Gibraltar faces restart challenges

Taseko Mines Ltd. and Ledcor CMI Ltd. have weathered the first year of startup challenges, to bring the Gibraltar copper and molybdenum mine in south-central British Columbia into full production status in 2005.

Spokesmen for the two companies describe the startup as satisfactory, but agree that the property can be improved as miners gain experience at Gibraltar, work through changes in ore grade, deal with unexpected maintenance issues due to its dormant period, and evaluate adding a refinery to the on-site processing circuit in an effort to reduce operational costs.

“We’re still trying to work through all the operating conditions that are presented to us,” said Russell Hallbauer, a former Teck Cominco manager who was appointed president and CEO of Taseko in July. “We’re looking forward to utilizing new technology both in the pit and the concentrator, trying to increase throughput and recovery while minimizing down time. It takes a little bit of time to work through.”

A producer since 1972, the Gibraltar open pit mine located near Williams Lake was closed from 1998 through 2004, due to low metal prices. Taseko, part of the Hunter Dickinson group of companies, acquired Gibraltar in 1999, and in 2004 formed a joint venture partnership with Ledcor to restart mining at Gibraltar.

Mining and mill operations resumed in October 2004 with the first concentrate shipped overseas in December. Mine crews are currently averaging about 130,000 tons of ore and waste per day, with 35,000 tons of daily mill throughput, according to Jim Cox, vice-president of the mining group at Ledcor. “We’re a bit above average so there are not any issues in that respect. The guys are getting the most out of the equipment.”

Startup challenges

Currently, Gibraltar employs about 250 workers, most of whom are new local hires at the property. A handful of workers, six to ten, were already working on-site during its care-and-maintenance shutdown period, Cox said. The remaining workforce had to be hired and trained, one of the initial challenges in the restart process that has been overcome, Hallbauer noted. The “buoyant” mining industry made “attracting qualified labour difficult, as the skilled labour working on-site five or six years ago moved on,” he said. “We had a core group of management that stayed on through the shutdown and they were the nucleus for firing the place back up.”

Other startup challenges at Gibraltar came from fluctuations in the grade of ore, Hallbauer said, which impacted metal recovery in the first few months of the year, primarily molybdenum.

In the company’s fiscal third quarter report for the three months ending June 30, 2005, Taseko reported molybdenum production of 177,593 lb, an increase over the prior quarter but 8% off of the amount forecast. The recovery rate of 26.5% was also less than forecast, due to the variability in the ore feed, the company reported.

Copper production in the third fiscal quarter also increased from the previous quarter but was slightly off forecast, with 15.49 million lb produced at an 80.8% recovery rate.

“The molybdenum is tied up with the copper, so when you have higher copper, you have higher molybdenum,” Hallbauer said. “The sensitive circuits affect how you can recover, so you lose some of it; a small variation in (the ore) is a big issue.”

As operators continue to mine and mill at Gibraltar, the database and understanding of the ore grade increases, he said. “You understand what to do to rectify the problem,” Hallbauer said. “We’re working through all these things in the predictability of the ore we are mining.”

Other challenges experienced during Taseko’s first year of operations at Gibraltar stem from unexpected breakdowns resulting from the property’s dormant period, Hallbauer said.

“We’re still working through the issues that we are still presented with from the shutdown. Things break that were not expected,” he said. “We’re trying to increase stability and increase recoveries in the concentrator. We’re discussing how to modernize the facility internally with new technology and how to increase production. If that means to add capacity, we will look at how to do that.”

Downstream plans

One major project Taseko is considering at Gibraltar involves the final processing of concentrate. The company is working to update a feasibility study completed in 2002 that assessed the viability of constructing a copper refinery at Gibraltar.

Cominco Engineering Services Ltd. has developed a hydrometallurgical process of producing cathode copper from concentrates, a process that could be implemented at Gibraltar, according to Taseko. Previous estimates of production cost savings range up to US$0.20/lb, according to the company.

“We’re working with engineering companies that are capable of building and engineering it properly,” Hallbauer said. “We’re trying to push ahead as fast as we can, but the nice thing about the concentrate that we produce is that it’s very clean, and easily sellable.” The company currently ships concentrate to Asian refineries for final processing under a 40-month contract with Glencore Ltd.

Should the company decide to build a refinery at Gibraltar, Hallbauer estimates construction of the project would take 18 to 24 months to complete. According to Taseko, the British Columbia Environmental Assessment Office has determined that the proposed refinery would not be reviewable under the BCEA Act because the process would be integrated with ore milling operations at or in the vicinity of the existing operation.

Already, Gibraltar has contributed to the local area’s environmental needs, providing the regional government with a lined landfill disposal facility. “All regional garbage comes into Gibraltar in a big landfill. We bury it and collect any residual contaminants that may come out of the bottom through leaching,” Hallbauer said.

In a Dec. 12 release, Taseko announced a 30% increase in the mine’s reserves. Gibraltar now has a 15.5-year mine plan, with an estimated 194 million tonnes of sulphide ore and 14 million tonnes of oxide ore, using long-term metal prices of US$1.10/lb for copper and US$6.00/lb for molybdenum.

Hallbauer expects the mine life to grow with continued drilling and evaluation of the mine’s reserves. “It’s a big resource and we’re working on the reserves,” he said. A number of mine pits already exist at Gibraltar, Hallbauer said. The size of the pits and the amount of additional metal recovery is not constrained by engineering factors, he added, “…just cost.”

At present, Gibraltar is providing Taseko with net earnings. In its third quarter report released in mid-August, Taseko reported $10.1 million in net earnings, compared with a loss of nearly $2.0 million during the previous quarter. The restart of active mining operations and increased sales of copper and molybdenum concentrate were credited for the earnings. Average sales prices were US$1.51/lb of copper and US$34.00/lb for molybdenum.

“Everybody in the industry is glad to see metal prices staying up,” said Cox, at Ledcor. “This is an important project for us: it’s our first in copper and the first opportunity to take on a turnkey operation to provide mining, milling and maintenance.”

Gibraltar is also Ledcor’s first mining operation in British Columbia, working under a joint venture agreement in which the company shares in net profits. The 40-month contract agreement with Taseko gives Ledcor 15% after operational costs, Cox said.

Ledcor brought to the table an existing equipment fleet and the ability to acquire new machinery on a timely basis, Cox said. Included in those key startup acquisitions were a new shovel and five mine haul trucks, worth about US$20 million, according to Taseko.

“We’ve staffed up and are working the kinks out the last couple of months,” Cox said. “It’s all about refining the mine plan and communic
ating between the pit and the mill. We’ve certainly seen in the last few months better predictability of ore coming into the mill; we’re paying a lot of attention to it.”

Patricia Liles is based in Fairbanks, AK, and can be reached at pliles@alaska.net

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