The global economy took a beating in 1998, perhaps the worst year for commodity prices since 1991, and the outlook for 1999 is believed, by many, to be lacklustre at best. In many cases these hardships have prompted the mining industry to cut the fat out of its operations. Still, a number of companies managed to triumph over the negative market conditions and start up mines that are economically viable.
The most notable mine opening of the past year was the Ekati diamond operation in the Northwest Territories. Ekati is 51%-owned and operated by BHP Diamonds, a division of Australia’s
Situated 300 km northeast of Yellowknife, the mine is Canada’s first diamond producer and one of the 15 largest diamond mines in the world. It was officially opened in October and open-pit mining is under way at the Panda Pipe, one of five kimberlites in the mine plan. Three of these — Panda, Koala and Fox — are near the processing plant, while Sable is 17 km to the north, and Misery is 29 km to the southeast. All five pipes will be mined by open-pit methods, whereas underground mining is to be continued at the Panda and Koala kimberlites.
Ekati is expected to produce at least 3.5 million carats per year from reserves that weigh in at 65.9 million tonnes grading 1.09 carats per tonne (fully diluted). The average value of the diamonds has been set at US$84 per carat for all five pipes. The Panda pipe has the highest value per carat: US$130.
Another Canadian mine that officially entered production was
The project began with a minable reserve of just over 14 million tonnes grading 3.17% nickel and 0.88% copper. The total, project-wide resource, in all categories weighs in at 22 million tonnes grading 3.06% nickel and 0.87% copper. Raglan’s Zone 2 deposit is currently being mined by open-pit methods, while the Katinniq deposit is subjected to underground extraction.
Other pits will be brought on stream over the next five years. Stripping of Zone 3 is slated for this year.
Kemess South hosts a minable resource of 204 million tonnes averaging 0.22% copper and 0.62 gram gold per tonne, equivalent to 990 million lbs. copper and 4.1 million contained ounces gold. The estimated average cash cost is pegged at US$128 per oz., net of copper credits valued at US80 cents per lb.
The Glimmer mine in northeastern Ontario began producing on the first day of 1998. Operator
Minable reserves at Glimmer are pegged at 240,000 contained ounces at an average grade of 0.415 oz. gold per tonne.
Closures
On the flip side, four Canadian mines were shut down over the past year as a result of poor commodity prices.
In April 1998,
At the start of 1997, sulphide reserves at Gibraltar totalled 142.5 million tonnes grading 0.3% copper and 0.009% molybdenum, whereas oxide reserves were estimated at 3 million tonnes averaging 0.27% copper. The mine was slated for closure by the end of 1998. However, privately owned NGMT Resources, made a bid for the mine in an effort to keep it alive. Under an agreement with Boliden, NGMT was required to secure financing commitments sufficient to enable the purchase of half of Gibraltar’s net working capital (about $4 million) and to operate the mine for at least the next four years. Boliden figured that the total financing required to keep the mine running would be at least $20 million. However, NGMT was unable to raise the necessary funds and the agreement was nixed. Boliden has begun to shut down the mine, and full closure is expected to be completed by February 1999. About 280 people will lose their jobs as a result.
Meanwhile, giant nickel miner
In early February 1998,
Foreign mines
On the international scene, Canadian companies are faring relatively well.
In July 1998, Boliden produced the first copper cathode at the Lomas Bayas mine in northern Chile. The US$244-million project was one of the key assets acquired by Boliden in its takeover of
The deposit is estimated to host 12 million tonnes grading 2% copper, underlying a gossan cap containing a minable reserve of 1.7 million tonnes grading 1.7 grams gold per tonne, or 101,700 contained ounces.
The Leopard fissure, which hosts a resource of 3.8 million tonnes grading 0.753 carat, is one of two fissures currently being developed on farms wholly owned by SouthernEra. The other, Sugarbird, hosts 4.48 million tonnes at an as-yet-undetermined grade.
In August, commercial production began at SouthernEra’s 40%-owned M1 pipe, and since then more than 359,000 carats from 57,873 tonnes have been mined at a recovered grade of 6.2 carats per tonne. This grade, however, is skewed by the unexpectedly rich overburden and is expected to drop to the projected recoverable grade of 2.25 carats per tonne as primary kimberlite is reached.
At last report, M1 hosted minable reserves of 736,00 tonnes at a recoverable grade of 2.25 carats per tonne. The reserves account for 15% dilution, are estimated to a depth of 100 metres and are sufficient for 2.5 years of production at current rates.
Bolivar Goldfields (bvg-t) started mining at its Tomi gold mine in Venezuela’s El Callao district in July. Work on site is continuing to i
ncrease production to the target rate of 1,400 tonnes per day by the year’s end. At last report, the Tomi project hosted a minable reserve of 2.7 million tonnes grading 3.68 grams gold per tonne.
Toronto-based junior
During March,
US producers
American producers were also busy over the past year. Notable mine openings include:
Homestake Mining ‘s (HM-N) Ruby Hill in central Nevada. Mining is focused on the West Archimedes orebody, which, at last report, contained 7.6 million tons grading 0.099 oz. gold per ton, equivalent to 760,000 contained ounces. The reserve consists of 1.9 million tons of material grading 0.23 oz. gold and 5.7 million tons at 0.053 oz. gold per ton.The East Archimedes deposit contains a resource of 7.2 million tons grading 0.073 oz. gold, equivalent to 526,000 contained ounces. Homestake plans to gain access
to this mineralization by deepening and expanding the main pit eastward.
Newmont Gold (NGC-N) added another feather to its cap when it started up the La Herradura mine in northern Mexico. Newmont owns 44% of the heap-leach mine with Penoles, Mexico’s largest mining company, holding the remainder and acting as operator.La Herradura hosts proven and probable reserves of 54.4 million tons grading 0.031 oz. gold per ton, plus 48 million tons grading 0.037 oz. gold classified as “mineralized material.” Capital costs for the open-pit operation rang in at about US$75 million.
Alta Gold (ALTA-Q) started producing gold at the Olinghouse mine near Reno, Nev., in September. Full production at the annual rate of 100,000 oz. is expected to be achieved shortly. Average cash costs are projected at less than US$200 gold per oz. Proven and probable reserves stand at 12.2 million tons grading 0.04 oz. per ton, equivalent to 512,800 oz. Capital costs of the project are expected to be about US$18 million.With the first gold pour at the Ken Snyder mine in Nevada, the royalty sisters have graduated to gold producer status.
Franco-Nevada Mining (FN-T) andEuro-Nevada Mining (EN-T) are equal partners in the Midas joint venture. The operation, billed as one of the highest-grade and lowest-cost mines in the U.S., is being built at a capital cost of US$84 million. Cash costs are estimated to fall below US$80 per oz., not including silver credits. Exploration to date at the Midas property has generated a global resource of 6 million oz. gold-equivalent, which includes minable reserves of 2.17 million tons grading 1.04 oz. gold and 11.65 oz. silver per ton (or 2.75 million gold-equivalent ounces). These reserves were calculated at US$300 per oz. gold and US$6 per oz. silver, and at a cutoff grade of 0.25 oz. gold.More than 40,000 tons of ore have been stockpiled and separated by grade (1 oz., 2 oz. and above 3 oz.), and underground development is well-advanced. The mine is expected to reach full commercial production early next year at an annual rate of 250,000 oz. gold-equivalent.
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