Production nearing for Ketza River gold

An in-house feasibility study prepared by Canamax Resources and audited by Wright Engineers recommends production for the Ketza River gold property in the Yukon. The $21.1- million project is a joint venture between Canamax and Edmonton-based Pacific Trans-Ocean Resources.

Only one significant hurdle has to be overcome before final approval is given. The joint venture will require a favorable ruling on its water licence which the Yukon government must submit for final review to the Ministry of Indian and Northern Affairs in Ottawa.

According to Canamax Vice- president H. Walter Sellmer, project financing can not be completed until that permit is in place. In the meantime, the company will complete detailed design work and prepare tender documents to ensure the project is not delayed unnecessarily.

Several financing options are open to Canamax, including equity, debt, or a combination of both, but he didn’t wish to elaborate on the company’s preference. The cost to Canamax would be approximately $10.5 million which it shouldn’t have any problem raising, he indicated.

The feasibility study estimates an after-tax real rate of return of 40%, more than double the rate companies usually demand for larger mining projects. That return is based on a gold price of $400(US). Production would be about 49,600 oz gold per year at an operating cost of $129(C) per tonne.

Proven and probable mineable reserves are 460,000 tonnes grading 0.45 oz gold in the oxide category and the milling rate would be 320 tonnes per day. Mining method would be cut and fill, drift and fill and square set topping. The first two methods would be responsible for 80% of production. Production by mid-1988

If all goes according to plan, production would be achieved by mid-1988 and in a worst-case scenario later in September. This would be a remarkable accomplishment for a company that just acquired the property in early 1984.

The tailings dam is a critical element in the project because it must be constructed during a frost-free period and a time of low precipitation. In the event of a major delay, surface facilities presumably could be completed in advance of the tailings area, says Mr Sellmer.

The milling capacity for oxide material is actually 500 tons per day, but the limiting factor in optimizing throughput is how much carbon can be loaded and stripped in a 24-hour period, which is also a function of head grade.

Increasing the mining rate underground represents a major bottleneck too, he concedes. Looking into the future, he says: “we see a long- term outlook similar to Keno Hill. It probably won’t increase in size but could be around for a long time.” Ten-year mine life

Existing oxide reserves constitute a mine life of 4.25 years but he predicts the actual life will be at least 10 years, noting the potential for blocking out additional oxide material and sulphides as well.

There are at least 540,000 tonnes of sulphide material in the Peel zone grading 0.22 oz gold per ton. This reserve alone would extend mine life to 10 years. Recoveries would be lower (probably about 75%) but mining costs would be less, he points out. Anticipated costs for open pit and underground mining are about $75 per tonne.

More exploration work is planned this year and a minimum $1 million has been budgeted for the program. A portion of this will be spent drilling the downward extension of the Break zone and an area between the Break and Peel oxide zones. Surrounding properties will also be looked at, he says.

The Yukon government will provide a matching $250,000 grant to the joint venture for access road improvement under its Roads to Resources program. Mr Sellmer says the government has been very responsive to legitimate industry concerns and he doesn’t expect any significant delays for the project.