Revived Goldstream mine on verge of commissioning

The Goldstream mine should be ready for commissioning by mid-May, according to 50% owner and operator, Bethlehem Resources (TSE).

Bethlehem President Henry Ewanchuk said he expected the startup to be on time and within budget.

The Goldstream mine is near Revelstoke, B.C., with the balance of the operation owned by Goldnev Resources.

The two companies purchased the mine from Noranda in 1989 for $5.75 million and proceeded with a feasibility study with a view to bringing the mine back into production.

The Goldstream mine was originally put into production by Noranda in 1983 at a cost of about $72 million but was forced to close in 1984 as a result of a drop in copper prices and lower-than-expected recoveries.

Noranda did its feasibility based on a copper price of US$1 per lb. only to watch prices drop to US60 per lb. after the mine was opened. Noranda also ran into problems with recoveries due to the oxidized surface ore being mined in the open pit. The oxidized ore lowered zinc recoveries to the single digit level from an expected recovery of about 50%. Noranda spent a great deal of time and money altering the mill circuit in an attempt to bring up the zinc recoveries before shutting down the operation. At the time of the mine’s closure, minable reserves were reported at 3.5 million tonnes grading 3.51% copper and 2.50% zinc.

Bethlehem plans to mine strictly from underground and increased the cutoff grade to 3% copper from 2%. As a result, ore reserves dropped to 1.86 million tonnes grading 4.81% copper and 3.06% zinc. The reserve figure includes a 30% dilution factor.

Financing for the mine’s reactivation was secured from Nippon Mining and Sumitomo in late 1990 although completion of the deal was temporarily delayed by the hostilities in the Middle East.

The two Japanese companies agreed to provide up to $7 million with an added provision for the advance payment for concentrates. The advanced payment provision lowers the joint venture’s working capital requirements. Capital cost to bring the mine back on stream is estimated at about $4.5 million, primarily for underground development work.

Noranda developed the underground down to the 655-metre level with a decline winding down through the ore zone. The ore zone consists of a single continuous bed of massive and disseminated sulphides dipping to the north at about 35 and plunging to the northeast at about a 50 rake. The deposit thickness varies from one to seven metres.

The top of the underground workings sit at the 830-metre level separated from the open pit above by a crown pillar.

Ore reserves do not include the pillar which Ewanchuk estimated contains in the order of 100,000 tonnes.

Subdrifting between the 830-metre level and 770-metre level on 7.5-metre centres has started with ore being stockpiled on surface. Mining will proceed by slashing out the ore between the intermediate drifts.

Tonto Mining was hired as the mining contractor. Brian Kynoch, vice-president of engineering at Bethlehem, said Tonto is paid using formula based on its cost per tonne, as well as the grade.

The initial mining process will be something of an experiment to determine the amount of pillaring required. Ewanchuk said he expected to leave about 15% of the material as pillars, some of which may be retrievable at a later date.

He noted the ground appears to be very stable with no evidence of rock falls in the workings after over six years.

Noranda did do some stoping, removing about 150,000 tonnes of ore. Ewanchuk noted one stope is over 150×30 metres wide and has remained stable. At a nominal operating rate of about 1,100 tonnes per day, the mine is expected to produce an average of 16.2 million kg (35.8 million lb.) copper and 3 million kg (6.6 million lb.) zinc over the mine’s 5-year life. Ewanchuk noted this production rate was an average, and first-year production would be slightly less due to lower grades in the initial phases. Production rates assume a 91% recovery for copper and a 30% recovery for zinc. Kynoch noted the zinc recoveries could be increased to 50% although the company’s main priority will be to get the mine up and running with primary emphasis on copper production.

He stressed the mine is a copper mine with over 90% of revenue derived from copper.

Including refining, treatment, and transportation costs, cash costs are expected to be in the order of US80 per lb. If zinc recoveries are increased to 50%, the cash cost would drop to US74 per lb.

With the copper concentrate expected to average about 26% copper, up to 40% of the cash operating cost is related to transportation costs. Bethlehem’s feasibility study on the project did investigate the possibility of smelting the concentrate on site at a capital cost of about $13 million. Since the financing agreement included a smelting contract, plans for on-site smelting have been precluded.

The extent of the Goldstream reserves is by no means limited to five years. Earlier this year Goldnev completed two tiers of holes to test the down-plunge extent of the Goldstream deposit.

Although Bethlehem is the operator of the mine, Goldnev is in charge of exploration through a contract with Prime Explorations.

Peter Loughheed, senior geologist at Prime, noted that there was some question as to whether the deposit would continue to depth as it crossed below the Goldstream River, or if a structural feature related to the river would cut it off.

The drilling was successful in extending the deposit about 400 metres down-plunge from the known extent of the reserves, indicating the potential of an additional two years of reserves.

Although the zone remains open at depth, Kynoch and Ewanchuk were quick to point out that the economics of mining the deposit worsen with depth due to the increased haulage distances. They also noted the use of a shaft would not likely be economic because of the deposit’s shallow dip. Further work will be required to determine the economics of mining beyond the known reserves. Goldnev has been active outside the mine area on joint venture ground. Geochemical and geophysical surveys identified a number of targets last year and led to the discovery of the Grolsch zone about eight kilometres west of the Goldstream. Drilling on this zone has encountered a zone of disseminated and banded to locally semi-massive pyrrhotite and sphalerite mineralization. Further drilling is planned to test the zone to the west.