Having assumed the reins of the Kemess mine, about 300 km northwest of here,
Speaking at the recent re-opening ceremony, Terry Lyons, Northgate’s CEO, said two factors — new management and changes to the milling processes — augur well for the open-pit operation.
“We feel confident we made a good investment in the mine,” he told The Northern Miner. “This year we are projecting to produce around 280,000 ounces of gold and 55 million pounds of copper at an estimated cash cost of US$160 per ounce after credits for copper. These are ambitious targets, but we believe they are achievable.”
When the mine was commissioned in May 1998 by now-bankrupt Royal Oak Mines, reserves totalled 211 million tonnes grading 0.2% copper and 0.6 gram gold per tonne. Development costs at the time exceeded $600 million, which, notwithstanding $166.2 million in government assistance for infrastructure, only served to plunge the already struggling company deeper into debt.
Kemess was expected to produce 235,700 oz. gold at an estimated cash cost of US$185 per oz. after copper credits. Actual cash costs ran to US$262 per oz.
Unable to service its debt in a weak metals market, Royal Oak slipped into receivership in April 1999, and the receiver subsequently put Kemess up for sale.
The low-grade, high-cost nature of the operation made potential suitors leery of paying the required cash to cover Royal Oak’s secured debt. Last November, after canvassing more than 70 potential buyers, none of which would pay the required US$180 million, the receiver agreed to turn Kemess over to Northgate.
Trilon Financial, Northgate’s largest shareholder, provided most of the cash needed for the acquisition, including a US$145-million bridge loan.
Northgate’s interest in Kemess dates back to June 1998, when the company acquired a portion of a US$120-million debenture issued by Royal Oak. The debenture was secured by a first charge on Royal Oak’s assets, including Kemess.
Kemess was not the first mine that Royal Oak’s Margaret (Peggy) Witte lost to Northgate. In the late 1980s, Witte’s first junior mining company, Neptune Resources, acquired and advanced the Colomac gold project, in the Northwest Territories. Neptune lost control of the project to Northgate, which brought it into production only to close it again within a year as a result of operational and financial problems. Royal Oak acquired the mine and re-opened it in 1994. Colomac was shut down in 1997 after depleting its reserves.
The Kemess mine is accessible by road from Mackenzie along Williston Lake. However, it is a long and difficult drive, and much of the operation depends on air support. Kemess has its own air strip, which is a two-and-a-half-hour flight from Vancouver. The mine employs 435 people and helps fuel the economies of Smithers, Prince George and Mackenzie, among other communities. Mine crews fly in for a 2-week stint of 12-hour shifts, then fly out for two weeks off.
Currently, Kemess is producing 124,000 tonnes of ore and waste per day. The pit at the Kemess South deposit has a low stripping ratio of 1.1 to 1 and contains 163 million tonnes with an average grade of 0.67 gram gold per tonne and 0.23% copper.
The final pit shape will resemble the sole of a shoe extending 1,798 metres east-west and 899 metres north-south. It will reach an ultimate depth of 375 metres.
Northgate has added a third mine shovel and more heavy trucks to transport ore, and developed a long-term maintenance program. Lyons said the mill is well-built and that fine-tuning will improve recovery rates for gold and copper. In order to improve recoveries, the company has added a new thickener at a cost of $2 million.
Equipment
A mining fleet consisting of 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. Each circuit consists of a 10.4-metre semi-autogenous grinding mill and a 6.7-metre ball mill. The ore is then further ground in cyclones and sent through the flotation banks and finally to the concentrate thickener and pressure filter. The concentrate is loaded on to trucks and hauled to a railhead for shipment to Vancouver and on to Japanese smelters.
About 45,000 tonnes of tailings are pumped up to the dam daily. The dam is composed of 9 million cubic metres of fill material that hold back 22 million tonnes of tailings. This year, Northgate plans to raise the dam by 13 metres, which will require 1.5 million cubic metres of fill placement. The dam is designed to reach an ultimate height of 155 metres, span a width of 1 km and hold back 220 million tonnes of tailings. It 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, and three collection pipes transfer any overflow to the seepage pond.
Geology
The Kemess deposit is hosted by a quartz monzonite intrusion that was subjected to supergene weathering during the Cretaceous age. The reserves are divided into a leached cap, a supergene enrichment zone and a hypogene zone. The hypogene and supergene ores will be mined and milled separately. The leached cap contains almost 18 million tonnes of low-grade copper averaging 0.059% copper, as well as higher gold grades averaging 0.77 gram per tonne. The combination of the leached cap and the supergene zone amounts to 45.6 million tonnes averaging 0.223% copper and 0.76 gram gold and represents about 23% of reserves. Mineralization in this zone consists of native copper, chalcocite and bornite. Fine native gold occurs in clots of hematite. The supergene ore requires more time in flotation and finer grinding, and is difficult to de-water.
The remaining 77% of the life-of-mine millfeed is hypogene material, which is significantly harder than the supergene ore and generally requires about 1.5 times more grinding. Mineralization in the hypogene zone consists of chalcopyrite in quartz stockwork veins. Native gold occurs as inclusions in ore peripheral to the grains of chalcopyrite. The hypogene ore contains about 23% less gold than the supergene material.
Owing to the presence of oxide copper, supergene recoveries for copper as well as gold are between 70% and 75%, whereas hypogene ore recoveries are 85-90% for copper and 75-80% for gold. Lyons said optimum mill recoveries had not yet been reached. Comparatively, during the first nine months of operation under Royal Oak, supergene recoveries averaged 53.1% for copper and 44.6% for gold.
Using a gold and copper price of US$300 per oz. and US80 per lb., respectively, Northgate estimates Kemess is capable of generating $55 million in earnings before interest, taxes and depreciation.
Current reserves are sufficient to sustain another nine years of operation, though a $1.5-million exploration program, slated for this year, could add to this figure.
“There are some promising areas that we control around the mine, so we expect to be able to extend the mine’s life substantially,” said Northgate President Ken Stowe. “We will be doing a lot of exploration work, starting this spring.”
One key target is known as Kemess Centre and is situated about 1 km north of Kemess South.
“What we think we have is the actual root system that fed the Kemess South deposit,” said Chief Geologist Michael Hibbit. “We believe Kemess Centre will yield similar mineralization to what is seen at the base of the Kemess South deposit.”
Another area of promise is Kemess North, about 4 km from the South deposit. The resource here consists of 74 million tonnes of material grading 0.34 grams gold per tonne and 0.09% copper.
“We want to see if we can bring the higher-grade portions into production while, at the same time, mining the South deposit,” said Hibbits. “Of course, if it’s large enough, we’ll bring it into p
roduction on its own.”
He added that the entire 31-sq.-km property has been thoroughly prospected but that little has been done in the way of advanced exploration.
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