New deep ore zone excites Dramatic mine turnaround for Dickenson

“This is one helluva mine,” says Dickenson Mines’ President and Chief Executive Officer Peter L. Munro with justified pride, for he has engineered a dramatic turnaround in the fortunes and outlook at this veteran 40-year-old gold producer which just a few short years ago was a dying mine on the verge of bankruptcy.

Today, the ore picture has never looked better, output and earnings are rising steadily, the company has over $40 million in working capital and is in the throes of expanding its entire operation.

There are indeed some exciting new developments taking place, The Northern Miner found on a trip underground. For far to the east and well into the hangingwall is a brand new ore occurrence of excellent grade and with real tonnage potential. While pointing out that a lot more work will be required to get the full ore picture here, it certainly is a wide open situation that is starting to line up over a length of 3,000 ft, according to chief geologist Jim Rogers. “It looks like a whole new mine shaping up. It could prove just as good as the rest of the mine — another 40 years perhaps,” he says. (More on this later.)

Reflecting this new development coming at a time when gold itself is on a strong uptick, Dickenson’s shares have turned strong in active trading on both the Toronto and American Stock Exchanges, reaching a longtime high of $10.50, up from a low of $6.50 earlier this year. And closely associated Kam-Kotia Mines, which virtually controls Dickenson through its holdings of a 33.3% voting interest, likewise rose to a new high of $2.80 in very active trading on the TSE, double its year’s low of $1.40. (There are absolutely no plans for any corporate marriage of these two companies, Mr Munro says).

Also, this new development spells good news for Montreal- based Sullivan Mines Inc., another veteran company that has been in the gold mining business for many years. For it owns a direct 34% interest in this Red Lake mine through a gutsy (and fortuitous) $10.2-millon cash purchase made in the darkest days of 1982 when gold was selling under $300 — a sum which it completely recouped in just over three years of its joint venture undertaking. “We like it and intend to keep it. We consider this a darn good investment,” R. J. Lafleur, Sullivan’s secretary-treasurer and vice-president finance, told The Northern Miner.

Now known as the Arthur W. White mine after its founder, and adjoining the prolific Campbell Red Lake on the east, it has turned out some 2.5 million oz of gold from 5.5 million tons of ore milled since 1948.

Production, which has risen in each of the past four years, should reach 72,000 oz this year without difficulty, well up from 1985’s 62,700 oz. Next year’s total output is projected at 84,000 oz while 1988 is expected to see 98,000 oz when the mill reaches its current capacity of 1,000 tons.

There are over 45 miles of lateral workings in this mine and 1,683,390 ft of underground diamond drilling, which work has developed nine separate ore zones within a favorable area a mile long and about 3,000 ft wide, an area that is still far from being worked out. New shaft possible

However, there is but a single production shaft from surface, extending to a depth of 3,589 ft (24th level) which virtually limits any significant milling expansion above 1,000 tons daily, unless of course, a new production shaft is put down from surface. (This should not be ruled out.)

Some 3,000 ft southeast of the No 1 shaft is a similar-sized internal shaft or winze that extends from the 22nd level to the 38th, a total depth from surface of 5,600 ft.

At the present time 30%-40% of the mill feed is coming from No 2 shaft developments, the proportion of which will gradually increase as time goes on. So will grade, which could well climb into the 0.40-0.45 oz range. But this deep ore will also be more costly to mine, for it can already require as much as 45 minutes just to get to a working face.

No dramatic changes in ore reserves are expected at this stage, although it can be stated that these are being comfortably maintained both as to tons and grade, both of which will likely be moderately higher come year-end. As at Dec 31, 1985, these were conservatively reported at around 3 million tons grading 0.33 oz. Rather it is working places (stopes) that pose the current bottleneck.

Right now, there are just 16-19 active stopes to provide the current daily mill rate of just over 700 tons. Management would like to have at least 30 stopes developed, which would lead to the maximum mill rate and a higher grade. But more importantly, management wants to see just how big a mine this really is.

“We could be looking at as much as a 17-million-ton mine,” says Mr Munro. If that proves to be the case, there would be another 12 million tons to go “so we certainly should not be mining at our current rate.” Heavy development program

To this end a very heavy development program is under way, with this year’s target shooting for 14,000 ft of drifting and raising and 72,000 ft of underground diamond drilling. And it will be more next year. Such a rate is far in excess of what would be considered normal for the current mill rate.

The geological department, which has a staff of nine (two in 1980 when the mine was in trouble), is now pretty well running the show at this mine. Strong on structure and detail, it has already seen this change from a played-out ore situation to a wide open one.

Much of the current work, naturally, is focussing on the new deep hangingwall zone referred to earlier, from which geologist Rogers hopes to eventually match the 3,000 tons per vertical foot of ore developed in the old mine. (As a general rule of thumb, the mill rate for a gold mine should be half the tonnage per vertical foot that the deposit generates).

The first intimation of something brand new was picked up in long exploratory drilling on the 30th level some 3,000 ft east of the No 2 shaft, which returned intersections like 0.92 oz over 10 ft. Subsequent probing quickly found this ore to extend up to the 25th level where it was at first thought to top but where high grade ore has since been picked up. And now there are strong indications of ore in this same structure on the 21st level. No drilling whatsoever has yet been done in this area above that horizon. So it could extend right on up through the mine, as that area remains wide open.

Certainly this is a strong-looking structure on the 30th level, the deepest horizon on which actual drifting in the new ore has been done and where 2,000 ft is scheduled to be carried out this year. Here we saw some excellent ore. This is in what is known as the 30-857-1 east drift which was 80 ft long at the time of the visit, with the face advancing in high grade (6.0 oz). Slashing and drilling into the walls indicate ore widths up to 80 ft. This is expected to mine out at a grade of about 0.4 oz with the nugget effect of coarse visible gold compensating for waste inclusions.

No probing has been done in the 600-ft interval between this ore shoot and that being developed on the 26th level. Certainly if the likes of this ore were to occur near surface, it would make a bonanza open pit.

Nor are the fine ore findings that are turning this operation around limited to this new hangingwall area, as a visit to the 23rd level showed. Here we saw a high grade stope just getting started on the main East South C zone in what is called the 23 complex from which 3,200 tons were recently extracted which averaged l.2 oz. Whereas most of the ore in this zone strikes northeast- southwest, this particular occurrence is in a north-south stucture branching off the main zone, not unlike some of the rich shoots being mined at the Campbell. Over-all ore grade from this stope is expected to average around 0.80 oz per ton. More costly at depth

As workings are carried deeper, ground conditions are proving more difficult and costly to mine. This requires more and more cut-and- fill stoping, as well as much rock bolting. Nevertheless this mine boasts an excellent safety record.

Hoisting the large amount of waste rock from the big development program is taxing the hoisting capacity, so that as much of this material as possible is left underground (about 35%).

It is currently costing around $240(US) to produce an ounce of gold at this mine, a figure that is expected to drop to $227 next year, John Kachmar, the company’s vice- president, finance and treasurer, told a group of analysts who visited the operation recently. Each $25 increase in the price of gold spells an additional 9 cents per share in earnings, he said. Net income for the 6-month period to June 30 was $1,318,000 or 12 cents per share, compared to $688,000 or 6 cents a year earlier.

Further evidence of the longevity Dickenson’s new management sees for its Red Lake operations is the decision to erect 24 new 3- bedroom town houses. Also, the company has closed its bunkhouse and dining room (one of the best in the north) and replaced it with a fine new complex of 104 fully modern single- man apartments. While these are being built, financed and managed privately by the same party, they are being guaranteed by the company for 10 years.

At the present time there are 290 on the payroll at Red Lake, including 70 salaried empoyees. In addition, the contracting firm of Aurora Quarrying Ltd. has 18 men on the job pushing the heavy development program under way on the 30th level.

Senior operating staff under Manager Peter C. Busse includes Larry Connell, mill superintendent; Joe Sullivan, mine superintendent; Brian Chandler, plant superintendent; Jim Rogers, chief geologist; Ronald Robinson, chief engineer; William Henry, mine controller and Dennis Brown, safety co-ordinator. (Next week, the Campbell Red Lake mine).