Golden Bear mine prepares to reopen

The Golden Bear mine in northwestern British Columbia is poised to reopen this summer, following a positive feasibility study for a proposed heap-leach operation.

The study, which was conducted on the Kodiak A and Ursa deposits, estimates that the mine could yield 176,000 oz. gold over a 5-year period at a cash cost of $US224 per oz.

These results are welcome news for North American Metals (VSE) and Wheaton River Minerals (TSE), whose previous attempts to construct a heap-leach pad were stalled by a major flood in 1994 (T.N.M., Oct.3/94). The flood saturated the soil liner, preventing installation of the overlying plastic liner in time for production.

“We’re not trying to accomplish as much this year as we did in just two months in 1994,” says Kerry Knoll, executive vice-president of Wheaton. “We’re only stacking half as much ore.”

Largely as a result of the flood, which forced the companies to suspend operations at Golden Bear, Wheaton lost $11.3 million (46 cents per share) in 1995. This compares with a loss of $3.2 million (17 cents per share) in 1994 and includes a $6.7 million writeoff of resource assets. Wheaton holds 82% of North American which, in turn, has a 100% stake in Golden Bear.

Taking a more cautious approach, Wheaton has reduced its annual production target to 14,000 oz. for 1996 from 27,000 oz. in 1994. The company expects to increase production gradually to a maximum of 63,000 oz. in 1999.

But before startup, Wheaton must secure $14 million in financing — $11 million this year and $3 million in 1997. Knoll says several institutions have expressed an interest in providing a gold loan for the project.

The company must also extend its mining permits, which expire in August.

According to the feasibility study, the project is expected to generate about $33 million in cash flow, with an estimated payback period of 2.2 years. The total cost of production is $US258 per oz., including capital costs.

Minable open-pit reserves in the Kodiak A deposit are 908,000 tons grading 0.096 oz. gold per ton, while the Ursa deposit contains 563,000 tons grading 0.204 oz. Stripping ratios are 1:1 and 6.6:1, respectively. Based on metallurgical testing, the ore is expected to have a gold recovery of 87%.

Wheaton hopes eventually to add the nearby Kodiak B and East low-grade stockpile deposits to its production portfolio. To this end, the company will launch a major exploration program in conjunction with the Golden Bear startup. Drilling will also investigate the potential of the carbonate complex surrounding the Kodiak A and Ursa deposits.