Canamax’s third mine Kremzar produces its first gold

There’s a lot riding on the Kremzar gold mine 20 miles northeast of here. Not only does Canamax Resources (TSE) expect the mine to be the company’s main gold operation, it marks the first production from an area that could turn out a lot of the precious metal in the years to come.

But one is not likely to hear as much about this area, referred to as the Lochalsh-Goudreau area, as one is to hear about the Mishibishu area, for example, about 20 miles to the west. That’s largely because there are fewer players here and hence there is less promotion.

In fact, Canamax has tied up about 10 miles of strike length along the main shear structure either by itself or in a joint venture with Algoma Steel (TSE).

Nevertheless, Muscocho Explorations (TSE) and 50% joint venture partner McNellen Resources (VSE) are expected to open their Magino gold mine in the Lochalsh-Goudreau area very soon giving the area two producers — two more than Mishibishu. Opening the Magino, just two kilometres south of the Kremzar and almost in the middle of Canamax’s holdings along the Goudreau deformation zone, has only been delayed because of minor problems with the mill according to Muscocho President J.T. Flanagan.

So Canamax, with an official opening scheduled for Oct 4, will be the first into production here. Preceeding that opening, however, The Northern Miner visited Kremzar for a tour of the underground workings and surface facilities and to witness the first gold pour — a 535-oz bar worth close to $300,000 considering Canamax’s hedging program that ensures a price of $450(US) per oz. The mine is expected to produce 32,000 oz of gold annually at a cash operating cost of $295(C) per oz.

Canamax first became interested in the Kremzar property in late 1982 and in early 1983 made a deal with Kremzar Gold Mines, a company now defunct, to earn a 50% interst in the property. By mid-1984, Canamax had drilled the fourth hole on what was called the New zone. That hole is now considered the Kremzar discovery hole.

In early 1987, Canamax bought out Kremzar’s 50% interest for $9 million and a 4% net smelter royalty on production after payback. Shortly after, a production decision was made for the property based on a 500-ton-per-day milling operation and a $20-million capital cost.

Capital costs are now estimated at $22 million, but that appears to be the only shortcoming of this project. Drill indicated reserves to a vertical depth of 1,200 ft are estimated at more than a million tons averaging 0.25 oz gold per ton. Although the zone being mined, the B zone, is cut off along strike at about 800 ft., the zone remains open at depth. The zone strikes east and west and is steeply dipping to the south at about 70 degrees . It varies in width from about 10-33 ft wide.

Access to the zone, which outcrops at surface, is gained by a 14×14 ft spiral ramp which now reaches a vertical depth of about 500 ft. Progressing at a rate of about 16 ft per day, the ramp is expected to eventually reach a vertical depth of about 800 ft.

The first level is at 115 ft below surface and subsequent levels are at 50 ft intervals.

Mining is being done by sub- level retreat (SLR) methods. Using this method, long holes for blasting are drilled from one level to the level immediately above, then blasted so a slice of ore about four feet thick, and as wide as the zone is broken. Once that ore is mucked out, another slice is drilled and blasted. The procedure is continued as mining “retreats” from the east end of the zone to the west end taking slice after slice.

Mine superintendant Jim Brandle says plans are to continue SLR mining to about the 415-ft level, then continue with cut-and-fill or shrinkage methods. However, he says SLR mining might be used solely if possible.

There is virtually no visible gold in the ore although it is free milling. Gold is associated with dark quartz veins that cut across the zone making it difficult to follow underground, says Brandle. A lot of sampling is required to determine where the values are.

Development work is complete on the first level, about half done on the second level and one-quarter on the third.

The carbon-in-pulp mill is running at its rated capacity of 500 tons per day. It has been designed to be easily expanded to handle 800 tons per day with the addition of a second ball mill and a sixth leach tank. Ore is hauled up the ramp to surface, then dumped onto a grizzly before being conveyed to the mill’s coarse ore bin. By having the grizzly on surface and designing the mill to accommodate future expansion, the company hopes to facilitate handling ore from its other properties in the area.

For example, Canamax anticipates it will need the 800-ton-per- day mill capacity to handle material from its 100% owned Lochalsh property about two kilometres to the south. The company plans to collar a ramp in October to explore that property from underground. Drill-indicated reserves using a cutoff grade of 0.088 oz gold per ton and a width of 6.5 ft currently stand at about 1.5 million tons grading 0.248 oz gold.

That ramp will also provide access to its 51% owned Goudreau property adjacent to the Lochalsh at a later date. Algoma is the joint venture partner.

Mill recovery rates are running at about 95%.

Kremzar is officially Canamax’s third operating gold mine. All three mines have been opened within the past year.