Smithers, B.C. — After streamlining operations at Kemess South, 250 km north of here,
The Kemess mine is in the mountains of north-central British Columbia at an elevation of 1,350 metres. The operation employs 319 people and contributes to the prosperity of Smithers, Prince George and Mackenzie, among other communities. The mine site is accessible by road from Mackenzie along Williston Lake. However, it is designated as a supply and concentrate route for trucks only. Much of the operation depends on air support. Kemess has its own airstrip, which is a two-and-a-half-hour flight from Vancouver. Mining crews fly in for a 2-week stint working 12-hour shifts, then fly out for two weeks off.
Ongoing drilling at Kemess North is part of a 10-hole, 5,200-metre campaign aimed at expanding the existing resource, which stands at 360 million tonnes grading 0.154% copper and 0.3 gram gold per tonne. Northgate budgeted $500,000 for the program, which began in early June. Hole 11 returned 248 metres grading 0.4% copper and 0.91 gram gold per tonne, starting at a down-hole depth of 146.3 metres, prompting Northgate to continue drilling until the end of October. If weather permits, six more holes will be sunk. The mineralization remains open to the north, northwest and northeast.
There are two basic rock types at Kemess North: Takla volcanics and a quartz monzodiorite. The volcanics overlie a porphyry dome, and the current resource is based on a gold-copper pyritic halo within the volcanics at a site dubbed the Centre Cirque. This year, drilling has progressed northeast over a ridge and through the volcanics.
“The Kemess North area was continuously drilled off from 1975 through to 1992,” says Michael Hibbits, the operation’s chief geologist, who adds that the previous exploration holes were typically short and rarely focused on the quartz monzodiorite.
“We’ve identified a trend of increasing grades and gold-copper ratios as we’ve moved to the northeast,” he says. “It’s all hypogene material, and we have already done some metallurgy and it looks good.”
Once drilling is completed, Northgate will recalculate its mineral inventory at Kemess North. Plans for next year include road development for easier drill access, as well as environmental studies, further metallurgical tests and grassroots work on several targets in the 308 sq. km. that surround the Kemess mine.
Northgate says it will not bring Kemess North on-stream until Kemess South is depleted.
The company has commissioned a scoping study on the feasibility of transporting ore from Kemess North to the mill site. Two methods of transport are being evaluated: truck haulage on an access road, and conveyor transport on an overland route (possibly in combination with a tunnel). Truck haulage is considered disadvantageous because it would entail massive earth-moving and require a large fleet of trucks. Therefore, preference is being given to the conveyor option, which would stretch 8 km along a surface and underground route. The capital cost of conveyor transport is pegged at $30-40 million.
Northgate assumed control of Kemess South from receiver PriceWaterhouseCoopers in late 1999. Kemess was originally commissioned in May of 1998 by now-defunct Royal Oak Mines. The total development cost of the mine was estimated to exceed $600 million, which contributed to the company’s downfall.
Trilon Financial, Northgate’s largest shareholder, provided most of the cash needed for the acquisition, including a US$145-million bridge loan.
Northgate recently closed a 6-year, US$100-million syndicated project loan designed to re-finance part of the original loan. In addition, the company has raised US$10 million for working capital.
Using a gold price of US$280 per oz., a copper price of US90 per lb. and a U.S. exchange rate of $1.48, Northgate estimates that Kemess is capable of generating earnings (before interest, taxes and depreciation) of $54 million per year over the mine’s life. Life-of-mine cash costs (net of byproducts) are pegged at US$150 per oz. gold.
At the beginning of the year, Kemess South’s proven reserves stood at 146 million tonnes grading 0.65 gram gold and 0.23% copper. Measured resources amounted to 56.1 million tonnes grading 0.39 gram gold and 0.161% copper.
Kemess has been improved considerably since Northgate assumed control. For example, the company has:
– bought six additional Euclid haulage trucks to help meet production targets;
– changed its tire supplier and implemented a tire maintenance program, thereby improving tire life by 40% and slashing costs by $500,000 per year;
– corrected problems with the bolts that secure the ball mill flanges in the mill, thereby reducing the mill’s downtime;
– reduced maintenance contractors by 90% and canceled all previously established rental contracts;
– negotiated an agreement with an air carrier to reduce personnel and freight costs and improve service;
– inked a concentrate agreement with Noranda’s Horne smelter for 100% of production, beginning in February 2002;
– modified the mill circuit by installing more efficient concentrate thickeners and flotation cells;
– modified concentrate shed load-out facilities and installed truck weigh scales;
– reduced fuel delivery charges by implementing freight and fuel back-hauls;
– purchased and installed a second primary transformer as a back-up unit;
– implemented industry-recognized safety programs, such as the 5-point safety system;
– reorganized and assembled a performance-oriented management team; and
– accelerated construction of a tailings dam to match permit requirements and deadlines.
These and other steps have translated into a 50% improvement in mine production, as well as a $20-million (annualized) increase in net smelter returns.
During the second quarter of 2001, the mine cranked out 68,023 oz. gold and 6,440 tonnes copper at a cash cost of US$185 per oz. (net of byproduct credits). The average millhead grade was 0.9 gram gold and 0.24% copper. Recoveries were pegged at 65% gold and 72% copper. By comparison, in the first quarter of 2000, the mine produced 57,700 oz. gold and 4,940 tonnes copper at a cash cost of US$239.25. The average millhead grade was 0.88 gram gold and 0.23% copper, and recoveries were pegged at 62% gold and 66% copper.
This year, Northgate hopes to produce a total of 265,000 oz. gold and 31,750 tonnes copper at a cash cost of US$190 gold per oz. (again, net of byproduct credits).
Total production at Kemess in 2000 totalled 225,994 oz. gold and 22,860 tonnes copper, while cash operating costs averaged US$248 gold per oz. The average millhead grade was 0.778 gram gold per tonne and 0.22% copper. Recoveries were pegged at 64% and 74% for gold and copper, respectively.
Upon commissioning, Kemess was expected to produce 235,700 oz. gold at a cash cost of US$185 per oz. By the end 1998, after three months of production, Royal Oak had produced 70,000 oz. gold and 9,430 tonnes copper at a cash cost of US$262 gold per oz. Gold and copper recoveries were 56% and 63%, respectively; millhead grades, 0.61 gram gold and 0.22% copper.
The open-pit mine is operating at the daily rate of 124,000 tonnes of ore and waste. Minable reserves at Kemess South deposit have a low stripping ratio of 1.18:1.
The final shape of the pit will resemble the soul of a shoe extending 1.6 km by 0.75 km with a maximum depth of 375 metres. The remaining mine life is projected at eight years (146 million tonnes)
Three electric hydraulic shovels and eleven 240-tonne haulage trucks transfer run-of-mine material from the Kemess South Pit to the primary crusher. From there, two underground conveyor belts feed two grinding circuits at the daily rate of 45,000 tonnes of ore. Each circuit consists of a 10-metre semi-autogenous grinding mill and a 6.7-metre ball mill. The ore is then further ground in the cyclones and sent though the flotation banks and cleaner circuit and finally to the concentrate thickener and pressure filter. The concentrate is loaded on to trucks and hauled to Mackenzie by truck and then by rail to Rouyn-Noranda, Que., for smelting.
Two types of concentrate are produced; a hypogene concentrate, which grades 23% copper and averages 50-60 grams gold per tonne; and a supergene concentrate which grades 30% copper and averages 80-150 grams gold. The mine produces 150,000 tonnes of concentrate per year.
The tailings are pumped over 7.5 km (150 metres vertically) up to the dam via two rubber-lined steel pipelines. Two 9,300-kW pumping stations force about 45,000 tonnes of tailings through the pipeline per day.
Once completed, the tailings dam will measure 1 km long and 150 metres high. The dam has a design capacity of 220 million tonnes of tailings and is equipped with an upstream fresh water diversion system and a seepage recycle pond downstream. The entire downstream section of the dam is underlain by a filter. Three collection pipes transfer any overflow to the seepage pond.
The Kemess deposit is hosted by a quartz monzonite intrusion, which was subjected to supergene weathering during the Cretaceous-age. The reserves are divided into a leach cap, a supergene enrichment zone and a hypogene zone. The leach cap contains about 6% of the reserve, whereas the supergene material constitutes 12% and the supergene zone, 82%.
The combination of the leach cap and the supergene zone totals 45.6 million tonnes averaging 0.22% copper and 0.76 gram gold. Mineralization consists of native copper, chalcocite and bornite. Fine native gold occurs in clots of hematite. The supergene material requires more residence time in flotation, higher slime production and a finer grind; also, it is difficult to de-water. The remaining life-of-mine mill feed is classified as hypogene material. It is significantly harder than the supergene ore and generally requires 1.5 times more grinding. Mineralization in the hypogene zone consists of chalcopyrite in quartz stockwork veins. Native gold occurs as inclusions within ore peripheral to the grains of chalcopyrite. The hypogene material contains about 23% less gold then the supergene material.
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