Axiom: mines are made in force at Dumagami

The successful development of the Dumagami Mines’ gold property once again goes to show the power of the old axiom that mines are made rather than the product of a happen-chance discovery, notes President Paul Penna in the annual report.

The pivotal event for the property located in Bousquet and Cadillac twps., Que., was the discovery of the new and higher grade West Zone which has now been traced from above the 600 level elevation to a depth of 3,400 ft from surface — a vertical extent of nearly a half mile and still open.

The added data from the detailed exploration and development program on the West Zone from the sixth and eighth levels which was completed in mid-August, provided a basis for an upward revision of the ore reserve inventory.

This inventory in the categories of probable, possible and drill indicated is currently estimated at 5.4 million tons at an average grade of 0.134 oz gold per ton. This includes the approximate two million tons at an average grade of 0.185 oz attributable to the mine area from the 13th to the 22nd level horizons, a vertical extent of some 1,200 ft.

In addition there are geological reserves for which insufficient drilling has been done to include in reserves. This category represents an estimated 1.1 million tons.

This increase in reserves, enabled a sound economic basis to proceed to large-scale production and the attendent $31.9-million commitment, explains Mr Penna.

Engineering design for a 2,000- ton-per-day concentrator for planned start-up by mid-1988 is already in progress, concurrent with the deepening of the shaft from its present bottom at 1,476 ft to a depth object of 3,200 ft. This will include additional underground development on the 11th, 16th and 21st levels to confirm tonnages and grade of the West Zone.

The shaft-deepening program is already in progress, notes Mr Penna, with level development to access the West Zone expected to be finished by mid-1988 to coincide with scheduled completion of the milling complex.

Construction of the concentrator is planned to start in May, 1987. Design of the mill flow sheet and metallurgical tests are nearing completion. Some of the major equipment items have already been acquired, including two ball mills and two cone crushers.

The capacity of the concentrator has been determined at 2,000 tons per day or 630,000 tons per year. Excess capacity is provided for likely treatment of ore from the Goldex Mines property in the Val d’Or area.

The carbon in pulp process has been incorporated into the flow sheet. Preliminary estimates based on 1,800 tons per day throughput rate including an open pit mining option, indicate a cash cost of about $38 to $39 per ton. After depletion of the optional open pit reserves, the operating cost for the 1,500-ton- per-day underground operation would be in the order of $41 to $42 per ton.

Project financing will be devoid of funded debt, Mr Penna says. Existing cash resources remaining from the 1983 financing total about $9.5 million. Supplemental financing for the shaft program for $4 million is already arranged via a flow-through financing arrangement with parent Agnico-Eagle Mines. The remaining balance of approximately $13.5 million is under active negotiation, says Mr Penna.

Mr Penna notes that drill intersections from surface drilling at neighboring Lac Minerals’ Bousquet mine property of similar ore grades over good core lengths provide a significant added degree of confidence to Dumagami’s reserve estimates. Indeed, Dumagami and Lac are jointly funding a deep exploratory drill hole sited on the common boundary. This hole will be drilled to test the approximate 3,800-ft horizon. Results are expected late this month.