cut-and-fill and open-stoping, assuming a minimum mining width of 2.5 metres and external dilution averaging 17% at zero grade. Ore would be hauled from underground by truck to a crusher adjacent to the portal, which would feed a modular mill.
Gold would be produced on-site using conventional crushing and grinding with an integrated gravity gold recovery circuit followed by flotation and cyanidation of flotation concentrates.
The mill and facilities are designed for a 10-year life and therefore allow for an extension of operations beyond the 2-year life of the Doris North zone.
Miramar expects permits to be in-hand by the third quarter, allowing construction to begin and major equipment to be ordered by year-end. Startup is planned for early 2005. In 2002, capital expenditures for the acquisition of Hope Bay Gold and exploration and project activities at Hope Bay amounted to at $73.8 million.
This year, the company expects to spend $18.3 million on Hope Bay, including $1.8 million on permitting and feasibility work on the Doris North development project. Some 43,000 metres of core and 4,500 metres of reverse-circulation drilling are planned for the Madrid area and related structures, whereas 9,000 metres will target the Boston deposit at depth.
At last count, the Hope Bay project held measured and indicated resources of 3.4 million tonnes grading 15.4 grams gold, plus an inferred 6.7 million tonnes grading 12.3 grams gold.
On the back of its Yellowknife gold mines, Miramar managed to post net earnings of $600,000 (or 1 per share) in 2002, compared with a loss of $5.9 million (10 per share) in 2001. The gain came despite a production shortfall that saw the aging operations crank out 115,134 oz. gold, down from 129,607 oz. in 2001. The cash cost of producing an ounce of gold was US$246, a slight improvement over the US$257 per oz. tallied in 2001.
Driving the jump in earnings was a higher gold price. During 2002, the company realized US$293 per oz. of gold, compared with US$274 per oz. in 2001. Operating cash flow hit $8 million, compared with $5.5 million, and revenue from gold sales totalled $53.1 million, compared with $54.9 million.
As of the end of 2002, the company had some 66,600 oz. gold hedged at between C$470 and C$478 per oz. through to 2004. During the first three months of 2003, Miramar reduced its number of hedged ounces, and outstanding call options by 24,100 oz., through scheduled deliveries and repurchases of contracts.
“Despite the efforts of our operational team, mine production in Yellowknife was below forecast for the year,” says Walsh. “Mine-site management was successful in meeting many challenges, including recovery from the collapse of the roof of the oxygen plant, which resulted in a four-month shutdown of the autoclave circuit, completion of labour negotiations with the unions at both of the mines, and implementation of a revised operating plan to maximize gold production and extend the economic life of the mines into 2005.”
The Giant mine treated 64,896 tonnes of refractory ore grading 11.82 grams gold per tonne. Recoveries were steady at 88%, generating 23,899 oz. gold, compared with 25,361 oz. in 2001. At the Con operation, some 184,185 tonnes of ore grading 12.75 grams gold was treated, about the same amount as in 2001. However, a slight improvement in recoveries to 92.1% enabled production to rise to 75,799 oz., compared with 75,512 oz. in 2001. On the refractory side, the operation treated 69,499 tonnes of material grading 9.33 grams gold, generating 19,714 oz. gold, down from the 85,946 tonnes processed in 2001 at a grade of 9.64 grams gold, yielding 25,480 oz. Arsenic tailings added 2,524 oz. gold in 2002, down from 3,806 oz. in 2001.
Discovered in 1935 and 1944, the Con and Giant mines poured their first gold bars in 1938 and 1948, respectively. The production estimate for the combined operation is 105,000-110,000 oz. this year, 80,000-85,000 oz. in 2004, and 20,000 oz. in 2005. Cash costs are expected to average US$250 per oz. Depletion of free milling ore is expected in the third quarter; operations will then be converted to refractory ore processing only. Miramar anticipates that the reclamation of arsenic tailings from the Con and Negus ponds will be completed in 2003, with final pond closure scheduled for 2004. Full mine closure is expected by the second quarter of 2005.
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