Mine output nears C$500 million in value

The value of mineral production in Yukon Territory is expected to soar in 2013 to more than C$1 billion when the third of three producing mines hits its stride with commercial output of about 1,700 metric tons per day. The territory, meanwhile, is enjoying the economic benefits of having three high-paying and big spending mines in operation.

In 2011 the value of mineral production at Capstone Mining Corp.'s high-grade Minto copper-gold-silver mine, Alexco Resource Corp.'s Bellekeno silver-lead-zinc mine and Yukon Zinc Corp.'s Wolverine silver-rich volcano massive sulphide mine totaled nearly C$500 million.

The three mines spent a total of C$233 million on operating expenses, including C$58 million on payroll. Some 745 workers - 260 at Minto, 173 at Bellekeno and 312 at Wolverine - earned an average annual wage of C$77,000. Some 43 percent of this highly paid crew resided in the Yukon, including 149 members of the territory's First Nations.

The mines also invested C$33 million in capital expenditures, bringing to C$266 million their total 2011 spending on goods and services, including 30-40 percent spent locally.

Clair Derome, a mining industry consultant and outgoing-president of the Yukon Chamber of Mines, presented this statistical snapshot of the Yukon's young, but growing, mineral production sector to an audience attending the Yukon Geoscience Forum in Whitehorse in November.

"In addition, the mines are well spread out in the Yukon, so the industry spreads the benefits all over," Derome said before introducing the members of a discussion panel that included representatives of the three mines.

A long future in Yukon

Minto, the largest and oldest of the Yukon's currently operating mines, is located in west-central Yukon Territory. It produced 37.1 million pounds of copper, 196,098 ounces of silver and 18,439 ounces of gold in 2011 from average mill feed of 3,600 metric tons per day. Since startup in October 2007, the mine has produced more than 187 million pounds of copper and is still going strong.

Colleen Roche, Capstone's manager of sustainability and environment affairs at Minto, said the mine has considerable expansion potential and new ore deposits are being developed that will take the mine's life beyond 2020.

Currently implementing Phase 5 of development at the Minto North and Ridgetop deposits, Capstone also has undertaken a prefeasibility study for Phase 6 to be completed in early 2012 for development of the Copper North and Wildfire deposits.

"We're seeing an obvious trend in production, and that's why we envision a long future in the Yukon," Roche said.

Though Minto currently is an open-pit operation, Capstone intends to begin underground mining there in 2012 in the Area 2 deposit.

"In fact, in the near future, we will put out a (request for proposals) for a contractor to develop an underground operation with an eye to taking underground production in house within 18 months of startup," Roche told the forum participants.

Other challenges facing Minto include meeting ongoing regulatory requirements of a more stringent water management plan developed since 2009 and continuing successful collaboration with the Selkirk First Nation, which holds as traditional territory the land where the mine is located.

Ambitious growth ahead

Alexco's Bellekeno Mine, situated in the historic Keno Hills silver district of east-central Yukon, began production in January 2011 with one of the highest silver grades in the world. It is also the only primary silver producer in Canada. In 2011, the mine produced 2.2 million ounces of silver along with substantial quantities of lead and zinc at roughly 250 t/d.

Alexco, which initially acquired the historic Keno Hills claims through a reclamation project with the Canadian government, soon recognized the considerable mineral potential that remained in numerous small abandoned mines in the district.

Brad Thrall, Alexco's executive vice president and chief operating officer, told the forum that the company focused it exploration on the eastern end of the district and identified a sizable new zone of mineable silver in 2007.

"We were able to move Bellekeno from discovery to production in three years, but we had a lot of support to do it," Thrall said.

Alexco recently initiated the permitting process for two more high-grade silver deposits in the district, Onek and Lucky Queen.

"Sometime in 2012, we will have three mines in production and up to 5 million ounces silver in annual (output) in the next three to four years," he said.

Ramping up production

After spending much of the past two years addressing significant operating and safety challenges, Chinese-owned Yukon Zinc is advancing the Wolverine Mine located in the Finlayson District of southeastern Yukon toward commercial production, according to Don Strickland, mine general manager.

Wolverine produces three products - lead, zinc and copper concentrates, with silver as a byproduct that currently accounts for 40 percent of its revenue. The concentrates are shipped to Asian smelters through the Port of Stewart.

"Right now, we're in the early stages of ramping up production, at 500-600 t/d," Strickland told the forum audience in November. "The mill (is designed to process) 1,700 t/d, and we expect to achieve commercial production in early 2012," he said. "And we expect to be a fully developed underground mine in 2013."

Strickland also said Yukon Zinc enjoys a great working relationship with the Kaska First Nation, which has traditional rights within the Wolverine area.

Hurdles yet to clear

All three mine representatives cited containing costs as a significant ongoing challenge. Strickland noted that energy costs at Wolverine, which generates its own power with diesel, is relatively high at 33-36 cents per kilowatt-hour when compared with the Yukon average of 11 cents/kwh.

"We're working to reduce energy consumption at Wolverine," he said, citing the use of waste heat and more efficient lighting as steps the miner has taken.

Derome said a number of mining companies are investigating the option of generating power with liquefied natural gas because LNG can be delivered directly to a mine site. They are also considering using a 60/40 LNG-diesel blend to help cut energy costs, she added.

Mark Ayranto, vice president - Yukon for Victoria Gold Corp., said his company hopes to hook up to Yukon's electrical grid to get power when it begins gold production at the Eagle Project on the Dublin Gulch Property in central Yukon.

The project also enjoys good road access and an exemplary relationship with the Na-cho Nyak Dun First Nation.

Ayranto said Victoria is well on its way to completing permitting for the Eagle project in 2012 and has earmarked C$350 million in initial construction capital over two years, along with average annual operating expenses of C$80 million.

Victoria has targeted 2014 for startup of a heap leach operation expected to produce 170,000 ounces of gold annually for at least a decade.

With more than 300 permanent jobs to offer at Eagle, Ayranto said a big challenge for Victoria will be finding skilled workers in the Yukon and elsewhere. "If we are going to attract people to the North, we need good housing and schools that attract families," he added.