Echo Bay works to reduce Lupin costs

The struggle to stay profitable has intensified at the Lupin gold mine of Echo Bay Mines (TSE) as the gulf between production costs and market price narrows.

Production costs at the mine, 250 miles north of Yellowknife, N.W.T., are US$283 per oz., while the price of gold has stagnated below US$350 — the same level as when the mine began production 10 years ago.

All 420 non-union employees are reminded of that fact as the two shifts gather at 6 a.m. and 6 p.m., respectively. The current price of gold along with mottoes of efficiency, safety and teamwork are posted throughout the minesite, most conspicuously on the walkway between the preparation area and the cage. Workers are understandably frustrated. They are under pressure to think and act with optimum efficiency every waking minute.

“The price of gold is hurting us (as it is hurting) everybody else,” said Lupin’s general superintendent, Ron Devin.

But while soft gold prices have weakened the Lupin balance sheet, management and staff are hopeful that better days are around the corner. One cause for optimism is the prediction, on the part of many investment dealers, that gold prices will rise in 1993.

This year’s production target is 229,000 oz. “We’ll come so close to that, it’ll scare you,” a determined Devin told The Northern Miner. He added that Lupin celebrated its 10th anniversary in October, 1992, and that with current proven reserves of 1.4 million oz., the mine has another eight years of life left in her.

The shaft bottom is sitting at 3,970 ft., and there are plans to explore production potential below that depth in 1993. The findings will determine Lupin’s future profitability. “At the moment, all depends on the results of the development program,” Devin explained. “We’ll have a better handle on it by the end of ’93.”

As production becomes concentrated below the 2,400-ft. level, Echo Bay must address the challenge and cost of mining at lower depths.

“We will soon be mining from the 3,700-ft. level,” said William Burton, assistant mine manager. “At this depth, the mining methods that have done so well for us in the past will not suffice. With increased ground pressures, too much waste rock would fall into our stopes, unacceptably diluting the ore.”

Use of rockbolts has therefore become crucial in controlling costs. In 1991 alone, 45,817 rockbolts were installed.

Snaking through the sub-strata in a “Z” pattern, the orebody is comparatively uncomplicated. Mining in the form of sub-level longhole open-stoping has occurred in three areas: the East zone initially, then the Middle zone and finally a gradual increase of activity in the West zone.

Width varies dramatically from zone to zone. It was 23 ft. in the Middle zone but is only 6.5 ft. in the West zone. To date, the West zone accounts for more than 40% of production, most of that coming from the 2,130-ft. level. Production levels are spaced 265 ft. apart, with grade varying from 5 grams gold per ton to as high as 32 grams. The average is about 15 grams, and the West zone is currently yielding healthy values.

Increasing production while cutting costs is Echo Bay’s strategy. It hopes to feed 2,300 tons per day into the mill by the third quarter, compared with 2,000 tons per day in 1992, an increase of 15%.

Also, the company expects to save $750,000 by shutting down the operation for four weeks in summer. (The mill will continue to grind 2,300 tons per day because of stockpiling.)

In the fall of 1992, the service cage was commissioned for transporting men and materials. This freed compartments one and two for hoisting ore and waste. Hoisting is taking place from a dump pocket at the 3,775-ft. level and the shaft is being refitted with 10-ton skips to replace the 9-ton variety now in use.

“We are considering the next deepening of the mine,” said Burton, “which could involve replacing the current hoist with a 15-ton-diameter, 3,800-hp unit and extending the headframe to accommodate 13.5-ton skips.” Only two years ago, the entire equipment fleet was deteriorating at the same rapid rate, thanks to a mediocre preventive maintenance (PM) program, said Lupin maintenance planner Charles Case. Since that time, an extensive PM program has extended the lifespan of some equipment. The need to purchase two scoops this winter, for example, has saved the company $800,000. Significant drains on resources are construction and maintenance of the winter road from Yellowknife. Road work is budgeted at $5 million, Devin said. The company is extremely interested in a lead-zinc find at nearby Izok Lake, owned jointly by Metall and Minnova, who have proposed building a road to a deep water inland port on the Coronation Gulf. Such a road, should Echo Bay gain access to it, would reduce production costs by between $20 and $25 per oz.

“If we reduce our costs, our longevity will be extended,” Devin said. — Tony Kryzanowski is a freelance writer from St. Albert, Alta.