Nuinsco, Echo Bay say Cameron Lake won’t go

After nine years of exploration, the Cameron Lake gold deposit owned by Nuinsco Resources (TSE) has been deemed uneconomic. The conclusion is part of a feasibility study completed by Wright Engineers, which was commissioned by Echo Bay Mines (TSE), the largest shareholder of Nuinsco.

The conclusion comes as a blow to Nuinsco which has been involved with exploration and development of the property since 1979. During the ensuing years, the deposit’s discovery and development became a catalyst for renewed exploration in northwestern Ontario, in particular the Dryden-Kenora area, which has never had a viable gold mine. Many in the area hoped that the Cameron Lake deposit would become the first.

According to Wright Engineers, an engineering consulting firm, the Cameron Lake deposit requires a minimum gold price of $550(US) per oz inorder to be economic. This is based on a milling rate of 500 tons per day. Mineable reserves total 788,000 tons at a fully diluted grade of 0.194 oz gold per ton, the Wright report says. Based on new equipment, capital costs were estimated at $30.5 million, Douglas Hume, president of Nuinsco, told The Northern Miner. With a 4.5-year projected mine life and costs of $67.50 per ton, the project would be unable to payback or generate an acceptable return at current gold prices.

As a result of the negative report, future underground exploration and development has been deferred and there are no plans for additional exploration of the property.

Despite the setback, Hume remains optimistic about Cameron Lake. “The company is still analyzing the Wright study and is looking at ways to reduce capital and operating costs,” he explained. The Wright study does recommend additional exploration with the objective of expanding reserves and mine life.

Between the 600-ft and 800-ft levels, the B zone, the main mineralized zone on the property, widens and hosts up to 1,000 tons per vertical foot. The zone remains open below 800 ft and along strike, the report says. As a result, Wright recommends deepening the decline ramp to the 850-ft level and deep drilling.

“Echo Bay did a terrific job, the openings are first class and we have access to the deposit,” Hume adds. His task will be trying to reduce capital costs, possibly operating costs, and increasing reserves and mine life with the objective of making the deposit economic.

“We intend to wait for a better gold price,” an Echo Bay spokesman told The Northern Miner. He added that the company has confidence in the project and has no plans to sell it. “It fits well with our plans.”

Echo Bay Mines holds a 53.78% interest in Nuinsco following the purchase of an additional 769,231 shares at 91 per share. The proceeds of the placement, $700,000, will be used to pay off debts owing to Echo Bay and to support ongoing activities.

Echo Bay spent $6.7 million on the underground evaluation program. Combined with prior exploration expenditures made by Nuinsco, the final bill comes to $14 million.