Roof collapse disrupts Con production

A collapsed roof at the Con mine in Yellowknife, N.W.T., has forced Miramar Mining (mae-t) to shut down the autoclave.

The collapse, which occurred in the oxygen plant, did not result in any injuries. The cause and impact of the incident were not yet known, but the miner expects to meet its 2002 production forecast of 130,000 oz.

The cost of trucking in liquid oxygen is expected to add $1-1.5 million to overall operating costs for 2002. A portion may be recovered via insurance claims.

The leased plant provides oxygen to the autoclave, which processes refractory sulphide concentrates from both Con and the company’s nearby Giant mine. An unaffected outdoor storage tank that can hold 285 tons of liquid oxygen is being refigured to provide a direct feed.

The collapse has not affected production in the free-milling circuit, which accounts for most of its production. Also, mined refractory material is being stockpiled for treatment later in the year.

In 2001, Con and Giant produced a total of 129,607 oz. at a cash cost of US$256 per oz. The company was looking for similar levels of production in 2002 but at a cost of less than US$240 per oz.

Earlier this year, Miramar and Hope Bay Gold (hgc-t), its long-time partner at the Hope Bay gold Project in Nunavut, announced a merger plan. Under the proposed deal, Hope Bay shareholders would receive 0.263 of a Miramar share for each share tendered. Miramar’s number of shares outstanding would increase to 102.7 million.

The merger has the support of certain shareholders and Hope Bay management, representing 41% of the company’s shares. The deal is subject to due diligence by both parties but only requires the approval of Hope Bay shareholders, who are scheduled to vote in late April.

Regulatory and court approvals are also required.

In related news, Miramar has closed a previously announced $4-million private placement of 2.7 million flow through shares at $1.50 apiece. The deal’s underwriter was paid a 6.5% commission and given an option to purchase 186,667 flow through shares until March 12, 2004, at $1.50 apiece.

Proceeds are earmarked for the Hope Bay project, where Miramar and its partner plan to spend $8 million in 2002. The program will include 100 drill holes to delineate and expand the Doris Hinge zone so that a feasibility study can be completed by year-end.

Earlier this year, resources at Hope Bay were increased to 10 million tonnes grading 13.3 grams gold per tonne. The resource is spread among the Boston, Doris and Madrid deposits.

A subsequent independent scoping study on the Doris area alone concluded that the high-grade Hinge zone can support a stand-alone operation with a capital investment of $26.7 million. A stockpile of 9,000 tonnes of Boston material would expand the Hinge zone resource to the tune of 471,600 tonnes averaging 18.5 grams gold.

The proposed daily mining rate of 600 tonnes is expected to yield 271,724 oz. of the yellow metal over 2.1 years. Initially, the near-surface deposit would be mined by open-pit methods followed by underground bench-and-fill or room-and-pillar extraction.

Ore would be delivered to a crusher set up beside the portal and then fed into the modular mill that would utilize conventional crushing and grinding, with an integrated gravity recovery circuit followed by flotation and cyanidation. The flow sheet is expected to extract 97% of the gold fed into the mill. Tailings would be deposited under water in a small lake east of the Doris Hinge zone. Cash costs are projected at US$114 per oz.; total costs, at US$177.

Assuming a gold price of US$260 per oz., the project has a payback period of 15 months, which falls to 12 months at a gold price of US$300 per oz. The mill and facilities will be designed for a 10-year life, allowing Miramar to develop other deposits in the belt.

Subject to regulatory and shareholder approval, Aurado Exploration (aeo-t) will issue 50 million treasury shares, at 5 apiece, to $2.45 million.

In connection with the placement, David Robinson has replaced Paul Conroy as a director of Aurado. Robinson is the president and chief executive officer of Calgary-based Tracer Petroleum.