Holt-McDermott dilution monor problem: Barrick

With all the hype surrounding some astonishing gold discoveries at the Goldstrike operation in Nevada and a lawsuit over the Mercur mine in Utah, American Barrick Resources’ (TSE) newest gold producer has garnered about as much attention as the stage hand in a Broadway play.

Around 15 million oz of new gold reserves at Goldstrike has put the spotlight firmly on the Toronto company’s U.S. producers at the expense of an operation that has its own role to perform in the unfolding Barrick story.

The latest addition to a lineup that now includes seven North American gold producers will contribute about 80,000 oz gold to a 1989 production quota which should add up to 425,000 oz. That would make Holt-McDermott Barrick’s third largest gold producer behind Goldstrike (160,000 oz) and Mercur (115,000 oz).

The new Holt McDermott mine also ranks as the first gold producer in the Barrick portfolio to be brought all the way from the grass roots stage. The other mines were either bought for cash or acquired with the assets of companies like Pancana Minerals and Western States Minerals (in the case of Goldstrike). Performing nicely

Despite concern in investment circles about lower than expected production and grade, Holt McDermott is performing quite nicely as it is put through its paces by a staff of about 200 non-union mining personnel.

Located within a stone’s throw of Hwy 101 which connects the mine to nearby Kirkland Lake, Ont., the operation has been brought to a production mode at a capital cost of about $77 million.

At a cash cost per oz of $250(US) this year and $220 per oz in 1989, Louis Dionne, Barrick’s vice- president of Canadian operations is anticipating a 4-year payback period. Gold recoveries are said to be better than 94%.

Brought in from Barrick’s Camflo mine to oversee the Holt McDermott operation, Dionne arrived about eight months after the production decision was made in December, 1986. He said the two operations are so alike that when equipment isn’t being used at the low-cost Camflo, it is shipped and put to work at Holt McDermott.

“The carbon-in-leach mill is running at about 900 tons per day and should be up to about 1,400 tons by November,” said Dionne during a telephone interview with The Northern Miner.

Originally staked in 1922, the property was acquired by American Barrick along with debt-ridden Camflo Mines in 1984. While it was carrying a debt load of $80 million before the merger, Camflo elected to hang onto the 4,000-acre property until the development funds were made available thr ough Barrick. Large deposit

When the Toronto company set itself a mid-1988 production target of 100,000 oz, a large deposit of three million tons grading 0.192 oz gold per ton had been outlined by 250,000 ft of diamond drilling.

With three drills located on the property, proven/probable reserves now stand at four million tons grading 0.15 oz. They are sufficient to support a mine for seven years.

Open below 1,500 ft at depth and along a 35,000 ft strike length, the sheet-like mineralized zone is being mined using long hole open stope and shrinkage stoping methods. To access the zone, Barrick has constructed a 420-m, 3-compartment shaft and development drifts on the 100-m, 150-m, 200-m and 300-m levels.

Dionne said the discrepancy in the grade figures released in 1986 and at startup are due to the geology of the region. He said the ore is in contact with the McKenna Fault zone, a structure which is parallel to and approximately half a mile south of the east-west regional Destor-Porcupine fault. Grade dilution

“For example, we are working with two major zones and when they come together on the 200 level we have to include some low grade ore,” said Dionne who claims that Barrick is facing grade dilution in a limited area.

“I have a better feeling as to what grade we will have in the future,” Dionne told The Northern Miner.

With six stopes under construction and scheduled to be in operation by year-end, Barrick is planning to hit its new 1989 production target without any hitches. The operation should produce 30,000 oz this year.

Following discussions this September with joint venture partner (at the adjacent Worvest claims) Lenora Explorations (TSE), Dionne said the company will spend $2.5 million to drive a 3,000-ft drift out towards the Worvest and Three Star zones which lie west of the Holt McDermott shaft.

Reserves at the Worvest and Three Star properties stand at one million tons grading 0.14 oz and 750,000 tons of grade 0.15 respectively.

Meanwhile, Kirkland Lake, which until now has been without a new mine for 25 years, could turn out to be Canada’s latest gold camp. Toronto-based Canamax Resources (TSE) is planning to begin custom milling ore from its Matheson project which is expected to produce 8,000 oz gold this year.

Joint venturers Lac Minerals (TSE), Jonpol Explorations (TSE) and T & H Resources (TSE) are moving ahead with exploration at the nearby Garrison Twp. property where reserves stand at one million tons grading 0.23 oz.

In a bid to examine the extent of its own reserves, Barrick is conducting a definition drilling program at various levels of the Holt McDermott property and exploring the continuity of the orebody on the 300 and 350 levels.

“We have a good team on site and I am happy with the way things are going,” said Dionne.