Vancouver — Drilling has enabled
Kemess North now hosts a resource of 442 million tonnes grading 0.4 gram gold per tonne and 0.23% copper, or 5.7 million contained ounces gold and 2.2 billion lbs. copper. This calculation is based on a gold-equivalent cutoff grade of 0.6 gram gold per tonne and gold and copper prices of US$325 per oz. and US90 per lb., respectively. The deposit hosts a higher-grade core of 170 million tonnes grading 0.5 gram gold and 0.29% copper based on a cutoff of 0.6 gram gold. (The previous resource calculation was 360 million tonnes grading 0.154% copper and 0.3 gram gold.)
“These results substantiate our view that Kemess North represents significant potential to extend the mine life at Kemess,” says Northgate President Ken Stowe. “Kemess North will benefit from its proximity to our existing infrastructure, which will significantly lower the capital required to bring the project into production following the completion of mining at Kemess South.”
Earlier this year, Northgate commissioned Optimum Project Services to perform a scoping study to determine the feasibility of transporting ore from Kemess North to the mill site. Two methods of ore transport were evaluated: truck haulage using an access road, and conveyor transport via an overland route or a combined tunnel and overland route. Northage has opted for the latter; such a conveyor system would stretch 8 km along a surface and underground route. This route would feature a 3.9-km conveyor tunnel with the conveyor suspended from the back of the drift. Vehicles would use the tunnel to transport supplies and workers. It would run at a 3,650-tonne-per-hour design rate, and no transfer points would be required, meaning only one single flight conveyor would be used.
The expanded resource at Kemess North is the result of a 16-hole, 8,200-metre program of diamond drilling in October. Intersections revealed higher gold and copper grades than were previously known to exist. The best intersection averaged 1.54 grams gold and 0.6% copper over 100 metres.
There are two basic rock types at Kemess North: Takla volcanics and a quartz monzodiorite. The volcanics overlie a porphyry dome. This year’s drill program moved northeast over a ridge and drilled through the volcanics. Northgate says there is a noticeable trend of increasing grade toward the northeast, as well as at depth. The porphyry system at Kemess North is characterized by an extensive surface gossan measuring 3.5 km in strike length.
Faulted extension
Northgate reports that two holes intersected a north-south-trending fault that appears to bound the mineralization on the east. This fault supports the company’s theory that the Kemess East target is the faulted extension of the Kemess North deposit.
Initial results of preliminary metallurgical tests on drill core from the recent program suggest the material is amenable to recovery by Northgate’s existing flotation process at the Kemess South mill. The material is reportedly softer than at Kemess South, which could translate into higher throughput and lower unit costs.
Next June, Northgate will begin delineating the shape and extent of Kemess North mineralization, while drill-testing other targets in the vicinity of Kemess North. The company holds 30,800 hectares surrounding the Kemess mine.
Of particular interest are the Nugget and Kemess East targets, which both within 2 km of the North deposit. Kemess East is believed to be the faulted-off eastern extension of Kemess North, 600 metres to the southeast, whereas Nugget is along strike and 1.1 km west of Kemess North.
In the third quarter, Northgate incurred a loss of $5.5 million (or 18 per share) despite generating a positive cash flow from its Kemess South gold-copper deposit.
The loss, which is attributed to historically low copper prices, is nonetheless an improvement over the $8.3-million loss (28 per share) reported for the third quarter of 2000.
Higher gold output
The Kemess mine poured 64,271 oz. gold in the recent quarter, compared with 59,400 oz. a year earlier, while copper production dropped to 6,530 tonnes from 7,080 tonnes. The decrease is due to the treatment of more lower-grade leach-cap ore.
The company realized an average gold price of US$273 per oz. in the latest quarter, with copper averaging US$67 per lb. In the year-ago quarter, the mine cranked out 68,023 oz. gold and 6,440 tonnes copper at a cash cost of US$185 per oz. (net of byproduct credits).
The net realizations were improved by $3.5 million during the third quarter as a result of forward sales contracts, which were closed out against production.
Gold grades at the operation climbed to 0.81 from 0.69 gram per tonne between the two periods, with copper grades remaining steady at 0.22%. Recovery rates came in at 64% for gold and 76% copper, down from 68% and 79% a year earlier.
At the end of 2000, reserves at the mine stood at 145.9 million tonnes grading 0.65 gram gold per tonne and 0.24% copper.
This year, Northgate hopes to produce a total of 275,000 oz. gold and 30,390 tonnes copper at a cash cost of US$200 per oz. gold (net of byproduct credits).
Total production at Kemess in 2000 was 225,994 oz. gold and 22,860 tonnes copper, and cash operating costs averaged US$248 per oz. gold. The average mill head grade was 0.778 gram gold and 0.22% copper. Recoveries were pegged at 64% and 74% for gold and copper, respectively.
The Kemess South mine is 250 km north of Smithers.
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