OceanaGold Studying Underground Mine to Complement Haile Open Pit

OceanaGold has announced the results of a preliminary economic assessment (PEA) of a potential underground mining operation at its Haile gold mine in Lancaster County, South Carolina. Open-pit mining operations at Haile are currently nearing startup, with first ore to be delivered to the mill at the end of 2016 (See “Oceana Nearing Production Start at Haile Mine,” p. 12, E&MJ, September 2016).

“The Haile underground PEA demonstrates the technical viability of an underground operation with strong economics that has the potential to complement the current plan for the Haile gold mine,” OceanaGold President and CEO Mick Wilkes said. “We are now working on an optimization study that will incorporate the results of the Haile underground PEA and the extensive drilling data that we have collected this year. The optimization study will determine the optimal mine design for both the open pit and underground while utilizing updated commodity price assumptions for reserves. We expect this study to be completed by the middle of next year.”

Current Haile mill throughput is planned at 7,000 short tons per day (st/d). Gold production is scheduled to average 126,700 ounces per year (oz/y)over a mine life of 13.25 years.

The underground PEA is modeled on mineralization located beneath Haile open-pit reserves. Oceana anticipates that mill feed will be a blend of open-pit and underground material. The PEA includes consideration of plant modifications to increase throughput rates to 9,120 st/d.

Average annual production of 80,000 to 100,000 oz/y of gold from underground from 2019 to 2025 would complement gold production from the open pit.

Work on the Haile underground PEA focused on identifying potential mining methods, a high-level capital and operation cost estimate, and potential cash flow generation. Open stoping with rock backfill was chosen as the most appropriate mining method, on the basis of relatively high recovery and productivity and low cost. Mining has been assumed to progress bottom-up, with the design including a sill pillar at the midpoint of the Horseshoe resource and two concurrent mining phases at Horseshoe.

The PEA estimates that total preproduction capital expenditures required for underground development and the procurement of underground equipment would be approximately $53 million, with life-of-mine sustaining capital cost requirements of approximately $45 million. Oceana expects that a modification to Haile’s mining permit would be required before commencement of underground operations.

Upon completion of the optimization study, which is expected in the middle of 2017, the company expects to provide a more comprehensive technical update on the Haile gold mine.

The $380 million Haile mine, shown here during its plant construction phase, is expected to begin production from its surface operations early in 2017. (Photo: OceanaGold)
The $380 million Haile mine, shown here during its plant construction phase, is expected to begin production from its surface operations early in 2017. (Photo: OceanaGold)

ITH Downsizes Development Plan for Livengood Gold Project

International Tower Hill Mines (ITH) has reported the results of a prefeasibility study (PFS) of an optimized configuration for its Livengood gold project 70 miles northwest of Fairbanks, Alaska. Engineering optimization studies incorporated in the PFS evaluated several scenarios, ultimately selecting a project that will process 52,600 st/d and produce a total of 6.8 million oz of gold over a 23-year mine life.

The new Livengood development plan is significantly downsized from a 100,000-st/d project considered in a 2013 feasibility study, which targeted production of 7.9 million oz over a mine life of 14 years. The new configuration reduces initial capital costs by 34% to $1.84 billion, process operating costs by 28% to $7.48/st, and all-in sustaining costs by 16% to $1,263/oz of gold produced, all as compared to the 100,000-st/d project.

“We are pleased that our optimization study has resulted in lower capex and opex costs projected over a 23-year mine life,” ITH CEO Tom Irwin said. “Livengood’s fundamentals are compelling, with a substantial gold resource, favorable jurisdiction, proximity to infrastructure, and great leverage to the gold price. We are committed to advancing our basic engineering and metallurgical work to further de-risk the project and prepare for future permitting.”

The Livengood project configuration evaluated in the PFS remains a conventional, owner-operated surface mine that will utilize large-scale mining equipment in a blast-load-haul operation. Mill feed will be processed through a 52,600-st/d comminution circuit consisting of primary and secondary crushing, wet grinding in a single SAG mill and single ball mill, followed by a gravity gold circuit and a conventional carbon-in-leach circuit.

Results to date indicate that further work is warranted to continue to optimize the project, such as improved resource modeling that could potentially enhance head grades and improvement to the mine plan to reduce capex and opex. Metallurgical tests completed to date indicate that there are further opportunities to improve overall gold recovery. Subject to available financing, work will continue to optimize flowsheet and reagent consumption to maximize recovery, confirm the grind/recovery relationships, and refine the process opex.

ITH is also continuing to advance environmental baseline work in support of future permitting to better position the project for a construction decision when warranted by market conditions.

The Livengood project is connected by an existing paved highway to the city of Fairbanks. Project construction would include a lined tailings management facility and an administration office/shop/warehouse complex. Project development would also include construction of a 50-mile, 230-kV electrical transmission line to the mine site from existing grid power near Fairbanks. The total power demand is estimated at 55 MW.

Exploration drilling at the Livengood gold project, 70 miles northwest of Fairbanks, Alaska. (Photo: International Tower Hill Mines)
Exploration drilling at the Livengood gold project, 70 miles northwest of Fairbanks, Alaska. (Photo: International Tower Hill Mines)

Sinkhole Drains Stack Pond at Florida Fertilizer Plant

On September 15, fertilizer producer Mosaic Co. announced that a 45-ft-wide sinkhole had mostly drained a phosphogypsum stack pond into a regional aquifer system which underlies an area of about 100,000 mi2 (260,000 km2) in the southeastern United States. However, the plume was contained to the New Wales facility’s property, near the central Florida city of Mulberry, and the damage could be remediated, Mosaic said.

“On Saturday, August 27, water level monitoring showed a decline in the water levels for one of the two cells of our active stack, the west cell,” Mosaic said. The company did not specify if it was a vadose (erosion) or a collapse sinkhole that drained the west cell of the South Stack. Mosaic stated the sinkhole “formed under the cell” and “we believe (it) damaged the liner system at the base of the stack. … We believe the sinkhole reaches the Floridan aquifer.”

Upon detecting water level decline in the pond, Mosaic said it began “pumping water out of the west cell and into an alternative holding area on-site to reduce the amount of drainage. At this time, we have begun the process of recovering the water by pumping through on-site production wells.” Mosaic described one well as “24 in. in diameter and 800 ft deep.”

Mosaic has contracted Environmental Consulting & Technology Inc. (ECT), which is coordinating with the U.S. Environmental Protection Agency (EPA) to collect and test water from neighboring wells. “As of (October 4), Mosaic has received 850 well water test requests. ECT is prioritizing testing based on neighbor’s proximity to the New Wales facility,” Mosaic said. “The samples will be analyzed for minerals and other parameters that are indicative of the type of water that was released as a result of the sinkhole.”

It also encouraged well owners seeking an alternative means of testing to receive a water test at no cost from the Florida Department of Environmental Protection.

On September 28, Mosaic stated, “results of radiological testing conducted at nine water wells located in close proximity to Mosaic’s New Wales facility have all returned results that are within normal drinking water standards.” Mosaic offered free bottled water to neighbors who request it.

The plume will likely be recovered, according to Mosaic. “Water within the Floridan Aquifer in the vicinity of the New Wales facility generally moves to the west, and at a slow pace—around 1,000 ft per month,” Mosaic said. “That pace allows us to recover water from the gyp stack in the aquifer by pumping it through our well. That well is located west of the gypsum stack and taps into the Floridan aquifer.”

Walt Precourt, Mosaic’s senior vice president–phosphates, said, “We are working with experts to develop a plan to plug the sinkhole, which will likely include the use of concrete-like grout to seal the pathway that opened into the aquifer.”

The New Wales facility was slated for closure in a consent decree filed with the United States District Court for the Middle District of Florida in October 2015.

Overhead view of the sinkhole that remains after a leak drained 215 million gallons of water from a plastic-lined stack pond at Mosaic’s New Wales, Florida, phosphate operation.
Overhead view of the sinkhole that remains after a leak drained 215 million gallons of water from a plastic-lined stack pond at Mosaic’s New Wales, Florida, phosphate operation.