The estimate is based on a gold price of US$325 per oz. and a copper price of US95 per lb.
Plans call for development of an open-pit operation in 2005, with prestripping to begin a year later. A primary crusher, semi-autogenous grinding (SAG) mill, and truck maintenance depot will be built initially. By the fourth quarter of 2006, ore would be crushed and milled to minus half an inch and sent south 7 km to Kemess South’s mill and flotation circuit.
Northgate expects the Kemess North and South pits to be running in tandem beginning in late 2006. The annual mining rate is projected to be 50 million tonnes; annual mill throughput, 25 million tonnes. Kemess North’s life-of-mine stripping ratio is pegged at 0.6-to-1.
By late 2009, when Kemess South is depleted of ore, the mine’s two SAG mills and crusher will be moved to Kemess North, where the three mills will combine for an annual throughput rate of 34 million tonnes until 2019. Ultimately, the depleted South mine will be used for tailings impoundment.
Between 2004 and 2009, Kemess is expected to produce 283,000 oz. gold at a cash cost of US$173 per oz., falling to an average of 228,000 oz. at US$135 per oz. over the subsequent decade. Cash costs over the operation’s entire 16-year mine life are pegged at US$150 per oz. Conversely, copper production over the same periods will be 77 million and 117 million lbs., respectively.
During the second quarter, Kemess South produced 69,226 oz. gold and 19.5 million lbs. copper. In all, the mine is expected to produce 293,000 oz. gold and 73.5 million lbs. copper in 2003, as mining moves back to higher-grade areas of the pit.
At the end of 2002, Kemess South hosted proven reserves of 109.4 million tonnes grading 0.71 gram gold and 0.23% copper, or 2.5 million contained ounces of gold.
Kemess North’s hypogene ore is similar to that of Kemess South. So far, metallurgical tests indicate life-of-mine recoveries of 62% for gold and 89% for copper. Fine-tuning of the Kemess South flotation circuit should improve recovery assumptions used in the final feasibility study.
The proposed operation generates an internal rate of return of 11% at a gold price of US$375 per oz., a copper price of US95 per lb., and an exchange rate of C$1.50 per U.S. dollar. Projected capital costs are $157 million, with annual sustaining capital pegged at $5.5 million between 2010 and 2019.
Says Northgate CEO Ken Stowe: “The results of the prefeasibility study demonstrate that Kemess North is a low-risk investment opportunity that leverages our existing asset base at Kemess South and returns substantial incremental cash flow over a total mine life of sixteen years.”
Northgate expects to complete an ongoing final feasibility study at Kemess North in the first quarter of 2004. Currently, the company is carrying out geotechnical and condemnation drilling, as well as pit design and environmental studies.
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