Coeur d’Alene gets a handle on Kensington

Opening up a new mine is seldom an even process.

But after toughing through operational issues and the death of one of its miners Coeur d’Alene Mines says its Kensington gold mine in Alaska is back at full production ahead of schedule.

It was only in November of last year when the company announced a slowdown at the mine so that it could focus on a series of projects aimed at reducing costs and achieving more consistent production levels.

The need for such improvements can be seen in the operating results for the mine last year — its first full year of production — as it turned out 88,420 oz. of gold but at high cash costs of US$1,088 per oz.

Despite those higher than industry average costs, the mine still managed to generate operating cash flows of US$36.1 million.

Those cashflows point to the mines potential, and Coeur’s recent work was set upon with an eye to realize some of that potential.

Work over the last five months included commissioning an underground paste backfill plant, upgrading the mine’s electrical infrastructure and further developing the underground mine so that it would gain exposure to more working faces thus gaining greater operational flexibility.

The company also accelerated its drill work and has finished 8,500 metres of definition drilling so far this year at the project which sits 72-km north of Juneau.

Up on the surface Coeur was busy building a new warehouse, dormitories and a bigger dinning facility.

Back in November Coeur said it would reduce processing rates by 50% to 700 tonnes per day at the mine so that it could get a better handle on inconsistent early results, and that it would take 6 months to do it. The company managed to finish a month ahead of schedule.

Coeur also said at the time that it was improving the overall safety of the operation.

That last point has special relevance in light of the death of miner Joseph Tagaban in September of last year. Tagaban’s death was connected to a mine blast at the site and an investigation by the U.S. Mine Safety and Health Administration ruled that the company should have done a better job training workers on blast safety.

And while Coeur says 2012 production totals will be similar to last year’s, it predicts that costs will begin to decline in the second half of the year as production levels increase

For 2013 and beyond the mine is slated to turn out between 125,000 and 135,000 oz. of gold per year. Such higher production totals will help to drive down costs as a large component of any mines costs are fixed, which decrease as they generate more revenue.

Kensington currently has proven and probable reserves of 5.4 million tonnes grading 6.24 grams gold per tonne for 1.3 million oz. of gold and measured and indicated resources of 2.8 million tonnes grading 5.47 grams gold for 587,000 oz.