Imperial, Sumitomo consider closing Mt. Polley

Low metal prices are forcing Imperial Metals (IMP-T) and Japanese partner Sumitomo to consider temporarily suspending operations at the Mt. Polley copper-gold mine at the end of July.

Built for $115 million, the central B.C. mine officially opened in September 1997. Minable reserves at startup stood at 82.3 million tonnes grading 0.3% copper and 0.42 gram gold per tonne at an overall stripping ratio of 1.16 to 1. This is equivalent to 1.1 million contained ounces gold and 544 million lbs. copper. Life-of-mine recovery rates are projected to average 82.1% for gold and 68.4% for copper.

Imperial Metals is the operator and 55% owner of the Mt. Polley mine, situated 60 km northeast of Williams Lake. Sumitomo owns the remainder. The operation directly employs 167 people and provides indirect employment for an additional 335 people.

Operating at a full production throughput rate of 17,808 tonnes of ore per day, the mine was expected to produce 100,000 oz. gold and 24 million lbs.

copper in each of its first four years of operation at a cash cost of US$181 per oz., with copper as a credit. Cash costs were based on a gold price of US$380 per oz., a copper price of US$1 per lb. and a Canadian dollar worth US70 cents.

Over the life of the mine, gold grades are projected to decrease while copper grades increase. The mine was forecast to churn out 71,440 oz. gold and 29.4 million lbs. copper annually over a 12-year life span. Using the same parameters, the cash cost of gold production over the life of the mine was pegged at US$266 per oz.

While year-end figures for the mine have yet to be released, Imperial stated the mine achieved record production levels in the month of March, producing 9,000 oz. gold and 1.4 million lbs. copper. No cash operating costs were provided.

Imperial is working on an economic plan to improve the financial conditions of Mt. Polley and is involved in negotiations with the Job Protection Commission of B.C.. The company is seeking concessions from the provincial government on power rates and on other government charges, such as port charges and local taxes. The company is also seeking wage reductions from its unionized employees.

As well, Imperial is looking at ways to renegotiate a US$39.5-million loan from Sumitomo.

The company hopes the economic plan, coupled with higher metal prices, will allow the mine to continue operating beyond July 31.

Imperial says the recent developments at Mt. Polley won’t have any bearing on its proposed merger with beleaguered Princeton Mining (PMC-T), which is also pursuing concessions from the B.C. government for its 60%-owned, newly constructed Huckleberry copper mine in the west-central part of the province.

Princeton shareholders and debenture holders are scheduled to vote on the proposed merger on April 17.