High-grade, low-cost gold producer — Snip mine an

The extraordinary success of the Snip gold mine is in direct contrast to numerous gold mines developed during the heady years of flow-through financing which all too often failed to live up to expectations.

Located on the Iskut River, about 100 km northwest of Stewart, B.C., Snip has exceeded its planned production rates since startup. It has also been a healthy source of profits for operator and 60% owner Cominco (TSE) and junior partner Prime Resources Group (VSE).

The mine turned out 153,402 oz. gold last year at a cash cost of US$145 per oz. That is no small feat considering the lack of road access and that the bulk of gold is produced in concentrate which must be shipped to Japan for smelting via Wrangell, Alaska.

Dave Johnston, vice-president of mine operations for Cominco Metals, modestly points out that Snip’s operating success reflects the high grade of the deposit being mined. Ore grades averaged an impressive 31.7 grams per tonne (0.92 oz. per ton) last year, better than the 30.4 grams (0.89 oz.) average in 1991.

“Grade does a lot for you,”Johnston said. “But Snip is also an operational success. We have good productivity for an underground mine and that tells you the mine is well set up.”

Snip’s original design capacity was 300 tonnes a day, although the mill was designed with a large enough ball mill and sufficient grinding capacity to allow for scaling up to 500 tonnes per day.

That foresight turned out to be justified. Ore treated last year averaged 451 tonnes a day, 50% higher than the design capacity, with daily throughput occasionally exceeding 500 tonnes. This performance represents a substantial improvement over 1991, when an average of 336 tonnes per day were milled. The company also replaced the ounces mined last year with new reserves found in and around existing workings (reserves on the books are sufficient for at least six more years).

Johnston describes the Snip deposit as a typical narrow-vein mine where considerable development is required for each ton of ore mined. The shear-hosted vein system tends to wander and vary in thickness, typically ranging from 1.5 to 4 metres wide. Before mining began, about $13 million was spent to prove up the deposit. Much of the mine’s success today reflects a decision by Cominco to base its original minable reserves on 12.5-metre spaced drilling and development in ore on four mining levels. Three different mining methods are used at Snip; mechanized cut-and-fill in the wider areas, and shrinkage stopes (at the bottom of the deposit) and cut-and-fill using jacklegs in other narrow parts. (The deposit dips at 30-90 degrees.)

“The mining mix varies all the time,”Johnston said. “In the past two years we have been into the wider areas where we can use mechanized mining. These wider areas also tend to have the higher grades. We’re also getting very little dilution, even though we budgeted 15-25% in our original reserves.” In 1992, overall gold recovery averaged 91.3%, as estimated at feasibility. Of the 92,000 oz. produced to Cominco’s account last year, 66,900 oz. were produced from 5,000 tonnes of concentrate grading 417 grams per tonne (12.2 oz.), and 25,100 oz. from bullion on site.

“We’ve improved the recovery of gold from bullion over the fourth quarter of last year, and into this year,”Johnston said, adding that the gravity circuit now accounts for 37% of gold production, compared with 23% last year. This improvement was achieved by some mechanical changes to the circuit, and to a larger extent, by changes to the water system. “Producing more gold on site helps our cash flow, lowers costs, and improves the ultimate recovery of the value of gold.”

The deposit contains some copper, and based on the original bulk-sampling and pilot work, Cominco estimated it might have about 5% copper in the concentrates. It has not been the case — 2% is more typical — so only minor values are obtained from the red metal.

The mine operates around the clock, and employs 125 people, fewer than originally estimated. “We started skinny and kept it that way,”Johnston said. “As we get into more conventional jack-leg mining, we may have to add people.” The work force is non-union, and a collaborative management style is encouraged. The company doesn’t pay the traditional miner’s bonus to individuals. Instead, the incentive or gain-sharing plan applies to all employees, thereby fostering a team effort where everyone “gets a piece of the action.”This incentive system is modelled after one used for 10 years at the Polaris mine in the Northwest Territories.

“We purposely set up a system that works and doesn’t require a lot adjudication or time to measure,”Johnston said. “The workforce shares any improvement in performance over budget, and everyone benefits when ways are found to reduce costs or improve production.”

Snip has been a environmental success too, Johnston added. “Our mine has had no measurable impact on water quality and the fish population is healthy,”he said.

Nor does the mine have any acid-generating problems. While there is potential for this in some parts, taken overall the mine project ranks on the acid-consuming side, or close to neutral.

Environmental issues are taken seriously at Snip, whose $65 million capital costs reflect an estimated 15% spent on various environmental considerations. In the mine planning stages, Cominco backed off its original plan to use cyanide to recover gold. Although not as much gold is recovered, the decision not to use cyanide cut capital costs by about $10 million. For Johnston, the decision was clearly the right one from both operational and environmental standpoints.

“The ground here is porous, and there is no glacial till we could use to seal ponds and provide a physical barrier to migration of cyanide into groundwater,”Johnston said. “We might have had a difficult time controlling stray effluents. If we were in a dry belt we would have no problem, but this area gets plenty of rain.”

For eight months of the year, Cominco is able to use its hovercraft to haul concentrates to Wrangell, and back-haul freight (mostly fuel). About half the tonnage is handled this way, the rest by air transport.

The company has no plans to build an extension from the road put in from Hwy. 37 to Volcano Creek. “The road is too expensive for the tonnages we have left to mine,”Johnston said. “If we find another deposit, perhaps.”