New owner planning to expand Quinsam coal

Expansion of the Quinsam coal mine on Canada’s west coast is planned by the project’s new owner.

“We screened scores of properties before we found what we were looking for,” George Vooro, president of Hillsborough Resources (TSE) said, “and that turned out to be the Quinsam coal mine of Consolidated Brinco — it was the perfect fit.”

With a similar endorsement, Vice-President Eli Eliev identified the mine as “the jewel of the Isle.” The “Isle” is Vancouver Island but this time the jewel is diamond — black diamond.

Hillsborough and Brinco completed their merger earlier this year. The Northern Miner recently visited the Quinsam property with the New Hillsborough owners.

Brinco started test mining in 1986 and commercial production in 1989. An underground section was also opened in 1989 as a trial but the bulk of production came from two open pits.

Pit production was scheduled for 250,000 tonnes per year and underground for a minimum of 175,000 tonnes. In addition, Brinco established a coal washery capable of handling 115 tonnes per hour. Whenever a customer’s ash and sulphur specifications can be met from the raw, crushed and screened coal, the heavy-media cleaning plant is bypassed.

Hillsborough is tackling the mine as a 100% underground operation. The original open pit required a stripping ratio of 10-12-to-1 and has been shut down. The second pit mines a 5-metre-thick seam with a 1.5-to-1 strip ratio. It is seven kilometres from the washery but coal reserves are limited and they are expected to be exhausted by this fall.

Underground access to the seam is made by a triple entry collared in the high wall of the original pit; a single section of room-and-pillar was being mined at the time of the site visit. A second section is scheduled for production almost immediately and a third is planned for July or August. Each section will produce 250,000 tonnes raw coal per year for 1992 sales of 500,000 tonnes clean coal. Production of 750,000 tonnes is anticipated for 1993 and one million tonnes for 1994.

Long-term contracts with Japanese customers are in place for 252,000 annual tonnes and Hillsborough’s marketing consultants expect the increased production can be marketed satisfactorily. New customers in Korea and Taiwan are strong possibilities.

Quinsam coal is a hard, high-quality bituminous (thermal) coal of a class in strong demand for power generation. While the marketing of metallurgical (coking) coal is suffering from a worldwide slackness in steel production, sales of thermal coal are expected to increase substantially. (This assessment is advanced by consultant firm Australian Mineral Economics, which considers the disfavor in which nuclear energy is held as the key to a burgeoning coal demand.)

In addition to expanding mine production, Hillsborough’s priority is to reorganize the handling arrangements of the coal. This reorganization includes the coal’s 31-km road haul to tidewater and loading on to bulk carriers. It will entail silo load-out capability at the mine, storage at tidewater, a deep-sea dock immediately west of Campbell River and a ship loading facility. These facilities are scheduled to be in operation by late 1993 or early 1994.

At the end of February, Hillsborough awarded to Sandwell Inc. of Vancouver the initial phase of a $1.2-million engineering study for the location, design and development of a deep-water coal-loading facility at or near Middle Point, north of Campbell River. The facility will handle vessels of up to 80,000 tonnes capacity. (Current facilities allow for loading on vessels of up to 70,000 tonnes capacity.)

Financing of the underground expansion will require $2.6 million and be provided from internal funds. Cost of the new handling facilities is estimated to be $29 million (final plans are expected this month); financing has yet to be confirmed. The most probable scenario is a combination of debt and internal funds but the possibility of a joint venture for the entire project has not been ruled out, Vooro said.

Quinsam’s coal sells in the range of $40-43 per tonne (FOB ship) — metallurgical coal is more than double this figure — but the mine’s location near tidewater and the ease with which the coal can be mined give Hillsborough a commanding advantage over its competitors.

The coal seam is 2.75-4 metres thick, it has a dip of 8-10, explosive methane gas is negligible and water inflow is slight. The roof and floor of the seam are competent and require rockbolting only. Faulting encountered so far has caused few problems.

Continuous mining machines cut the coal at 3-4 tonnes per minute with 7-tonne shuttle cars delivering to a daylight-bound trunk conveyor. New shuttle cars are now on order and will be of 12-13-tonne capacity. Target production is 61.5 tonnes per manshift; up to 72 tonnes per manshift was being registered at the time of the visit. (Brinco’s average from underground startup to July, 1991, was 31.6 tonnes per manshift.)

As of April, 1991, proven reserves are estimated to be 25.3 million tonnes, with an additional 7.9 million tonnes in the probable category. The company acquired 16,000 hectares of coal rights when it merged with Brinco. The potential of this 30-km-long belt has been estimated by British Columbia government geologists to be in the 200-million-tonne range. The figure is based on geological probability; extensive drilling has yet to be performed. Coal mining was a flourishing industry on Vancouver Island from 1852 until 1966. More than 75 million tonnes were mined on the island; a peak was reached in 1922 with production of 1.75 million tonnes.

Hillsborough is planning for an output of one million tonnes coal by 1994. This production will be from a single mine at the northern end of the field where major reserves are still known to exist.