Right on the money at Lagunas Norte

The hard work of a very dedicated team and US$340 million dollars are reshaping the Alto Chicama region with Peru’s newest gold mine. Barrick’s Lagunas Norte mine is coming into production ahead of schedule and on budget, no easy task at 4,100 m above sea level in the Andes Mountains.

There is an air of excitement among people eager to see the first gold pour, which has been advanced to mid-June rather than the third quarter of the year. Lagunas Norte will contribute 800,000 oz of gold per year to the Barrick balance sheet during its first three years of production. The deposit contains an estimated reserve of 9.1 million oz of gold.

The budget was divided into several segments: US$72 million for mine development; US$58 million for construction of the leach pad and recovery plant; US$140 million for infrastructure (roads, power, communications); US$25 million for indirect costs; and US$45 million for contingencies. Adhering to the budget had its challenges: the costs of labour, building materials and equipment rose during the development period. A worldwide shortage of rubber has made heavy equipment tires especially hard to find.

Operating costs for 2005 are estimated to be US$110-120/oz. This includes amounts for sustainable development initiatives, ensuring that the neighbouring villages continue to benefit from Barrick’s new enterprise. (See details on page 8 of this issue.)

The magic of Alto Chicama

High in the Andes Mountains of Peru, Alto Chicama has a certain magic, almost a spiritual quality about it. Perhaps it is because Cerro Shullcahuanca, which towers above the mine site, has special significance to native Peruvians. Evidence that it was used as a sacred site predates the arrival of the Spaniards by many centuries.

Getting to Alto Chicama requires a three-hour drive from the coastal city of Trujillo. The road is public, but Barrick has made many improvements so that it can safely transport materials to and from the site. Anyone going to Alto Chicama on the company’s behalf must be accompanied by a security guard and a qualified driver. The driver on my trip was Barrick’s public relations expert Tony Ballestrini.

Barrick is no stranger to Peru and its politics. The company opened its successful Pierina gold mine in 1998 (CMJ June 2001 and April 2000). When the Peruvian government offered a mining option contract for the Alto Chicama district in 2001, Barrick was the winning bidder. Exploration began immediately, and a year later the promising discovery of Lagunas Norte was announced. In December 2002, the company exercised its option to acquire 100% of the Alto Chicama property, and in September 2003 submitted an environmental impact statement. The EIS was approved in April 2004, and development began in earnest on the open pit and heap leach project.

Lagunas Norte deposit

Lagunas Norte is a high-sulphidation epithermal gold deposit hosted at the contact between the Cretaceous sedimentary rocks of the Chimu Formation and the Tertiary volcanic rocks of the Calipuy Group. The sedimentary rocks are characterized by relatively thick beds of sandstones interbedded with fine-grained siltstones and mudstones that locally grade into coal beds. These rocks were folded during the Andean orogeny. The Tertiary volcanic pile overlying the Cretaceous sequence is restricted in thickness, and is characterized by a cluster of volcanic vents related to phreatomagmatic activity.

Gold mineralization is disseminated within the sedimentary and volcanic rocks, and both structural and stratigraphic controls are recognized. Economic gold grades are associated with broad zones of vuggy silica in the volcanic rocks, and also within irregular zones of fracturing, brecciation and silicification in the underlying sedimentary sequences. Mineralization has been defined over an area 1,600 m long, 750 m wide and as much as 300 m deep.

Lagunas Norte reserves are estimated to contain 9.1 million oz of gold and 23.2 million oz of silver. Proven and probable reserves total 208.15 million tonnes at 1.4 g/t Au and 3.4 g/t Ag; and the mineral resources add another 14.65 million tonnes at 0.82 g/t Au and 4.3 g/t Ag, or another 395,000 oz of gold and 2.0 million oz of silver to the total.

Environmental preparedness

Obtaining environmental approval had its challenges. The Alto Chicama area includes three separate river drainage basins. Permitting in this setting presented water management challenges that needed to be overcome in the EIS. But given its exemplary track record at Pierina, its consultative approach, and its willingness to take extraordinary measures, Barrick was able to proceed with development.

Igor Gonzales, Barrick’s regional vice-president for Peru, outlined the immense effort and some of the environmental programs for Lagunas Norte. It is very important to meet the highest international standards for the environment and safety, he noted. Barrick did an 18-month-long baseline study, which resulted in the most advanced environmental impact assessment ever done Peru. The standards the mining company applied at Lagunas Norte are now considered as reference in the country.

Each year the Alto Chicama district receives between 1,400 and 1,700 mm of precipitation. It arrives in the summer as intense rain and hail, causing erosion. Barrick has built 594 sedimentation dikes to control the flow of water below the mine site and to minimize erosion. Numerous sedimentation containment terraces have been constructed following the positive experience at the Pierina mine, and 30,000 m of silt fences have been installed. Groundwater is routinely sampled to ensure its quality is not degraded. Rainwater is channelled to roadside ditches to avoid erosion. Finally, ponds have been built to contain runoff, sludge and process water overflow inside the mine site.

Wherever the landscape has been disturbed for mine-building and transportation, the company has transplanted native cactus, orchid and other species out of affected areas and into nurseries. There they are propagated, and larger numbers of them are replanted near their original locations after the work is completed.

Barrick has also stockpiled topsoil and established tree nurseries. At the Pierina mine, one million trees have been replanted. In the Alto Chicama district the reforestation program was started early by creating a facility that will grow thousands of quenuales and native pine seedlings for revegetation and erosion control. The topsoil will be a vital finishing touch for reclamation.

More than 1 million m3 of topsoil was moved and stored before mine development could begin. The preservation of this material is vital to Barrick’s reclamation plan. In fact, reclamation of portions of the leach pad will begin only two years from now, well before mining is completed. The life of the project is expected to be 16 years, including construction, mining and closure. The goal is to minimize disturbance to this special area of the Andes.

Lagunas Norte mine

The cut rock faces in the pit are surprisingly colourful. There are patches of black, green, orange, brown and creamy white. The gold is so finely disseminated throughout the deposit that rock colour is not indicative of ore grade.

Conventional truck and shovel mining has been selected for the Lagunas Norte deposit. Mining is proceeding in 10-m high benches with an eventual pit size of 1,900-m by 1,100-m by 160-m planned. Haul roads are at least 35 m wide, which allows haul trucks to pass each other without pulling over. GPS and a modular dispatch program ensure that haulage productivity is maximized.

Komatsu supplied the shovels, trucks, loaders and service equipment for the Lagunas Norte mine. There are a pair of PC4000-6 shovels each of which has a bucket capacity of 23 m3. They fill nine 730E trucks with 190-t loads. For lighter loading work, the mine has a WS1200-3 loader with a 20-
m3 bucket. Other equipment includes five D375-A dozers, three WD600 rubber-tired dozers, two GD825-A graders and two PC400 excavators. The production drills at the mine are three Reedrill SKS12 Infinity models.

Mine manager Augusto Chung explained that a two-stage crushing system has been installed. Run-of-mine ore goes to a Nordberg 1,067-mm by 1,422-mm primary crusher that reduces the size to a nominal 150 mm. The secondary crusher circuit, a pair of Nordberg MP800 units, further reduces the size to 40 mm. The fine ore is stored in a 1,000-t bin before being trucked to the leach pad.

Leaching and gold recovery

The site of the leach pad takes advantage of the terrain that forms a natural basin. In preparation, the native plants were relocated and the topsoil was removed and stored. Acid-generating peat material and clay are stored separately. Natural springs in the basin have been fitted with a drainage pipe to divert the water to existing lakes or streams.

The leach pad is to be built in six phases over the life of the project. With the site prepared, Barrick laid down and compacted a 30-cm clay barrier. This was covered by a 2-mm geomembrane before the leak detection system was laid down. The leach pad liner, 2-mm thick, is protected by 1 m of over-liner material onto which the ore is placed. The ore is crushed to 80% passing 40 mm and placed in up to 10-m thick layers on the pad.

A series of drip emitters allow barren solution from the plant to trickle through the heap. The emitters are arranged on a 1-m by 1-m grid. Pregnant leach solution is collected in a pond and then pumped to the recovery plant.

The gold recovery plant relies on the tried-and-true Merrill-Crowe process. It has a capacity of 1,600 m3/hour. Pregnant solution can contain between 2 and 8 g/m3 Au, depending on the rainy season, said metallurgical engineer Rodolfo Espinel.

The solution is passed through leaf filters to remove solids, then deaerated. The addition of zinc dust precipitates the gold, which is collected on a press filter. Filtercake is pulled from the press every seven days and retorted to drive off any mercury. Silica, flux and borax are added to the cake and it is smelted in an electric induction furnace.

The dor bars are small. They weigh about 20 kg each and contain 60% Au and 40% Ag.

The gold plant is fully automated using field-mounted instrumentation and a process control system from Allen Bradley. Some Foxboro instruments are also included. The expected gold recovery rate is in the range of 80-85%.

People balance the equation

Barrick anticipates employing a workforce at Lagunas Norte of approximately 500 people, half of them local hires. The remainder come from other areas of the country, Peruvians accounting for 98.5% of the workforce. There are many skilled tradesmen and miners in Peru because of the country’s long history of mineral production. Generally speaking, the workforce will rotate on a 10-days-in/4-days-out schedule, although operators may have an 8-in/6-out schedule.

Barrick is fortunate to have developed such a wonderful mineral resource as the Lagunas Norte deposit. But it could not have been done on budget and ahead of schedule without its dedicated work force.

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