Grade Is King Again
Gold mines that can provide good returns in any environment–even a hostile one in which prices hover at 20-year lows–are few and far between. The new Bulyanhulu operation in Tanzania’s Lake Victoria district fits that criterion, though its potential wasn’t immediately obvious in the 1990s, when Sutton Resources Ltd. was attempting to vend the advanced underground deposit to a senior partner.
Majors came, saw and went, with the exception of Barrick, which looked beyond the reserve of about 3.6 million ounces gold outlined at the time, and beyond the poor infrastructure, lack of trained miners, and daunting health and social challenges. The company saw a high-grade core property in an Archean greenstone belt not unlike Canada’s Abitibi camp, but one less explored, with obvious potential for major discoveries. Barrick shelled out US$280 million to acquire Sutton’s Tanzanian assets–its first deal in Africa–and then launched an aggressive program to boost reserves. Mine planning and engineering also went into high gear and, about two years later, the first ore was moving through a modern, 2,500-tonne-per-day plant.
Alan Hill, executive vice-president of development, says Barrick couldn’t be more pleased with its progress. Reserves were doubled, then tripled, and the US$280-million mine was constructed by SNC-Lavalin on time and on budget. This was no small feat, given the infrastructure that had to be put into place before mining could begin.
In the years ahead, the company plans to boost Buly’s annual gold production to 500,000 ounces from 400,000 ounces at an average cash cost of US$130 per ounce. “We see potential for this to increase to 800,000 ounces,” Hill said, “and the economics keep getting better and better. Buly will be a powerful cash-flow generator for at least 20 years.”
More importantly, the new mine is a springboard to advance other projects in the region, including prospective ground acquired from Randgold Resources and, more recently, Pangea Goldfields.
“Buly is the hub of our district development program,” Hill added. “Some 25 million ounces of gold have been found in the Lake Victoria district during the past five years and there is still excellent upside.”
Barrick’s COO John Carrington is frugal in his use of superlatives to describe mineral deposits, no doubt because he knows that many hide geological or metallurgical surprises. Yet, so far at least, Buly’s surprises appear to be of the pleasant variety: high grades, good ground conditions and recoveries, and better-than-expected continuity.
“The conversion rate to reserves from resources is almost 100%,” Carrington told analysts earlier this year, “and the potential for reserve increases at Buly is almost unlimited. It will be our third powerhouse,” referring to the other two major mines: Goldstrike and Pierina.
With a gold resource base of more than 14.6 million ounces, Buly has already achieved “world class” status, a prestigious ranking that belongs to the few gold deposits that ever exceed 3.2 million ounces.
Such an achievement would no doubt surprise the herdsman who first discovered gold on the property in 1976, triggering an influx of artisanal miners who subsequently extracted thousands of ounces of gold from surface showings. State-owned geological and mining agencies explored the ground until 1983, when two Finnish companies formed a joint venture with the government and operated the project. The joint venture was not renewed in 1989, at which time Placer Dome entered the picture, only to back away a few years later.
Vancouver-based Sutton Resources — at the urging of board member Roman Shklanka (a former Placer Dome employee) — immediately applied for a permit, but progress stalled when the Finnish companies began legal action to regain control of the project. The case was settled in favour of the government, which granted the licence to Sutton’s subsidiary, Kahama Mining, in the fall of 1994.
Sutton began drilling in early 1995, and an underground development program was launched in the fall of 1996. Kilborn Engineering then began a bankable feasibility study based on 385 drill holes completed by May 1998.
Despite ever-growing resources, Buly- anhulu’s road to production was rocky and tortuously slow, until Barrick made its surprising leap of faith into Tanzania in 1999. It was a surprise because, until then, Barrick had shied away from Africa, where making mines can be far more challenging than in the Americas. Revisions to Tanzania’s mining laws and an improved fiscal regime convinced Barrick’s top brass that the country saw mining as a cornerstone of its economic revival. “It has been an excellent host country,” Hill said.
Reserves Expand… and Expand
Alex Davidson, senior vice-president of exploration for Barrick, says the initial attraction was the quality of the deposit, and its potential at depth and along strike. “What we’ve found since is that things are even better than expected. In today’s gold price environment, grade is king, and the average grade here is about 15 grams per tonne. The property now has over 10 million ounces of reserves at US$300 per ounce gold, and it’s pretty insensitive to price.”
The main rock types on the property are mafic volcanic flows overlain by a series of felsic pyroclastics and ash tuffs, which form part of the Archean Lake Victoria Greenstone Belt. Argillite is present at the mafic/felsic contact as well as within the mafic flows. The gold, silver and copper mineralization occurs in mineralized “reefs”–quartz veins localized along steeply-dipping northwest-striking structures generally within the argillite. So far, Reef 1 is the most significant of the nine reefs identified on the surrounding land package.
With more than 200,000 m drilled to date, the deposit extends downdip at least 2 km and has a strike length of almost 5 km. This work has turned Buly into three distinct deposits, all within Reef 1: the Main Zone, the East Zone and the West Zone.
The bulk of the existing 10-million-ounce reserve (21 million tonnes averaging 14.69 grams per tonne (g/t) Au) is found within the Main Zone. The Main Zone has the highest grades, averaging above 16.5 g/t Au, and is still open to depth. The East Zone, discovered last year, contains 1.2 million ounces grading 12 g/t Au. Though lower grade than the Main Zone, its near-surface reserves are accessible by ramp from surface.
The West Zone is deeper and hosts almost 2 million ounces at 14.0 g/t Au. It was found below some shallow Sutton holes that were completely barren. Recent drilling has encountered encouraging results west of the West Zone, in what is now being called a potential “Far West Zone”.
Based on two widely spaced, deep holes (about 2,000 m below surface), both of which returned high-grade mineralization, Davidson believes the orebody will be as continuous at depth as has been demonstrated closer to surface. He also expects the original reserve to be quadrupled as a result of ongoing exploration, the key to this growth being the continuity of the orebody. “It’s absolutely amazing,” he says. “I’ve never, in my entire career, seen an orebody with such continuity, both at depth and along strike.”
Roy Meade, general manager of Kahama Mining (now Barrick’s Tanzanian subsidiary), recalls that when Barrick officials first set foot in Tanzania, the Buly project consisted of an airstrip, a basic exploration camp, a deposit developed by decline to slightly more than 180 m below surface, and various surface facilities.
“One of our first tasks was to bring in reliable infrastructure–power, water, air and surface transportation,” he said.
The 138-km, 220-kV powerline, brought in from the national grid, meets the requirement for 14.5 MW of power. “It’s hydro-power and therefore dependent on rain,” Meade explained. “We’ve had plenty this season but have suffered occasional brownouts because of record droughts in the past few years. As a precaution, we are installing enough stand-b
y generating capacity for all our requirements.”
To meet Buly’s water needs, an intake and pump station was installed at Lake Victoria’s Smith Sound. The pipeline has a capacity of 160 m3 per hour, far more than the mine’s 90-m3-per-hour needs. Seventy-five kilometres of road access was upgraded, allowing mine equipment and materiel to be transported more than 1,000 km from Tanzania’s main city, Dar es Salaam. The rail line at Isaka (126 km from the mine site) is used to bring in consumables such as cement and fuel, and to haul the copper concentrate to ports for shipment to smelters. Other infrastructure includes a 1,700-m airstrip and a satellite dish for reliable communications.
“We’ve had tremendous help from the government in building this project,” Meade said.
The newly built mine is expected to produce 250,000 ounces of gold this year, 380,000 ounces in 2002, and 400,000 ounces by 2003. The initial mining rate is to be 1,618 tonnes per day, ramping up to 2,500 t/d by 2003, once additional ore is mined from expanded reserves in the East Zone. The potential to increase daily production to 4,000 tonnes, and possibly even 6,000 tonnes, is being studied.
Access to the ore is provided by a circular shaft, 1,090-m deep and 6.4 m in diameter, situated at the centre of the Main Zone, and by three internal ramp systems. The shaft was sunk by RUC of South Africa. The stations will be at 120-m intervals.
Hoisting from the 4,700-level loading pocket began in April. This is a temporary measure, until the mid-shaft loading pocket is completed later this year. Shaft-sinking and equipping will be completed in the fall of 2002, with a total hoisting capacity of 5,000 tonnes per day from shaft bottom.
Buly is a modern trackless operation that uses longhole stoping (45%) and drift-and-fill (35%) as its main mining methods; the balance is development ore. The mining width varies from 2 m to 6 m depending on vein orientation. The minimum width for longhole stoping is 2.1 m, whereas drift-and-fill requires at least 2.7 m.
In the first five years most production will be from longhole stopes, with panels measuring 200 m in length by 15 m to 40 m high. Drift-and-fill will be used in the East Zone and in portions of the Main Zone. Ground conditions are described as “good”, though some poor conditions exist in upper sub-levels, owing to localized weathering.
Production equipment includes Toro load-haul-dumpers (LHD), and Sandvik Tamrock drills including Quasar single-boom and Minimatic twin-boom jumbos.
Unit mining costs for this year are estimated at US$38 per tonne but should decline to an average of US$25 per tonne (US$60 per ounce) over the life of the mine.
Because Buly has great lateral extent, it may be necessary in the future to sink another shaft; if so, it would most likely be in the high-grade West Zone. That will mean more capital investment, though it should also result in reduced development and haulage costs.
While currently sized at 2,500 tonnes per day, the mill at Bulyanhulu was designed for expansion in the years ahead. It consists of a 4,000-tonne-per-day crushing and grinding circuit, a gold gravity circuit, and a copper-gold-silver flotation circuit.
Tailings are thickened and filtered, with 20-30% sent to a paste backfill plant and then used underground for support. This method is cost-effective and allows for rapid cycling of stopes. The remainder goes to the tailings facility.
On the environmental front, standards are as high as in North America. All mill discharge will be made into paste, not just the portion used for backfill. Unlike slurry tailings, paste does not need abundant water, a natural basin for storage, or the installation of large, expensive water-retention dykes. The tailings impoundment is designed as a series of cells, the first one having a three-year capacity. All tails not used for backfill will be pumped to the impoundment, and deposited in relatively thin layers. The paste will flow until the tailing mass gains strength through consolidation and desiccation. As soon as the stacks reach design height, the cell can be prepared for closure and reclamation. Closure will be simplified by the fact that the process uses no cyanide.
Excess water from the tailings impoundment will be directed into a sedimentation pond to remove the solids. The overflow will go into a reclaim pond, from which it will be pumped back to the process plant for reuse in the mill circuit. In addition, drainage from the waste dumps will be directed to a collection pond and held until it can be used in parts of the process circuit.
The mine and processing facility will undertake an internal environmental audit each year. The surface water, groundwater, wildlife and air quality will be monitored during the construction, operations and closure phases to avoid significant environmental impacts.
Gold recovery is expected to average 89%, of which 42% will come out in the gravity concentrate and 47% in the copper concentrate. The presence of free gold has made mill operators optimistic that gravity recoveries in the Knelson concentrators will be higher than expected. The expected recovery rates for copper and silver are 85% and 79%, respectively.
In addition to the gold dor produced on site, more than 20,000 tonnes of copper concentrates will be produced annually. Each tonne grades 300 g/t Au, 270 g/t Ag and 18% Cu.
Total processing costs are estimated at US$20 per tonne this year, decreasing to US$15 per tonne (US$41 per ounce) over the mine life.
At present, the mill treats only Buly’s sulphide ores. However, some of Barrick’s nearby properties contain oxide and transition mineralization, while others are considered metallurgically complex. Modifications and/or additional circuits may be necessary over the long term if Buly is to become Barrick’s regional processing hub for a broad range of deposit types.
Shortly after picking up Sutton, Barrick picked up more properties in the region by acquiring Randgold Resources and, more recently, Pangea Goldfields. The company now controls 7,200 km2 of ground in the Lake Victoria gold belt, with Buly serving as the hub of the exploration effort.
The Lake Victoria gold belt consists of an inner and outer arc, both of which are bounded and intruded by granitic intrusives. The inner arc, comprising mainly mafic and felsic volcanics (similar to the Abitibi camp), hosts several important deposits, such as Buly and Barrick’s nearby Tulawaka deposit (acquired in the Pangea takeover). Iron formation and sediments dominate in the outer arc, which hosts deposits such as Geita and Golden Ridge.
“There are almost no outcropping rocks,” Davidson said, “so although the belt has barely been touched, it has already made Tanzania one of the most attractive countries for gold exploration. I think it will be one of the top Archean districts in the world.”
Barrick has organized its holdings into six main geographic districts: Bulyanhulu, Tulawaka, Golden Pride, Geita, Musoma and Sekenke. The exploration teams at work in these groupings have experience in both Archean and African terranes. This year’s exploration program, budgeted at US$24 million, is largely focused on Buly and Tulawaka, though significant work is also planned at Sekenke, Geita, and parts of the Golden Pride district.
Davidson said recent exploration at Tulawaka has confirmed the grade and continuity of Pangea’s previous drilling. Mineralization, which occurs in quartz veins and adjacent wallrocks, is continuous over a 1-km strike length and extends to a depth of 300 m. A resource of 1 million contained ounces has been confirmed at a grade of 16 g/t Au, with more drilling planned.
“Then we’ll start a feasibility study,” Davidson added. “If we’re able to bring reserves to the two-million-ounce level, Tulawaka may be a stand-alone facility. Otherwise, we’ll truck the ore to Buly for processing. In either event, Tulawaka will initially be an open-pit mine.”
About $16 million will be spent at Tulawaka this year, including the feasibility s
tudy and environmental studies.
Exploration in the Golden Pride district will target gold mineralization along, or on splays of, the shear zone hosting the Golden Pride mine. Another target is the nearby Chocolate Reef project, acquired from Pangea. “It hosts a 1.6-million-ounce gold resource in the same type of ore as Buly,” Davidson said. “We’re excited about its upside potential.”
The Musoma district on the east shore of Lake Victoria is an early-stage project covering small-scale mines. Reconnaissance mapping and sampling are planned. Barrick also plans to explore its 18 licences in the Geita area, including extensions of the Geita mine.
At Sekenke, southeast of Buly, Barrick’s land package covers the old Sekenke gold mine (145,000 ounces extracted before 1960, at grades of >16 g/t Au) and a 60-km-long corridor of artisanal workings. The geology is described as “similar to Buly”.