Kirkland Lake Gold (KGI) has put together a group of mines
along the fabled "main break" that produced over 24 million
ounces of gold. It is an amalgamation of the best old producers of the district. One might think, if one imagined one was the smart money, that these mines worked for a better part of a century must be depleted. Some in the industry know that is a pathetic fallacy -- A sentiment from natural appearance that does not reflect (mining) reality.
Dennis Sheehan was chief geologist of Lac Minerals of Hemlo
fame. Some time before his untimely death I had asked him about Lac's return in the late 1980's to a pillar recovery operation on the Lakeshore mine. I had seen nuggets coming from the pillars as big as a man's fist. Had the early miners saved the best for last? I asked him about grade and why they had shut down after a couple of years. "We were running into ounces per ton, sometimes as high as 30 oz's. We did not do it right. I recommended re-opening the whole mine. Spend ten million dollars and do it right. We did not do that, and it was our mistake. If we had, I guarantee you we would still be mining it ten years from now or more."
That was just the Lakeshore. KGI put 5 of the big ones in a row together, like a string of pearls. How much gold could be left there? Well the old saying in most gold mines is that at any time in their history there is generally as much left in 'em as ever came out of 'em. I have worked in a half dozen gold mines and I would say from going over reserves that is an accurate statement often. So why do they close at all?
It is an interesting question. Most mines operated a fixed
price of 35 dollars for 35 years as inflation raised their
costs steadily. Generally this cause a lack of reinvestment in development, larger capacity, or research and improved equipment. Mines have to plan their production and invest to develop their ore for ten or more years in advance. When they get to the end of that period, they either have cash reserves to do all the work to continue and maintain their old workings, or they have to quit. Most mines in Canada got caught in a rapidly inflating environment in the mid seventies with ever higher interest, labour and fuel costs, and no new development of shafts, drifts and equipment. Many had reserves, even substantial ones, but gold was not that high, and development costs were staggering. One I worked at, Kerr Addison, in 1977 calculated that to expand their operation they would require a 20,000 ton a day operation
and 300 million dollars. That money never got spent for manifold economic, environmental and political reasons. Many Canadian mines closed between 1968 and 1980. They closed their doors just before the gold price skyrocketed. Few would reopen, and some that did, just did not have the formula to continue. |
