Persistent losses at the Premier Gold gold- silver mine near Stewart, B.C., have 60% owner Westmin Resources (TSE) reviewing the project’s future. The company is reviewing its ore reserves once again, and as a result, the remaining mine life may drop to less than one year. In light of the drop in reserves, Westmin decided to reduce its milling rate at the mine to 1,500 tonnes from 2,300 tonnes per day. The production drop is expected to be complete by March 15, 1991.
In concert with the reduced throughput, the company plans to cut the mine’s workforce to 100 people from the current level of 165.
Westmin began operations at the mine in the second quarter of 1989, but failed to reach commercial production until the first quarter of 1990.
In an attempt to stem the losses, Westmin undertook a study late in 1989 to optimize the open pit operation. Ore reserves were lowered as a result of the study. As of April, proven minable ore reserves were 3.3 million tonnes grading 2.45 grams gold and 69.4 grams silver per tonne.
Bruce McKnight, vice-president of corporate affairs, said the optimization plan appeared to be working well as evidenced by the improved performance of the operation.
Milling rates increased from about 140,000 tonnes per quarter in the fourth quarter of 1989 and the first quarter of 1990, to almost 200,000 tonnes in the second quarter of 1990 and 216,000 tonnes in the third quarter.
Head grades held up well in the second quarter, averaging 2.60 grams gold, but dropped to an average of 1.97 grams gold in the third quarter.
McKnight said the mine has been encountering less ore than forecast in the last two or three pit benches, leading the company to rework its ore reserve figures.
This will include reviewing all the old geological data dating back to the Premier mine’s early production. The data will be compared with operating experience and current reserve estimates to determine if reserves should be lowered.
Underground mining at the Premier mine dates back to the early 1900s, and the mine operated continuously from the 1920s until 1953 when low metal prices forced its closure.
McKnight said the company was also investigating sources of underground ore. The property has four promising areas including the 4G, 602, 609 and Northern Lights areas, although he noted Westmin is concentrating on developing the nearby SB project with Tenajon Resources (VSE).
If a drop in reserves is not required, the mine life would be in the order of five years.
Pioneer Metals (TSE) is Westmin’s partner on the Premier project, with a 40% interest. With the mine’s continued losses, Pioneer now owes Westmin more than $18 million.
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