Roof collapse stalls Con production

A collapsed roof at the oxygen plant at the Con mine in Yellowknife has forced Miramar Mining (MAE-T) to temporarily suspend autoclave operations.

The collapse, which occurred early on March 16, did not result in any injuries. The cause and impact of the incident are being examined.

So far, the company figures that overall operating costs for 2002 could be negatively impacted by about $1 to $1.5 million owing the cost of trucking in liquid oxygen. Some of the cost may be recouped via insurance.

The leased oxygen plant provides oxygen to the autoclave for the oxidation of refractory sulphide concentrates produced from ores mined at Miramar’s Con and Giant gold mines in the N.W.T.

Miramar’s president and CEO Tony Walsh said, “This incident was entirely unexpected. Our Yellowknife operations have been operating above expectations and generating positive operating cash flow for more than a year. This incident is expected to result in the deferral of some production ounces and an increase in costs for 2002. However, based on our assessment of the situation thus far, we anticipate that we should still be able to meet our overall production forecast for 2002 and there should be no long term impact on Miramar as a result of this incident.”

An associated outdoor storage tank with the capacity to hold about 285 tons of liquid oxygen was unaffected by the collapse, and Miramar and the company from which the plant is leased are working to reconfigure the tank’s piping and controls to feed liquid oxygen directly to the autoclave. The work is expected to take about four to six weeks. The two are also working to arrange for another source of oxygen.

An estimate of the time required to complete repairs to the plant will wait until the full extent of damage is known.

Miramar notes that the collapse does not affect the production of gold from the free milling operations at the Con mine. Those operations provide the majority of the gold recovered at the mine.

Miramar says it will continue to mine refractory ores from both the Con and Giant mines during the autoclave suspension. The material will be stockpiled for processing during the balance of the year. The lost time will be made up for by the autoclave’s excess capacity. The company still expects to meet its 2002 production estimate of about 130,000 oz.

The Con and Giant mines produced 129,607 oz. in 2001 at a cash cost of US$256 per oz. The company was looking for similar levels of production in 2002, but with a further reduction in cash costs to under US$240 per oz.

Late last year, Miramar inked a deal with the Federal Department of Indian Affairs and Northern Development (DIAND) to extend the life of the Giant mine and provide supplemental feed for its nearby Con mill.

Under the deal, DIAND agreed to contribute $300,000 per month toward environmental compliance and holding costs. The deal saved 50 jobs and remains in effect for as long as Miramar operates the mine.

Miramar is free from all environmental liabilities related to previous operations at the mine, and the reclamation security provisions of existing agreements between Miramar and DIAND will continue.

Earlier this year, Miramar and Hope Bay Gold (HGC-T), its long-time partner at the Hope Bay gold Project in Nunavut, announced plans to merge.

Under the proposed deal, Hope Bay shareholders will receive 0.263 of a Miramar share for each share held. The shares exchange would result in the new Miramar having 102.7 million shares outstanding.

The plan has the support of certain shareholders and management of Hope Bay holding 41% of the company’s shares. The deal, subject to due-diligence by both parties, only requires the approval of Hope Bay shareholders, who are scheduled to vote on April 28. Regulatory and court approvals are also required.