Hemlo’s Golden Years

The Hemlo camp is one of Canada’s most prolific mining regions, having produced approximately 24 million ounces of gold in less than 20 years. The gold has been extracted from open pit and underground operations, which have been owned by a continually evolving group of companies.

Currently, Teck Cominco Ltd. and Barrick Gold Corp. jointly own both the Williams underground and open pit mines and the David Bell underground mine, with Teck Cominco as operator. Newmont Gold owns and operates the Golden Giant underground mine.

While the initial discovery of gold off the Trans-Canada highway in the 1980s ignited one of the most competitive staking rushes ever seen, and the subsequent legal battles for control of the gold were hostile, the mood in the camp has mellowed and collaboration is today’s mantra. As evidence, Newmont states that information near the property boundaries is shared and ore is traded between the mines to ensure maximum extraction of the resource. This operating plan also helps ensure ground stresses are minimized.

Currently the Williams mine produces 10,500 tonnes per day averaging approximately 5 g/t Au. The Golden Giant produces 1,500 tonnes per day grading approximately 10 g/t Au while the David Bell mine produces 1,250 tonnes per day grading approximately 10 g/t Au.

The most mature mine at Hemlo is Golden Giant, which has produced more than 7 million ounces. As of year-end 2003, Golden Giant had reserves of approximately 1.0 million tonnes averaging 10.1 grams gold per tonne, or 331,000 oz. In 2003, the mine sold 229,700 oz, produced at a cash cost of US$227 per ounce while total cash costs were US$329 per ounce.

Access to the Golden Giant stopes is through a 1,444-m-deep, six-compartment shaft with main levels at 150-m intervals in the upper portion of the mine and 100-m intervals deeper down. Ore is mined in stopes ranging in size from 15 to 33 m high, 15 m along strike and with an average width of 15 m.

The mill, which uses standard CIP processing methods, is rated at 3,000 tonnes per day, but is currently running at 50% of capacity. The ore is crushed underground to -15 cm and is then hauled to surface for further crushing and grinding. Almost 35% of the gold is recovered using Knelson gravity concentrators. The remainder enters the CIP circuit and 96.2% of the gold is recovered.

Newmont expects Golden Giant to sell 155,000 oz of gold at total cash costs of $310 per ounce in 2004. The mine is slated to close in 2006. While Newmont is not currently conducting exploration at the mine site, later this year the company will re-evaluate exploration plans for 2005.

The Williams mine is Canada’s largest gold mine and is seeking to improve operations and expand its reserve base. In 2003, the Williams underground and open pit mines in conjunction with ore from the David Bell underground mine, produced 536,000 oz of gold at a cash operating cost of US$239 per ounce. Mill throughput was approximately 3.6 million tonnes at an average grade of 4.9 g/t Au, and the gold recovery was 95%. For 2004, gold production and operating costs are expected to be at similar levels as the previous year. Gold reserves at the Williams operation, which includes the David Bell mine, are approximately 2.7 million oz.

In order to improve efficiencies, Teck Cominco constructed a 5,000-tonne/day paste backfill plant, which was completed in April 2003 and successfully commissioned to design capacity shortly thereafter. Furthermore, in May the workforce at Williams was reduced by 10% through voluntary severance. The company announced that it would be aggressively exploring down-dip extensions of its orebodies and it was also planning a proposed expansion of the Williams open pit operation, which would make the mine economically viable until 2012.

Not all the activity in the Hemlo camp is confined to the three mines. The recent upswing in gold price has increased exploration activity, particularly in the Schreiber, White River and Heron Bay areas.

Teck Cominco has taken an option on Freewest Resources‘ Lizard property, situated 60 miles northeast of White River. The senior can earn a 55% interest in Lizard by spending $3 million on exploration over four years. The 493-claim property hosts numerous gold occurrences including the Stenabaugh showing that returned an assay of 3 g/t Au over 12 m. The property is also prospective for volcanogenic massive sulphide and nickel-copper magmatic sulphide deposits.

Previously, Teck Cominco completed airborne geophysics that delineated several electromagnetic anomaly clusters. The company is expected to begin drilling Lizard shortly.

Another junior, Tri Alpha Investments Ltd., has optioned the Big Duck Lake property near Schreiber. Tri Alpha can earn 100% interest in the 2,905-hectare property by paying the vendors $250,000 in cash and 400,000 shares and by incurring exploration expenditures of $1 million over a four-year period. Previously Tri Alpha completed a trenching and channel-sampling program exposing 5,000 m2 in 10 trenches covering two areas. Past work in one of these areas returned an assay of 17.31 g/t Au over 4.9 m.

Tri Alpha will complete data compilation and cut grids before additional trenching is completed. If results warrant, Tri Alpha will conduct drilling.

And finally, Sparton Resources Inc. and Beaufield Consolidated Resources have a joint venture agreement concerning several properties totaling 11,000 hectares in the Hemlo camp. Two of these properties were acquired from Newmont and one was acquired from Newmont and Placer Dome. Although limited work on a small portion of the joint venture’s holdings has not been a great success, the partners are continuing and are looking at various financing options to proceed.

Hemlo is a prolific and mature camp with mines at or approaching the end of life and exploration continuing albeit at a slower pace than in the 1980s. Time will tell whether Hemlo has seen the last of its glory days or if renewed interest can lead to new development. Hopefully, continued exploration will give the camp a second lease on life.