The mining newspaper for Alaska and Canada's North

Far North producers deliver in 2012

Meadowbank output rebounds from 2011 woes, while Yukon's Minto falls short of expectations as Alexco and Wolverine hit new milestones

While others may have encountered insurmountable challenges, the new producers of precious and base metals in Canada's Far North achieved solid and, in some cases outstanding, performance results in 2012. The Meadowbank Mine in Nunavut and the three operating mines in Yukon Territory - Minto, Bellekeno and Wolverine, that began commercial production in recent years, posted results for the fourth quarter and full year of 2012 as well as guidelines for positive outcomes in 2013.

Nunavut gold

The Meadowbank Mine is the largest of the northern producers. Located 70 kilometers (43 miles) north of Baker Lake, NU and 300 kilometers (186 miles) west of Hudson Bay, Meadowbank produced 366,030 ounces of gold in 2012, or roughly 35 percent of owner Agnico-Eagle Mines Ltd.'s total output for the year of some 1.04 million ounces. The performance included record production of 98,403 ounces of gold at the Nunavut mine in the second quarter of 2012.

Meadowbank, which achieved commercial production in March 2010, now contains about 2.2 million ounces in proven and probable gold reserves. It is the first operating gold mine in the history of Nunavut, and the largest producer among Agnico-Eagle's six operating gold mines. The mine poured its first gold bar in 2010. It currently employs about 750 people and contributes roughly 15 percent of the gross domestic product for the entire territory.

Agnico-Eagle said Meadowbank contributed significantly to its 2012 income of US$310.9 million, or US$1.82 per share. However, the Nunavut operation also was at least partly responsible for a loss of US$568.9 million, or US$3.36 per share, due to a US$1.2 billion write-down of mining assets recorded in 2011 following a re-evaluation of the mining plan at Meadowbank and suspension of production at another mine. Last January, Agnico-Eagle also shortened Meadowbank's mine life to 2017 from a previous forecast of 2020.

"Compared with the prior year, 2012 earnings were positively affected by consistent performance at all operating mines and significant year over year improvement at Meadowbank," Agnico-Eagle said in a Feb. 13 statement. The producer also credited Meadowbank with helping to boost its 2012 cash flow from operating activities to a record US$696 million

The Meadowbank mill processed an average of 11,193 metric tons per day in the fourth quarter of 2012, 26 percent higher than the 8,866 tpd achieved in the fourth quarter of 2011. The mill throughput is due to significant improvements in equipment availability and maintenance.

Mine-site costs per metric ton averaged C$90 in the fourth quarter and C$88 for the full year of 2012, down from C$98 and C$91 per metric ton in the respective periods of 2011. The improvement in cost per metric ton was primarily driven by less waste rock being moved in the new mine plan and overall productivity gains.

Full year 2012 production was a record 366,030 ounces of gold at total cash costs per ounce of gold of $913. In 2011, the mine produced 270,801 ounces at total cash costs per ounce of $1,000. The improvements in production and costs at Meadowbank in 2012 were a result of a successful implementation of the new mine plan developed in the beginning of the year. Meadowbank's operating performance has been a key contributor to the overall operating success of the company in 2012.

For the next few years, Agnico-Eagle said a mill rate of about 11,000 tpd should be sustainable at Meadowbank. Annual gold production is forecast to total 360,000 oz in 2013, 367,000 oz in 2014 and 350,000 oz in 2018.

"Following two difficult startup years, Meadowbank exceeded expectations in 2012 primarily due to improved operating efficiencies, higher sustained throughput, better equipment availability and improvements in dilution. The currently expected mine life now extends partially into 2018. This is a slight extension of the previously disclosed mine life, in spite of the plan for much higher throughput rates, due to optimization of the mine plan largely at the Vault orebody," the company added.

Copper-gold transition

Capstone Mining Corp.'s Minto Mine located 240 kilometers (149 miles) north of Whitehorse is an open pit mining operation with conventional crushing, grinding, and flotation to produce copper concentrates with significant gold and silver credits. Concentrates are exported via the Port of Skagway, Alaska, to smelters in Asia for treatment and sale.

Aggressive exploration programs conducted since 2006 by Capstone have met with considerable success. The Minto mine produced its first copper-gold concentrates in May 2007. The mine's current capacity is 3,600 tpd and additional deposits are scheduled for development to extend Minto's mine life.

Results of a pre-feasibility study Phase VI were released in June that incorporated the earlier exploration success at Minto, extending the mine life to 2022 with an average of 40 million pounds of copper per year.

In October, Capstone reported a mineral resource at Minto that included measured and indicated resources totaling 53.39 million metric tons grading 1.12 percent copper, 0.41 g/t gold and 3.9 g/t silver for contained metal of 1.31 million pounds copper, 698,000 ounces gold and 7 million ounces silver and inferred resources of 16.21 million metric tons grading 0.34 g/t gold and 3.2 g/t silver for contained metal of 329,000 pounds copper, 157,000 ounces gold and 2 million ounces silver.

Minto's 2012 performance fell short of expectations though its production totaled 35.9 million pounds of copper concentrate, along with 18,599 ounces of gold and 183,536 ounces of silver. The results reflected about 43 percent of the company's total 2012 copper output of 82.8 million pounds and a decrease from 2011 production at the mine of 37.1 million pounds of copper concentrate. Gold output rose slightly from 18,439 ounces in 2011, while silver production dipped nearly 7 percent from 196,098 ounces during the same period.

Capstone's Cozamin Mine in Mexico also contributed to the company's production results.

"We achieved our 2012 production guidance of 80 million pounds ±5 percent of copper, with both mines performing as anticipated in the fourth quarter," Capstone President and CEO Darren Pylot said Jan. 10. "The flexibility of having two operating mines allowed Cozamin's strong performance to more than compensate for the shortfall experienced at Minto during 2012."

Capstone said 2011 and 2012 were transitional years at Minto as mining progressed into the Area 2 pit. Throughput has steadily increased at the mill, with 2012 throughput of 1.34 million metric tons up 7 percent from 2011.

In December, the company received regulatory approval to provide the flexibility to further increase the milling rate at Minto up to 1.5 million metric tons per year. Grades in the fourth quarter were at the expected 1.4 percent copper, and considered the plan changes due to highwall instability, which resulted in processing much more low-grade stockpile materials than long-term plans had anticipated. The previously announced accelerated pushback that was necessary to improve the stability of the west pit highwall continued throughout the fourth quarter. Mining in the Area 2 pit resumed in late December, and the company said it is working towards achieving its 2013 plan.

Success in silver

Alexco Resource Corp. completed its second full year of mining operations in the historic Keno Hill Silver District located 330 kilometers (205 miles) north of Whitehorse in central Yukon in 2012. From an initial indicated geologic resource of 11.9 million ounces of silver, 83 million pounds of lead and 57 million pounds of zinc, Bellekeno, Canada's only primary silver mine, is expected to produce between 2 million and 3 million ounces of silver each year for at least the first three years of production. The total estimated life-of-mine metal production is 8.6 million ounces of silver, 65.2 million pounds of lead and 35.2 million pounds of zinc.

Silver output in 2012 at Bellekeno exceeded 2.15 million ounces, including the operation's second-highest quarterly output of 595,823 ounces during the fourth quarter. The results compared with 2011 production of 2.02 million ounces of silver.

Bellekeno also produced more than 18.18 million pounds of lead and nearly 5.68 million pounds of zinc in concentrates in 2012, compared with 16.45 million pounds of lead and 7.22 million pounds of zinc in concentrates in 2011.

In the fourth quarter or 2012, mill throughput increased to a record 291 tpd average, up 9 percent over the previous quarter which was itself a throughput record. Mill throughput also continued to improve during the fourth quarter, peaking at 350 tpd. For the full year 2012, average mill throughput increased 17 percent over the previous year to 260 tpd.

In the fourth quarter, mill throughput was managed to match mine production rates of about 250 tpd toward the end of the quarter, as stockpiles and inventory were drawn down in accordance with plan. Alexco said Bellekeno's mine production rates will continue at this level into the first quarter of 2013.

Mill availability improved in the fourth quarter to 94 percent as a result of continued improvement in maintenance scheduling and operator training initiatives. The silver ore grade increased from the third quarter, as anticipated, by about 70 g/t as the mine sequenced back into higher grade areas. Continuation of this improvement was anticipated into the first quarter of 2013.

Operations at Bellekeno are expected to continue at generally the same pace as 2012, with guidance for silver production in the range of 1.9 million to 2.1 million ounces of silver, as well as approximately 17 million pounds of lead and 9 million pounds of zinc.

Alexco also said silver production at its Yukon operations in 2013 will be sourced from two new mines - Onek and Lucky Queen - in addition to Bellekeno.

The quartz mining license to allow mining at both Onek and Lucky Queen is in the final stages of approval. With respect to a water license amendment authorizing ore milling, the 'declaration of adequacy' has been received and a routine Yukon Water Board hearing has been scheduled for later in the first quarter.

Development work is progressing at both mines. Some 1,200 meters of rehabilitation of the Lucky Queen historical adit is complete and the additional time available due to permitting delays will be used for development of 200-meter or so primary incline to access higher grade areas of the Lucky Queen resource. At Onek, surface facilities are in place and the primary decline is progressing well with less than 200 meters remaining to reach the mineralization.

Though Bellekeno experienced several weeks of intensely cold conditions in the fourth quarter, Alexco President and CEO Clynt Nauman said the operation still achieved nearly record silver production. "It is a testament to our people that they have been able to not only operate but improve performance through this quarter. We have continued to build on our third quarter improvements in mill throughput, and with mill-related mechanical modifications we are confident we can ramp up to the 400 tpd target as feed is added from our newly developed Onek and Lucky Queen mines once appropriate permits are received," he observed.

Nauman said Alexco also achieved unprecedented exploration success in 2012 "with a 52 percent increase in our district consolidated silver resources to approximately 57 million ounces, and excellent drilling results from the recently discovered Flame & Moth deposit. We expect to have more good news in 2013 as we recalculate our Flame & Moth and other resources based on exploration results from the latter half of 2012," he added.

Near-capacity VMS output

At the Wolverine high-grade zinc-silver-copper-lead-gold mine located 282 kilometers (175 miles) east-northeast of Whitehorse in southeastern Yukon, owner Yukon Zinc Corp. is currently focused on ramping up the operation to full production of 1,700 tpd. In November, the privately held company reported operating at about 90 percent of full capacity at Wolverine, or roughly at 1,600 tpd. The mine began mill commissioning in late 2010.

Yukon Zinc reported achieving commercial production of 1,020 t/d or 60 percent of capacity at Wolverine over a 30-day period on March 1, 2012.

The Wolverine deposit, discovered in 1995, is a classic volcanogenic massive sulphide deposit hosted in felsic volcanic and argillaceous sedimentary rocks of probable mid-Paleozoic age. Wolverine's current mine life is about 9.5 years based on a 5.2 million-metric-ton deposit, and there is potential to expand the reserve through drilling.

Yukon Zinc completed major site construction at Wolverine in 2009 and 2010. Concentrates from Wolverine are trucked to a deep-water port in Stewart, B.C.

In October, the latest month for which figures are available, Wolverine continued to improve its processing rates and milled more than 46,000 metric tons of ore, according to a newsletter published by the privately held company.

Yukon Zinc plans to reach full operating capacity of 1,700 tpd during the first part of 2013, according to a company spokesman.

Yukon Zinc, meanwhile, completed construction lift of the fully lined tailings facility to ultimate height (capacity about1.4 million cubic meters of water). The tailings facility is built to withstand a 1:10,000-year seismic event.

The company also completed pilot water treatment test work in 2012. The results successfully demonstrated the ability to reduce all metal contaminants, including selenium, and organic/in-organic contaminants below the water discharge criteria. Water at the Wolverine mine is treated by passing it through an electro-biochemical reactor system, a new technology developed by Inotec Inc. from the University of Utah.

As part of its "Wildlife Protection Plan," Yukon Zinc contributes C$10,000 annually to the Yukon Government's Finlayson Caribou Annual Survey, hosts a Wildlife Technical Committee with participation from Kaska First Nation members from Ross River and Watson Lake and a regional biologist from Watson Lake. This committee tours key areas at site and provides input on the monitoring program and reviewing the company's annual wildlife monitoring report.

In 2012, Yukon Zinc became the first company to be honored by the Government of Yukon with the new Robert E. Leckie Award for Responsible and Innovative Mining Practices. Yukon officials lauded the company for successfully installing a functioning biochemical water treatment system and enlarging a lined tailings facility which involved raising a dam by seven meters and doing so in a responsible manner that significantly decreased the mine's overall environment impact.

Yukon Zinc also conducted on-site heavy equipment operation training, which saw six Yukon First Nation citizens receive certification.

"The ongoing relationship with Ross River Dena Council and Liard First Nation through employment, training, and traditional ceremonies at the Yukon Zinc mine site show a high commitment to social responsibility," observed the Hon. Brad Cathers, Yukon's Minister of Mines and Resources, in a statement. "Community engagement like this is essential for Yukon's mining industry to be successful in the long term."

Yukon Zinc also won the Robert E. Leckie Award for Excellence in Environmental Stewardship in the quartz mining category in 2011 for its leadership in applying innovative practices and technologies at the Wolverine Mine that will greatly benefit all in the exploration and mining field. The award was given for the company's work in water treatment, the use of recycled waste for heat production, its cost-effective and environment-friendly sewage treatment plant and its excellent approach to social responsibility.

The company employed 334 workers (including contractors) at Wolverine in October, down from 363 employees and contractors in July.


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