Modernization offers hope for high-cost gold mines

With the price of gold bullion recently sinking below US$360 per oz., mining companies will be facing increasing pressure to keep production costs in line at their operations. Declining precious metal prices and lower inflation this year have begun to dampen the outlook for gold in general, and several of the country’s highest-cost producers are already taking steps to cut costs.

Last year saw a number of gold mine closures in Canada, most of which were caused by technical or economic failures rather than exhaustion of orebodies.

In Newfoundland, for instance, Hope Brook Gold (TSE) is continuing this year with a major program to reduce costs at the Chetwynd mine. By making a series of technical improvements to the mill and effluent treatment systems, the company hopes to get cash costs down to around US$250 per oz. from nearly US$500 during 1989. The mine still hosts proven and probable reserves of 11.2 million tons grading 0.11 oz. gold per ton.

Meanwhile, at Corona’s (TSE) Nickel Plate mine near Hedley, B.C., steps have also been taken to reduce costs at that operation. Among the measures taken last year to increase efficiency at the mine were the installation of a larger crusher, modification of the mill circuit and the purchase of larger mining equipment.

The Nickel Plate mine had an initial capacity of 2,700 tons per day and this has been increased to 4,000 tons per day. Last year, the mill averaged 3,216 tons per day, and a small direct operating profit was achieved.

While the operation remains a high-cost producer, ongoing efforts are continuing by the 175 mine-site personnel to reduce costs. As of Jan. 1, proven and probable reserves for Nickel Plate were reported at 1.57 million tons grading 0.076 oz. gold, with an additional 6.6 million tons grading 0.075 oz. which may be minable depending on economic conditions. During the first quarter, the mill processed an average of 3,469 tons per day, about 22% higher than in the year-earlier period. Total production for the quarter at Nickel Plate was 14,611 oz. of gold.

Elsewhere, at Corona’s 55% owned Renabie mine near Wawa, Ont., mining costs are expected to stabilize this year as the operation experiences higher production rates. Mine development was accelerated last year to ensure higher production rates in 1990.

Record production of 44,500 oz. last year can be largely attributed to improvements that have taken place over the past five years. The company changed mining methods from longhole stoping to trackless sublevel caving, and transferred mining operations to the area of a new internal shaft. Mill capacity was expanded to 700 tons per day from 400 tons per day. A modernization program in the mine and mill also added to increased efficiency at the mine which employs about 180 people.

A large portion of Renabie’s 1990 production has been sold forward as protection against the high-cost mine’s sensitivity to swings in the price of gold.

Cost-cutting and modernization programs have also been initiated at Dickenson Mines’ (TSE) White mine near Red Lake, Ont. Unit costs are projected at US$302 this year, down from US$346 in 1989. In order to achieve increased production and lower costs, the company has intensified its commitment to training. In addition, stope productivity is expected to benefit from the introduction of additional electro-mechanical mucking units. Meanwhile, in the mill, the amalgam circuit will be replaced by a gravity circuit utilizing concentration tables. At year-end, proven and probable reserves for the White mine stood at 3.23 million tons grading 0.32 oz. Some high-cost gold mines 1989 1989 Cash Cost Mine Owner Production (US$/oz)003 Dome Placer Dome 144,135 342 Detour Placer Dome 130,080 325 Bousquet LAC Minerals 110,364 334 Chetwynd Hope Brook 81,607 471 Nickel Plate Corona 79,492 410 White Dickenson 75,600 346 Sigma Placer Dome 69,141 372 Renabie Corona/Barrick 44,519 341 Kremzar Canamax 24,234 346 Francoeur Rouyn/LAC 20,735 345