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Weekly UpdatesNickel projects across the North may be increasingly imperiled as a result of slipping metal prices, but many gold mining projects are actually growing in traditional camps like Timmins and Kirkland Lake.
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Kirkland Lake Gold is looking to spend $40 million to expand work at its Macassa Mine to include seven-day-a-week production of a zone known as the South Mine Complex.
Due to be mined at an initial rate of roughly 400 tons per day in January 2009, production will increase to 700 tons per day as early as March 2009 as contractor J.S. Redpath completes related infrastructure.
This move will allow the company to finally begin operating at a profit, something that had not been accomplished through its production of the Main Break, says Mark Tessier, vice-president of operations.
The new zone features 1.5 million ounces of reserves and resources at an average of 0.7 ounces per ton, which looms over the 0.3 ounces per ton seen on the Main Break.
Current production has been mostly to help fund exploration and to build a team in preparation to finally begin putting its books into the black, he says.
"The big thing for us is that this leap allows us to move from a company that is essentially borrowing money on the basis of its exploration profile to a company that will be producing and won't have to borrow any money" says Tessier.
"We want to be in a position where we're self-funding, and we believe we can continue to sustain that profile for many years here."
The expansion will also allow the company to improve its annual production to more than 100,000 ounces per year.
Those numbers could increase within 18 months, when officials will look at new production targets which may include pushing the South Mine Complex to as high as 1,000 tons per day.
This optimism is also seen across a pair of new mines slated to open in the Timmins area. Both Apollo Gold's Black Fox project as well as Lake Shore Gold's Timmins West project are still on schedule for their anticipated start dates in early 2009.
In fact, the shift in gold prices has failed to deter Apollo President and CEO R. David Russell, who says the bankable feasibility study for Black Fox used similarly low prices as part of its model.
"We'd like to see the gold prices a little higher so we can make some more money, but the economics are still very, very strong on this project."
Production is still expected to begin on the open pit in March 2009, which will reach 1,500 tonnes per day by the second quarter. While the underground operations have been deferred until after 2009, Russell says this is about the efficiency and low-risk nature of the open pit, which is already quite prospective.
However, if the company's plans to bring its 1,000-tonneper-day Stock Mill to 1,500 tonnes per day are a success, there may be some thought to push that to as high as 2,000 tonnes per day.
If this is indeed possible, the underground operations may begin sooner than planned, though this will depend on the optimal throughput of the mill.
Even the tailings dam, which is already being readied for up to eight years worth of capacity, is being examined for opportunities to expand it to 15 years.
Apollo sees such promise in the region that officials have begun to examine the potential of its Gray Fox property, located a kilometre to the southwest. More than $300,000 worth of drilling has taken place there through 2008, with $1.5 million slated to be spent on exploring the site in 2009.
With the mine life already pegged at more than 10 years, Russell hopes that further work at its exploration property and at Black Fox may well push that to as much as 50 years.
"This is our first shot at a real big gold mine in Canada, and we're really excited about it, let me tell you," says Russell.
BY NICK STEWART
Northern Ontario Business
www.klgold.com
www.apollogold.comn
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