Ontario mines still power Goldcorp

Goldcorp (TSX: G; NYSE: GG) has been so growth-oriented over the past decade — building new mines across the Americas and snapping up gold assets left and right — that it’s easy to forget sometimes just how productive its Ontario gold mines are.

Goldcorp’s three wholly owned gold production centres in Ontario — Red Lake, Musselwhite and Porcupine — yielded an impressive 1.04 million oz. gold in 2013, or 39% of Goldcorp’s company-wide production of 2.67 million oz. gold last year.

The global reserves and resources at these three Ontario mines total 21.2 million oz. gold, or 19% of Goldcorp’s company-wide total of 112.6 million oz. gold.

The jewel in Goldcorp’s crown remains the Red Lake underground mine in the town of Red Lake in the province’s northwest. Goldcorp rightly calls it its “Canadian cornerstone and the world’s richest gold mine.”

Indeed, after all these years, it’s still Goldcorp’s top-producing mine, cranking out 493,000 oz. gold in 2013. In the first half of 2014, Red Lake produced 184,500 oz. gold, putting it on track to hit 440,000 to 480,000 oz. gold for the year.

The mining method for the quartz-vein deposit is longhole, underhand and overhand cut-and-fill, and the milling rate at two nearby surface facilities totals 3,100 tonnes per day.

Goldcorp describes the surface processing as grinding, gravity concentrating, leaching, carbon-in-pulp, carbon elution and reactivation, electrowinning, bullion smelting and refining, and cyanide destruction, flotation and concentrate handling — “all of which are required to recover the three types of gold in the Red Lake ore.”

For the first half of 2014, the Red Lake output alone accounted for 14% of Goldcorp’s 1.33 million oz. gold production. (Goldcorp’s updated total production guidance for 2014 is 2.95 million to 3.10 million oz. gold.)

At the end of 2013, proven and probable reserves at Red Lake stood at 8 million tonnes grading 9.94 grams gold per tonne for 2.55 million contained oz. gold. Another 4.6 million tonnes grading 16.34 grams gold lie in the measured and indicated resource category, for another 2.41 million contained oz. gold.

That’s enough for at least another 12 years of mine life, which is good news for the mine’s 1,250-person workforce, including contractors.

Within the company, the Red Lake asset still ranks as its highest-grading reserve, outpacing the wholly owned, newly producing Cerro Negro gold mine in Argentina’s Santa Cruz province, with its proven and probable reserves of 18.9 million tonnes at 9.43 grams gold for 5.74 million oz. gold.

While the famed High Grade zone is the golden heart of the Red Lake operation, with its current head grade of more than 45 grams gold per tonne, Goldcorp comments that its recent investments in infrastructure and development have “positioned this renowned mine for many more years of long-term sustainable production.”

Goldcorp’s Cochenour gold project in the Red Lake camp is well advanced, with the existing Cochenour shaft being enlarged and upgraded, and a nearly completed 6 km haulage drift that will soon connect Cochenour to Red Lake’s existing underground infrastructure, allowing Cochenour–Bruce Channel ore to be processed at Red Lake’s Campbell milling facilities. 

First development ore from Cochenour is expected in the fourth quarter, and initial capital expense is pegged at $496 million. Goldcorp says its exploration focus at Cochenour is drilling the Bruce Channel deposit from haulage drifts, currently with seven drills, and nine drills by year-end.

 This year, Goldcorp is also highlighting a discovery at the Red Lake mine named “HG Young,” which has yielded numerous high-grade intercepts. The company is probing it using five drills from surface and rehabilitating existing infrastructure for underground access.

In terms of working with the First Nations near Red Lake, Goldcorp says it has developed a training program for new underground miners. In 2005, the Stope School opened to train new recruits — of which 80% are local First Nations — in the stope method of underground mining. The company says students obtain their Ontario Common Core Certificate, which permits them to work in an underground mine.

 In 2013, Goldcorp signed the Lac Seul Obishikokaang Collaboration agreement that the company says lays the foundation for future benefits for the Lac Seul First Nation, including training and employment opportunities, business and contracting opportunities, and a framework for consultation on regulatory permitting, as well as Goldcorp’s future financial contributions in support of community development.

Goldcorp’s Musselwhite underground gold mine at Opapimiskan Lake, 480 km north of Thunder Bay, is no slouch either, having produced more than 3 million oz. gold since opening day in 1997, including 255,000 oz. gold in 2013. For 2014 the fly-in, fly-out mine is slated to produce another 230,000 to 240,000 oz. gold, with the carbon-in-pulp mill running at 4,500 tonnes per day.

At the end of 2013, proven and probable reserves at Musselwhite were 9 million tonnes at 6.42 grams gold, for 1.85 million contained oz. gold, while measured and indicated resources were 800,000 tonnes at 5.59 grams gold for 140,000 contained oz. gold. That is enough gold for at least another 13 years of mine life.

Goldcorp notes that the 2010 discovery at Musselwhite of the Lynx zone — a zone of higher-grade ore above the cornerstone PQ Deeps underground operation — “has created the potential to significantly enhance economics and extend productive mine life.”

The Porcupine gold-mining complex in Timmins marked its 104th straight year of continuous mining and milling in 2014, and has produced more than 67 million oz. gold so far, including 292,000 oz. gold in 2013.

Output for 2014 is estimated at 290,000 to 305,000 oz. gold.

The Porcupine complex comprises the Hoyle Pond and Dome underground mines, the Hollinger open-pit mine, several large stockpiles and a central mill. Goldcorp says that “progress is steadily advancing on a deep underground [winze] shaft that will increase access to zones such as the TVZ and VAZ in the underground Hoyle Pond mine operation, and significantly extend the mine’s productive life.”

At the end of 2013, proven and probable reserves at Porcupine were 65.6 million tonnes grading 1.44 grams gold per tonne, for 3 million contained oz. gold. Measured and indicated resources add another 193 million tonnes at 1.19 grams gold for 7.4 million contained oz. gold. Porcupine similarly has a minimum 13-year mine life ahead of it, based on current reserves.