At the end of last month there was a spate of layoffs at mines around the world. Companies large and small were shedding payroll in response to soft commodity prices.
The logical progression – from cutbacks at producing mines to development delays – has begun. Two Canadian companies are backing away from such projects and concentrating their efforts on lowering costs. Gold miners have been particularly hard hit by the free-fall of the yellow metal last month.
Maudore Minerals of Montreal announced today that is shifting its focus from the Vezza gold mine to high grade targets in its Sleeping Giant gold mine, both of which are near Amos, QC. The company says that a structural 3-D re-evaluation of Sleeping Giant veins and structures has allowed it to identify multiple high grade opportunities within the existing mine environment.
Maudore acquired the suspended Sleeping Giant mine earlier this year from North American Palladium. Of chief interest was the mineral processing plant. Maudore reopened Vezza and treated the ore at the Sleeping Giant mill. Now the company has announced plans to finish mining and processing developed ore at Vezza over the next several months, thus lowering the cost per ounce and preserving capital. And 39% of the workforce, mostly contractors, will be idled.
Meanwhile a small workforce will prepare the Sleeping Giant workings for exploration and remnant mining. Maudore intends to mine certain high grade remnant stopes beginning late in Q3 2013. Exploration drilling will be done in the untested extensions of the high grade 20 and 30 zones as well as other potential veins. The remnant mining could be complete sometime in the next 12 months, although Maudore is not ruling out a return to full scale operations if sufficient new resources can be outlined.
The 20% decline in the gold price has forced QMX Gold of Toronto to suspend development at its Lac Herbin gold mine near Val d'Or, QC, despite reducing costs and other cost cutting measures it implemented three months ago. The decision ends the development of the main ramp below the 42 level and all exploration expenditures at the mine. QMX expects these changes will result in "profitable operations" as long as the gold price doesn't fall farther.
QMX will continue to operate the Aurbel mill to treat both ore from Lac Herbin and ore from the McGarry gold mine belonging to Armistice Resources. The custom milling is to begin in August, providing additional revenue for QMX.
Like dominoes, the projects are falling – first jobs at producing mines, now development projects, and next the abandonment of exploration projects, undoubtedly. The junior sector has found raising exploration funds increasing difficult over the past two years, and the situation shows no immediate signs of improvement.
As far as this writer is concerned, the mining industry is in for one of its cyclical downturns. How long it lasts or how great the next high, I cannot predict.
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