McArthur River, Batu Hijau among bright lights of 1999

Although 1999 put many established miners to the test, the year also saw the startup of several new mines both at home and abroad.

Junior Moydow Mines International (MOY-T) and its partners kicked off 1999 by celebrating the first gold pour at their open-pit Wassa mine, near Accra in Ghana.

Ownership in Wassa is divided among Moydow, with at 31%, Irish-listed operator Glencar Mining, at 59%; and the Ghanaian government, at 10%.

The US$42.5-million heap-leach operation is expected to produce about 90,000 oz. gold in its inaugural year, with total cash costs over the life of the mine pegged at US$180 per oz.

When mining began, reserves were estimated at 23 million tonnes grading 1.4 grams gold, equivalent to 1 million contained ounces gold. Overall resources (including reserves) stood at 50 million tonnes grading 1.25 grams gold, equivalent to 2 million oz. The partners expect that further drilling will continue to boost tonnage into the reserve category.

Olympic Dam

Also in the first quarter, Australia’s WMC (WMC-N) derived its first production from a major expansion of the Olympic Dam copper-uranium mine in South Australia, boosting the mine’s annual copper capacity to 120,000 from 85,000 tonnes.

The US$1.27-billion program entailed: sinking a third haulage shaft; enlarging a hydrometallurgical plant for uranium production: building a smelter, acid plant and precious-metals refinery; and expanding a copper refinery.

Olympic Dam’s annual production is expected to soar to 200,000 tonnes copper, 4,600 tonnes uranium oxide, 78,000 oz. gold and 850,000 oz. silver from the treatment of 9.2 million tonnes of ore.

San Andres

In March, following months of delays, beleaguered Greenstone Resources (GRE-T) poured its first gold at the San Andres open-pit, heap-leach mine in Honduras.

The startup delays were caused by engineering changes made to the conveyor system and delays in steel fabrication, as well as damage inflicted by Hurricane Mitch.

The good times didn’t last long, however, as mining operations were suspended periodically in mid-summer, owing to insufficient working capital. By September, Greenstone had initiated a lawsuit against its bankers.

Up to Sept. 30, San Andres had produced 32,197 oz. gold at a cash cost of US$233 per oz. from 1.3 million tonnes grading 1.81 grams gold.

The figures fell far short of Greenstone’s expectations. Even as late as March 1999, the company had projected that San Andres’ 1999 output would be 117,000 oz. at a cash operating cost of US$120 per oz. At design capacity, San Andres had been expected to crank out 180,000 oz. yearly from reserves of 20.5 million tonnes grading 1.1 grams gold.

Murrin Murrin

In May, the global nickel industry ushered in a new age with the commissioning of the US$650-million Murrin Murrin nickel-cobalt mine near Leonora in Western Australia.

The project, 60%-owned by Australian operator Anaconda Nickel and 40%-owned by Switzerland’s Glencore International, is the first major operation to exploit dry nickel laterites using a pressure-acid-leach (PAL) process. (Two smaller Aussie PAL operations — Bulong and Cawse — actually began producing nickel and cobalt metal several months before Murrin Murrin.)

Murrin Murrin got off to a rocky start, however, as the PAL plant had to be shut down for three months in mid-year while four autoclaves were overhauled.

Amid the startup problems, Anaconda drew encouragement from equity positions taken in the company by Canada’s Sherritt International (S-T) and South Africa’s Anglo American (AAUK-Q). Anglo, with a 23% stake, became Anaconda’s largest shareholder following a US$160-million placement.

Murrin Murrin is scheduled to reach its annual design capacity of 45,000 tonnes nickel and 3,000 tonnes cobalt by mid-2000. A US$650-million expansion program, now under way, could eventually boost production to 115,000 tonnes nickel and 9,000 tonnes cobalt annually over a 30-year mine life.

Murrin Murrin’s total reserves are pegged at 306 million tonnes grading 1% nickel and 0.064% cobalt using a cutoff of 0.8% nickel.

Anaconda closed out the year by launching a US$192-million lawsuit against its lead contractor, Fluor Daniel, after blaming the engineering firm for the PAL plant’s startup woes.

McClean Lake

In June, following months of deferment, Canada’s federal Atomic Energy Control Board approved an operating licence allowing yellowcake production at the McClean Lake uranium project in northern Saskatchewan.

The AECB had originally postponed its approval in December 1998, two months after issuing a cease-work order at the McClean Lake tailings facility. Of concern to the AECB was a “major deficiency” in the construction materials used for a filter drain in the mined-out JEB pit, which was to serve as a containment pit for tailings from the McClean Lake mill.

With production finally getting under way in the summer of 1999, stockpiled uranium ore from the JEB pit provided initial mill feed. By late autumn, operations had not yet reached annual design capacity of 6 million lbs. U3O8.

Ownership of the McClean Lake project is divided among French-government-owned operator Cogema Resources, with 70%, Denison Mines (DEN-T), with 22.5%, and OURD Canada, an arm of Japan’s Overseas Uranium Resources Development Co., with 7.5%.

Bell Allard

A second Canadian operation that opened in mid-year was Noranda‘s (NOR-T) wholly owned Bell Allard high-grade zinc-copper mine in Quebec’s Matagami region.

Benefiting from the Matagami division’s existing infrastructure, the $113-million underground operation is now producing 2,000 tonnes per day and is designed to yield an average of 94,000 tonnes zinc annually over a minimum mine life of five years.

Noranda’s production decision was based on reserves of 3.2 million tonnes grading 13.77% zinc and 1.5% copper, plus 43.45 grams silver and 0.76 gram gold per tonne. The global resource exceeds 6 million tonnes.

HudBay’s Konuto

In September, Anglo American (AAUK-Q) subsidiary Hudson Bay Mining & Smelting officially unveiled its $28.2-million Konuto underground copper-zinc mine, 16 km southwest of Flin Flon, Man., near the Saskatchewan border.

During its projected 6-year life, the 800-tonne-per-day operation will exploit a steeply dipping volcanogenic-massive-sulphide deposit that extends from near surface to a depth of 450 metres. Total reserves are pegged at 1.6 million tonnes grading 4% copper and 1.2% zinc.

Ore will be mined by cut-and-fill methods in three main stoping blocks, with waste rock and slag used as backfill. A ramp that now provides access to a depth of 240 metres will eventually be extended to 465 metres.

Currently, ore is being trucked to surface, crushed and then sent to HudBay’s expanded concentrator and metallurgical plant in Flin Flon.

In the same camp, HudBay is developing its Chisel North zinc deposit, near Snow Lake, and the 777 copper-zinc deposit, near Flin Flon. The work is part of a $360-million program due for completion in 2004.

McArthur River

In early December, Cameco (CCO-T) and Cogema Resources began mining at the $420-million McArthur River underground uranium operation in northern Saskatchewan. Serving as operator, Cameco holds a 70% interest, with the remainder held by Cogema.

With McArthur River being the largest known high-grade uranium deposit in the world, ore must be mined using remote-controlled raisebore methods and crushed underground. The material is then pumped to surface as a slurry for trucking to Cameco’s Key Lake mill, 80 km away.

Cameco predicts the operation will attain commercial production in the first half of 2000, with production for the entire year projected to exceed 11 million lbs. U3O8. At full production rates in 2002, the operation should churn out 18 million lbs. U3O8 annually.

The McArthur River deposit contains an impressive reserve base of 668,000 tonnes grading 17.3% U3O8, plus a resource of 859,000 tonnes of 12% U3O8.

Batu Hijau

Ending the year on a high note, partners Newmont Mining (NEM-N) and Japan’s Sumitomo recently shipped the first concentrate from their huge Batu Hijau copper-gold mine on the Indonesian island of Sumbawa.

Ownership is split 45-35 between Newmont and the Japanese-based major; Indonesia’s Pukuafu Indah holds the remainder.

Construction at Batu Hijau began in 1997 and was completed more than a month ahead of schedule and US$130 million under budget. Total capital costs amounted to US$1.8 billion.

Ore from the open-pit mine is crushed and conveyed 6 km to a concentrator, where, after flotation, concentrates are piped to a port facility. Tailings are deposited on the seabed, more than 4 km below sea level.

Batu Hijau is expected to produce 615 million lbs. copper and 515,000 oz. gold annually over a mine life of 20 years. Cash costs are pegged at less than US50 per lb. copper, after gold credits.

During the first five years of operation, the mine is expected to account for 2.5% of the world’s copper output.

Reserves stand at 11.8 million oz. gold and 10.6 billion lbs. copper in 910 million tonnes grading 0.4 gram gold and 0.52% copper. Copper and gold mineralization is associated with porphyry-related intrusions into a volcanic carapace.

Although the first shipment headed to Japan, the mine has long-term sales agreements with copper smelters in Korea, Australia and Europe.