My remarks are primarily aimed at the small company, particularly those opening their first mine. But I hasten to add that these remarks are certainly not unique to small companies. The unfortunate part is that they have greater impact on the small company and, therefore, one hears a lot more about them, whereas, the larger company can sweep them under the rug.
Of the three mines that Canamax opened while I was president, two are in the Abitibi mineral belt; the third is in the Yukon.
The first mine was Bell Creek, which was officially dedicated on Sept 30, 1987. Situated in the Timmins, Ont., district, with excellent infrastructure and more than 50 years of mining history, it is a simple conventional type operation with a 1,000-ft shaft and mine access on four levels.
The deposit is a quartz vein which is easy to follow and mine. The mill is a cyanidization Merril Crowe precipitation process with a gravity jig and table at the front end which recovers more than 60% of the gold. The operation is as simple as you can get and ideally situated. Yet it took more than three years to bring it into production.
The next mine was Ketza River, situated in the Yukon. Ketza is about as different to Bell Creek as you can get for an underground mine. It’s in mountainous terrain and operates on a fly-in, live-in camp schedule. But most significantly, it is a unique deposit and operation. It is an underground oxide mine.
The geometry of the orebody is made up of two deposits that coalesce; it sort of looks like a bent arm and an elbow that is accessed by three adits into the side of the hill. The mill is a CIP-type circuit.
The key feature of this operation is that it is unique to the Canadian experience. Consequently, the learning curve has been very steep. In spite of its remote location, the operation came onstream ahead of schedule and close to budget. However, the run-in period was much longer that anticipated and it took more than six months to get a handle on reconciling and correlating mine and mill grades.
The next mine opened was Kremzar, in Ontario. Situated in the Wawa Goudreau-Lochalsh district, this is a 500-ton-per-day operation with underground access by spiral ramp. Mining widths are excellent, averaging 22 ft over 500-ft lengths, which allows for big openings using highly mechanized, state-of-the-art mining equipment. The mine suffered through several construction delays due to late deliveries of structural steel; then, when things finally looked good, the frame of the jaw crusher cracked and operations were down for more than a week — all part of the run-in experience. You just can’t escape them. Three mines with a variety of deposits representing a variety of ore reserves requiring different min ing methods and each presenting its own operational situation with its own unique learning curve. So the question is what are some of the lessons — both technical and financial — to be learned from bringing on these mines?
The first lesson, possibly due to my background as a geologist or explorationist, was that mining can proceed only so fast, regardless of how much money or how good a contractor one has. You can only sink a shaft or drive a decline at a certain rate no matter what. At Bell Creek, it took 18 months to sink the shaft and then, to make matters worse, when it was almost completed, a fire cost us a 6-month delay.
The next hard lesson to learn was the time needed for preproduction development. It takes at least six months to get enough mining faces prepared so that you can feed a mill and this assumes that the mill and the mine are properly sized. By this I mean that the mill capacity is determined by reserves, the reserve potential, the geometry of the reserves and what mining method will be used.
When I read about some of the big mills that are being planned, I question how they expect to feed them. You can’t feed a mill from an exploration drift.
In my view, oversizing of a mill is perhaps one of the biggest failings in mining. Probably, more good deposits are ruined by oversized mills than by any other single cause.
As a result, Canamax sized all its mills to just fit the orebody. At Kremzar the company was optimistic enough to build the mill building large enough to add, at minimum cost, an additional ball mill and additional CIP tank, if and when the mineable reserves justify it.
This brings me to the next point — you have to allow for various delays in building the mill. As I have already indicated delivery times can be late and sometimes the unexpected can, and usually will, happen.
Then there is used equipment. Canamax used a lot of reconditioned equipment in its mills. If you are in a hurry you virtually have to count on used equipment because delivery time on new equipment is so long that the period of bringing on a new mine would be extended even further.
I don’t mean to take a cheap shot at the used equipment dealers, but I have come to believe that used or reconditioned equipment usually means it’s been steam-cleaned and painted. It’s only when you put the equipment in actual operation that you find out what needs to be reconditioned. At both Kremzar and Bell Creek used equipment pieces had to be virtually rebuilt — all of which cost time. And time is money.
Which brings me to the financial aspects. The most frustrating and probably the most financially sensitive period of bringing on new mines is the mill run-in. This is when you have to have the time and money to get the key components of the mill operating and “bedded.” That is, a certain amount of gold is going to find its way into and fill the cracks and crevices of the ball mill, regrind mill, solution tanks, pipes, etc. It may take several thousand ounces or more to do this and here you are starting up production and there isn’t any gold.
“Where the hell is the yeller gone?” It can be a truly scary time and is one of the real “lows” in bringing on a new gold mine.
Also, be prepared for the unexpected, the “acts of God,” if you will. The fire at Bell Creek is an example. At Ketza River, the last two summers have been 100-year record rainfalls. The result is that the 5-year tailings dam was nearly filled with water so that the project was soon faced with probably a half million dollars or more in unexpected investment in an additional water treatment plant. The point is: be prepared for the unexpected because, as sure as God makes the little green apples, you are going to have your share of unexpected costs.
Now you are finally operating. Next comes the grade correlation between mine reserves, mine feed and mill head. This can be the moment of truth — as you compare mineable reserve grades from the feasibility study with what actually gets delivered to the mill. Ore reserves equals the orebody, its shape and grade distribution — all influence the mining method and in particular the amount of dilution. Dilution is a mine operator’s nightmare.
For example, sub-level retreat mining is a cheap, fast mining method, but at Kremzar it gives as much as 40% dilution in millfeed grade, therefore, more tons need to be mined to get the same amount of gold recovered.
Depending on the geometry of the orebody, perhaps only part of the geological reserves are mineable — at Ketza it’s about 60%. At Kremzar, as a better understanding of the mineralization from underground mapping was gained, changes in the mining method were necessary to keep the millfeed grade high enough to have an economic operation.
The point is it takes time and money to really get what the company expects.
At Bell Creek, a simple little operation in a proven gold
district, it took us more than a year for things to settle down to where there was enough confidence in the mining to project revenue in business planning.
At Ketza, because of the unique orebody, it took six months to understand what mining methods would have to be used to give the proper grade control in order to deliver the grade to the mill to recover the ounces necessary to make the whole project viable.
At Kremzar, the slot raise “froze” which resulted in several months’ delay in feeding the mill from underground.
In summary, all three operations took longer to develop and live up to their feasibility predictions than expected. Production delays and shortfalls were probably the greatest disappointments and the most financially dangerous.
Bringing on new gold mines can be a very rewarding and exciting exercise, but I can guarantee that it’s going to take a lot longer and cost much more than expected. You had better be sure that you have the money and the patience to withstand the delays.005 John Hansuld is the former president of Canamax Resources. These remarks are excerpts from a speech delivered at a Northwestern Ontario Mine and Minerals Symposium held in Thunder Bay.
I would like to share some of the lessons that I have learned in bringing on three new gold mines. Many of the observations that I am going to make may be pretty obvious to some of you. However since mid- 1987, with all the euphoria of gold and the heavy emphasis on ounces of production, many of these lessons have been overlooked in the rush to get into production in order to achieve that magic production number of 100,000 ounces.
My remarks are primarily aimed at the small company, particularly those opening their first mine. But I hasten to add that these remarks are certainly not unique to small companies. The unfortunate part is that they have greater impact on the small company and, therefore, one hears a lot more about them, whereas, the larger company can sweep them under the rug.
Of the three mines that Canamax opened while I was president, two are in the Abitibi mineral belt; the third is in the Yukon.
The first mine was Bell Creek, which was officially dedicated on Sept 30, 1987. Situated in the Timmins, Ont., district, with excellent infrastructure and more than 50 years of mining history, it is a simple conventional type operation with a 1,000-ft shaft and mine access on four levels.
The deposit is a quartz vein which is easy to follow and mine. The mill is a cyanidization Merril Crowe precipitation process with a gravity jig and table at the front end which recovers more than 60% of the gold. The operation is as simple as you can get and ideally situated. Yet it took more than three years to bring it into production.
The next mine was Ketza River, situated in the Yukon. Ketza is about as different to Bell Creek as you can get for an underground mine. It’s in mountainous terrain and operates on a fly-in, live-in camp schedule. But most significantly, it is a unique deposit and operation. It is an underground oxide mine.
The geometry of the orebody is made up of two deposits that coalesce; it sort of looks like a bent arm and an elbow that is accessed by three adits into the side of the hill. The mill is a CIP-type circuit.
The key feature of this operation is that it is unique to the Canadian experience. Consequently, the learning curve has been very steep. In spite of its remote location, the operation came onstream ahead of schedule and close to budget. However, the run-in period was much longer that anticipated and it took more than six months to get a handle on reconciling and correlating mine and mill grades.
The next mine opened was Kremzar, in Ontario. Situated in the Wawa Goudreau-Lochalsh district, this is a 500-ton-per-day operation with underground access by spiral ramp. Mining widths are excellent, averaging 22 ft over 500-ft lengths, which allows for big openings using highly mechanized, state-of-the-art mining equipment. The mine suffered through several construction delays due to late deliveries of structural steel; then, when things finally looked good, the frame of the jaw crusher cracked and operations were down for more than a week — all part of the run-in experience. You just can’t escape them. Three mines with a variety of deposits representing a variety of ore reserves requiring different min ing methods and each presenting its own operational situation with its own unique learning curve. So the question is what are some of the lessons — both technical and financial — to be learned from bringing on these mines?
The first lesson, possibly due to my background as a geologist or explorationist, was that mining can proceed only so fast, regardless of how much money or how good a contractor one has. You can only sink a shaft or drive a decline at a certain rate no matter what. At Bell Creek, it took 18 months to sink the shaft and then, to make matters worse, when it was almost completed, a fire cost us a 6-month delay.
The next hard lesson to learn was the time needed for preproduction development. It takes at least six months to get enough mining faces prepared so that you can feed a mill and this assumes that the mill and the mine are properly sized. By this I mean that the mill capacity is determined by reserves, the reserve potential, the geometry of the reserves and what mining method will be used.
When I read about some of the big mills that are being planned, I question how they expect to feed them. You can’t feed a mill from an exploration drift.
In my view, oversizing of a mill is perhaps one of the biggest failings in mining. Probably, more good deposits are ruined by oversized mills than by any other single cause.
As a result, Canamax sized all its mills to just fit the orebody. At Kremzar the company was optimistic enough to build the mill building large enough to add, at minimum cost, an additional ball mill and additional CIP tank, if and when the mineable reserves justify it.
This brings me to the next point — you have to allow for various delays in building the mill. As I have already indicated delivery times can be late and sometimes the unexpected can, and usually will, happen.
Then there is used equipment. Canamax used a lot of reconditioned equipment in its mills. If you are in a hurry you virtually have to count on used equipment because delivery time on new equipment is so long that the period of bringing on a new mine would be extended even further.
I don’t mean to take a cheap shot at the used equipment dealers, but I have come to believe that used or reconditioned equipment usually means it’s been steam-cleaned and painted. It’s only when you put the equipment in actual operation that you find out what needs to be reconditioned. At both Kremzar and Bell Creek used equipment pieces had to be virtually rebuilt — all of which cost time. And time is money.
Which brings me to the financial aspects. The most frustrating and probably the most financially sensitive period of bringing on new mines is the mill run-in. This is when you have to have the time and money to get the key components of the mill operating and “bedded.” That is, a certain amount of gold is going to find its way into and fill the cracks and crevices of the ball mill, regrind mill, solution tanks, pipes, etc. It may take several thousand ounces or more to do this and here you are starting up production and there isn’t any gold.
“Where the hell is the yeller gone?” It can be a truly scary time and is one of the real “lows” in bringing on a new gold mine.
Also, be prepared for the unexpected, the “acts of God,” if you will. The fire at Bell Creek is an example. At Ketza River, the last two summers have been 100-year record rainfalls. The result is that the 5-year tailings dam was nearly filled with water so that the project was soon faced with probably a half million dollars or more in unexpected investment in an additional water treatment plant. The point is: be prepared for the unexpected because, as sure as God makes the little green apples, you are going to have your share of unexpected costs.
Now you are finally operating. Next comes the grade correlation between mine reserves, mine feed and mill head. This can be the moment of truth — as you compare mineable reserve grades from the feasibility study with what actually gets delivered to the mill. Ore reserves equals the orebody, its shape and grade distribution — all influence the mining method and in particular the amount of dilution. Dilution is a mine operator’s nightmare.
For example, sub-level retreat mining is a cheap, fast mining method, but at Kremzar it gives as much as 40% dilution in millfeed grade, therefore, more tons need to be mined to get the same amount of gold recovered.
Depending on the geometry of the orebody, perhaps only part of the geological reserves are mineable — at Ketza it’s about 60%. At Kremzar, as a better understanding of the mineralization from underground mapping was gained, changes in the mining method were necessary to keep the millfeed grade high enough to have an economic operation.
The point is it takes time and money to really get what the company expects.
At Bell Creek, a simple little operation in a proven gold district, it took us more
than a year for things to settle down to where there was enough confidence in the mining to project revenue in business planning.
At Ketza, because of the unique orebody, it took six months to understand what mining methods would have to be used to give the proper grade control in order to deliver the grade to the mill to recover the ounces necessary to make the whole project viable.
At Kremzar, the slot raise “froze” which resulted in several months’ delay in feeding the mill from underground.
In summary, all three operations took longer to develop and live up to their feasibility predictions than expected. Production delays and shortfalls were probably the greatest disappointments and the most financially dangerous.
Bringing on new gold mines can be a very rewarding and exciting exercise, but I can guarantee that it’s going to take a lot longer and cost much more than expected. You had better be sure that you have the money and the patience to withstand the delays.005 John Hansuld is the former president of Canamax Resources. These remarks are excerpts from a speech delivered at a Northwestern Ontario Mine and Minerals Symposium held in Thunder Bay.
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