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Feasibility study finds Lynn Lake glitters with gold
A gold mine is a step closer to becoming reality in Lynn Lake, Manitoba. A feasibility study for Toronto-based Alamos Gold Inc. (TSX: AGI) released in December estimates two open-pit mines near the northern Manitoba town could yield 1.6 million oz. of gold.
Capital costs to build the mine is estimated at US$338M, with a potential after-tax return of US$123M, based on the price of gold at US$1,250 an ounce.
While an Alamos spokesman cautioned there is still a process for the company to go through, a positive feasibility study is usually the catalyst for mine construction.
“It’s exciting, but let’s put it in perspective: it’s excitement for the province,” said Jim Fielder, chief administrator for the Town of Lynn Lake.
A mine would mean hundreds of jobs, along with the economic spinoffs that come with it – including a surge in hydroelectricity demand, and requirements for numerous services including food, gasoline and trucking. Construction is expected to require in the range of 500 jobs. About 500 employees will also be needed when the mine is fully operational, the company said.
Alamos has conducted mineral exploration since it purchased the mine sites last year for $20 million. Its more recent exploration results are not part of the feasibility study, and could improve the venture’s profitability, a company official said.
However, a mine is probably still at least four years away. Alamos must now go into what’s called the permitting stage: obtaining government permits, including an environmental impact assessment. That can take two years. Construction would likely take another two years. The new mining activity would be at two former gold mine sites that have been closed for decades.
The MacLellan site was formerly run as an underground gold and silver mine between 1986 and 1989. The other site, the former Gordon mine, operated as two open-pit gold mines, from 1996 to 1999.
Alamos would run both MacLellan and Gordon deposits as open-pit mining operations, said Alamos spokesman Scott Parsons.
“The feasibility study outlines solid economics,” Parsons said. “We’re going to be working to improve the economics before it gets to construction” through further exploration and studying things such as the possibility of contract mining.
The biggest factor making the shuttered mines viable again is gold’s price of $US 1,250 an ounce, Parsons said. That’s down from three years ago, when the price reached $US 1,800.
Alamos has an exploration agreement with Marcel Colomb First Nation, he said.
Lynn Lake, 820 km. northwest of Winnipeg, began in 1950 as a mining town and is the northernmost point in Manitoba reachable by all-weather road.
Sherritt Gordon first began mining copper ore in the area in the 1920s. The town was named after Sherritt Gordon’s chief engineer, Lynn Smith. It has a population of about 700, and is the birthplace of rock musician Tom Cochrane.
In a statement, the province said it is pleased Alamos is progressing with its work in Manitoba. “We will work with Alamos to ensure that a thorough, transparent and predictable permitting process takes place on our part,” it said.
(Source: Winnipeg Free Press)
Klondex reduces operations in Bissett
On January 9, Klondex Mines Ltd. (TSX: KDX) announced a change in operations, which includes the immediate reduction of underground mining operations and workforce at its True North mine in Bissett, Manitoba.
Following an extensive review of recent operational performance at True North, Klondex has decided to limit underground mining to areas already developed. Once these areas are depleted, underground mining will be suspended. The decision was largely based on the site’s inability to achieve planned operating and cash flow metrics in 2017. Preliminary full-year 2017 gold ounce production from True North is estimated to be approximately 24,000-27,000 ounces, which is less than the 35,000-45,000 ounce range of the company’s guidance.
The mine will be placed on care and maintenance status after the developed areas are mined to review strategic options and to provide optionality at higher metal prices. Klondex will continue to process tailings, as contained in its reserve estimate, through the mill for the foreseeable future in order to maximize cash flow and offset expected care and maintenance costs. Going forward, Klondex projects annual site free cash flow of $2 to $4M at current metal price levels assuming a processing rate of approximately 1,400 tpd from tailings grading 0.035 Au/opt (1.20 Au/gpt) from April through October, weather dependent. The average tailings grade processed in 2017 was approximately 0.05 Au/opt (1.71 Au/gpt).
Certain operational improvements made and additional understanding of the vein structures and mining methods over the past year have encouraged Klondex. This information will help the company better define future alternatives.
The True North mine enjoyed a successful drilling campaign in 2017 and expects to release a new resource estimate in Q1 2018. In addition, the Ogama-Rockland property, recently acquired through the Bison Gold Resources acquisition, is approximately 30 km. from the mine and has an inferred resource of 337,000 gold equivalent ounces. Klondex will assess the potential of processing ore from both the True North mine and the Ogama-Rockland property through the True North mill.
Paul Huet, President and CEO, said, “We regret the implications these actions will have on our workforce and other stakeholders but must ensure the long-term sustainability of the Company. True North and the recently acquired Bison Gold Resource properties continue to be valuable assets and we are taking the necessary steps to build the foundation for their long-term success within the Klondex portfolio.”
Landmark Exploration Agreement
Bunibonibee Cree Nation is pleased to announce that it has entered into a mineral Exploration Agreement with Altius Resources Inc. (TSX: ALS) to promote a cooperative and mutually respectful relationship relating to mineral exploration activities undertaken by Altius in Bunibonibee Cree Nation’s territory.
As part of the Exploration Agreement, Bunibonibee gave its consent to Altius’ preliminary exploration activities related to Altius’ Lynx Project, the first diamond discovery in Manitoba. “We are supportive of mineral exploration in our territory if a company comes to us in a respectful way to seek our consent, and if the exploration is done in a responsible way,” said Chief Tim Muskego of Bunibonibee Cree Nation. Although common in other provinces and Territories, exploration agreements between mineral exploration companies and First Nations are relatively new in Manitoba. The leadership of Bunibonibee Cree Nation hopes this agreement will inspire other First Nations and mineral exploration companies to develop similarly productive relationships.
“This is good news for Bunibonibee Cree Nation, and it is good news for other First Nations in Manitoba who will now be able to follow our lead,” explained Chief Muskego. “This agreement protects our land, water and our treaty rights and it means we will be able to continue exercising our rights. Resource companies have to understand that when they come onto the land that we have inhabited for generations, it will only benefit them to work with us in good faith and to seek our consent. This Agreement is an example of a company doing exactly that.”
Chief Muskego noted, “We are pleased that Altius was willing to work with us to craft an agreement that is respectful of our rights. Because of their respect and understanding, we can feel comfortable supporting their project.
I encourage the Government of Manitoba and other mining and mineral exploration companies to look to this Agreement as an example of best practice going forward, as the mining industry in our territory continues to grow.”
The parties agreed to deal with each other openly, honestly, transparently and in good faith, and in a manner that respects the other’s needs and values.
Bunibonibee Cree Nation, formerly known as Oxford House First Nation, is a signatory to Treaty 5 adhesion signed in 1909 and is located on the shore of Oxford Lake, about 950 km northeast of Winnipeg.
Callinex commences drilling campaign in the Flin Flon Mining District
Callinex Mines Inc. (TSX-V: CNX) is pleased to announce that it has commenced its 2018 winter drilling campaign at the Big Island and Flin Flon Projects within the Flin Flon Mining District of Manitoba. The campaign is anticipated to consist of two drill holes totalling approximately 1,200m in the Flin Flon Mining District to efficiently test two targets with significant potential upside.
Drilling at the Big Island Project will test a high-priority borehole pulse electromagnetic (BPEM) target that spans 450m by 675m located down-plunge from the Tara Lake Deposit, one of the highest-grade zinc-rich VMS discoveries ever made within the Flin Flon Mining District.The large BPEM target at the Big Island Project is highly conductive and also has a magnetic association that suggests the target is likely caused by massive sulphides.
Additionally, the Callinex will test its Hook Lake Target at its Flin Flon Project, a target that has been identified by multiple electromagnetic surveys located near HudBay’s 777 Mine and Mill in Flin Flon. The target lies along a boundary between claims owned 100% by Callinex and claims that have been optioned.
Neepawa’s Prairie Forest Products sold
Montreal’s Stella-Jones Inc. has purchased Neepawa-based Prairie Forest Products, a Prendiville Industries Ltd. company and manufacturer of utility poles and pressure-treated lumber. Also part of the sale is the Birch River plant, used for peeling and pointing fence posts, which are then treated at the Neepawa plant. The Neepawa plant employs 50 workers and the Birch River plant employs 10.
Stella-Jones has almost $2B in sales annually and employs 1,900 people at its 37 wood treating plants across North America.
Prendiville still owns Norwest Manufacturing in Thompson, MB and Kenora Forest Products in Kenora, ON.
Exciting news: MCFM affiliates with MAMI
Mid-Canada Forestry & Mining magazine is announcing an affiliation with the Mining Association of Manitoba Inc. This affiliation brings together an industry leading quarterly publication and THE mining organization in the Province of Manitoba. Watch more on MAMI in our next issue!