Timmins tailings plan gets OK

Some 140 million tonnes of tailings, the product of more than 75 years of gold mining in the Porcupine area, are going to be retreated by ERG Resources, making it one of the major gold producers in Timmins, Ont. What’s more, the project could eventually incorporate ore from Pamour Inc.’s substantial Timmins mining operations to create what ERG Chairman Dennis MacLeod calls a “supermill.” Pamour already produces more than 100,000 oz of gold a year.

The two companies are closely related. A series of deals, expected to be completed in January, will see Pamour hold a 66% interest in ERG. Pamour itself will be 51% owned by Jimberlana Minerals, an Australian company, which is more than 50% owned by an investment arm of New Zealand Insurance. Mr MacLeod is also president of Pamour.

The project will require about $65 million in capital, he says. Pamour will participate in the financing which Mr MacLeod estimates could comprise 50% equity and 50% debt, perhaps a gold loan.

Although the concept of re-treating tailings has never been done successfully on a large scale in Canada and is therefore viewed sceptically by some in the mining industry, Mr MacLeod says he is confident financing can be arranged.

“We don’t consider it to be innovative,” says Mr MacLeod. “We consider it to be mundane.”

Because the gold recovery technology is conventional, there is no actual mining involved and the project is large-scale, Mr MacLeod considers the venture offers “industrial risks with mining returns.”

The project would create the second largest gold tailings re-treatment plant in the world. One in South Africa, which Mr MacLeod was instrumental in designing, processes about 1.7 million tonnes per month. Although it produces uranium and sulphuric acid as well as gold, the gold is the major revenue producer for that plant as well.

Detailed engineering design for the Timmins project is set to begin in January with on-site construction to start in the spring, subject to the successful financing. The plant would be commissioned in the second half of 1988 with 1989 scheduled as the first full production year.

The plant is expected to produced about 100,000 oz of gold in 1989 decreasing to 50,000-60,000 oz per year after a few years. At a gold price of $400(US) per oz., the project is expected to give a 35% return on investment with a payback period of 2.6 years.

The breakeven gold price is initially $110(US) increasing to about $230 as the tailings grade decreases. The life expectancy of the project is about 18 years based on tailings now owned by ERG and Pamour. However, tailings being produced now could bring the life of the project to more thant 20 years.

Net after-tax earnings of ERG during the first five years of production from the project will average about $13 million, according to the feasibility study completed by Kilborn Engineering.

The production plant will be located close to Pamour’s Schumacher mill and will consist of a single stage flotation plant capable of handing one million tonnes per month followed by a conventional 100,000 tonnes-per-month concentrate regrind and carbon-in-pulp cyanidation plant. The plants will be operated for eight months per year.

In the initial years, the grade of tailings treated will vary between 0.49 and 0.82 g per tonne with gold recovery ranging from 45-55%.

Work has been done on ways to improve the gold recovery and Mr MacLeod says he expects that future metallurgical improvements will result in “appreciable increases” in gold production.

As well, the plant is being designed with an additional 20% throughput capacity and studies are under way on the possibility of also treating some or all of Pamour’s current ore production.

ERG now plans to conduct a feasibility study on a similar but smaller plant to treat 32 million tons of tailings it is purchasing from Jimberlana in the Kirkland Lake, Ont., area. The Kirkland Lake project would likely treat about 500,000 tonnes per month and come into production in 1990.