Gold mining, Gold price, technology and costs. Issues are addressed here that answer questions investors may have about economics of mining gold today and how this may change generally and in specific mining situations. This article is specific to the Chibougamau region, but they reflect on gold mining underground everywhere in Canada in the past ten years, and also on mine reopening as well. A mine is revisited that stirred a bit of controversy over a poster's insistence on its potential economics. We had appeared to demur, but that impression we insist was premature on the poster's part.
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Joe Mann
The Joe Mann operation was shut down by Campbell Resources in November 2000, due to a loss of over $16 million during the previous two years. “Difficulties in making a return were encountered in trying to make a profit," said Alain Blais,
vice-president, development and geology, Campbell Resources. "Originally a longhole and shrinkage stope mining method was used, but with numerous ground problems, it was decided by previous management to change to cut-and-fill to fix the problem. By the time of shutdown, it was obvious that the new method was not appropriate."
Following the company merger, Joe Mann was looked at by new management for reopening. "We decided to turn around and come back with the longhole and shrinkage stope method, keeping cut- and-fill in only one stope," said Blais. "At the time the gold price was $260 per ounce, so we needed a large reduction in operating costs." The company met with the union and explained the challenges.
Overall, a wage drop of 16% was required. The union agreed to the reduction, based on a gold price with a base of $260. For every increase of $10 in the price, employees would realize an increase of three per cent in their wages.
Negotiations were also made with suppliers, and by November 2001, the mine was reopened, with a target production of 20,000 tonnes monthly.
A fairly aggressive exploration program is under way. Last year, 140 000 ft were drilled on site. The exploration budget of $5 million includes a $2 million contribution from the Quebec government.
In March 2002, the Campbell mill, located 65 km from the mine site, was restarted. With a capacity of 1500 tpd, or 400 000 tpy, the mill is currently running 3.5 days per week. Today, the mine is still struggling to meet the targeted level of production, and is operating at about 70% to 80%. "We’ve come a long way, and we’re confident we’ll meet our target," Blais said. "We’ve made much improvement on the quality of control, and our exploration results are replacing the reserves we’ve mined. There is also good resource potential to the west of the orebody."
One key step toward improving mine performance was establishing more technical control with the longhole mining method. Workers and engineers have been retrained, and the mine is realizing results through good follow up and control of the production.
Campbell Resources is working with Rocmec, a firm based in the Lac St-Jean area, to develop a method for mining narrow veins. The new method, called thermal fragmentation, has been tested on surface and is currently being adapted for underground, with plans for testing by June.
"With the results we’re hoping for, it could mean big changes for the mine,” Blais said. "With the new technology, 65 000 oz of gold could be made accessible."
Thermal fragmentation involves drilling a six-inch hole to a 20 m depth with a longhole drill, then going down the hole with a thermal drill, or burner, that uses fuel and compressed air to quickly heat up the rock. The rise in temperature causes the surrounding rock to shatter from thermal shock. As the mine geology contains a lot of quartz, it’s easily fragmented, and the six-inch hole could open up to 20 in. The material created, up to 0.25 in., is pumped through a vacuum and sent to the hill. The top of the hole is not fragmented, leaving only the six-inch diameter hole for safety purposes.
"This technology was used in the 1960s in Russian iron mines to increase the size of blasting holes, but this will be the first time it’s employed underground for mining narrow veins," explained Blais.
The expectation is that one burner could provide 20,000 ozs of gold annually, greatly helping Joe Mann exceed its targeted 60 000 oz per year. Another benefit to thermal fragmentation is the same amount of gold ounces recovered requires five times less tons of ore, which means a great savings in transportation costs.
"It’s the perfect equipment for narrow-vein mining," said Donald Brisebois, general manager, Rocmec. "You need volcanic rock. This kind of gold deposit - narrow vein in hard rock - is very common in Canada, but there isn’t a mining method to access it economically. So it’s a very interesting possibility for us - we’re providing a needed solution. We’re not mining tonnes, we’re mining ounces."
Campbell reopens two mines in Chibougamau.
Campbell Resources is responsible for preparing the area to test the technology, involving driving drifts to the vein locations.
Rocmec is adapting its machines for the underground environment. Meanwhile, the area around the Joe Mann site is being searched for surface mineralization that could be recovered using the equipment Rocmec has already developed.
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