Having poured its one-millionth ounce of gold last summer, Claude Resources is well on the way to doubling the output of its Seabee project despite this spring’s dip in the gold price. Exploration success in northern Saskatchewan is the reason.
Claude is currently mining the Seabee and Santoy 8 underground gold deposits located about 125 km northeast of the town of La Ronge, SK. Longholing is the predominant mining method.
Completed in January this year, the Seabee shaft deepening to 980 metres from 600 metres has cut mining costs by reducing ore hauling distance, maintenance and labour. It has a skipping capacity of 1,000-t/d, that currently hauls waste and ore. Waste is also used as backfill in the mine.
Ore is treated on site in a 1,050-t/d mill, currently operating at between 750 and 850 t/d. This is a conventional carbon-in-pulp mill with a gravity circuit that recovers about 30% of the gold. After electrowinning and refining into doré bars, the overall gold recovery rate is 95%.
The Seabee operation produced 49,570 oz of gold in 2012 from a record mill throughput of 275,235 tonnes grading 5.86 g/t Au. Unit cash costs came in at $997 per oz.
The company flies its employees into the camp on a two-week rotation or in the case of management, on a four days in/three days out schedule. About 150 of its 350 employees are at the site at any one time. Supplies are trucked in over a winter road.
So how is Claude faring after this spring’s dip in the gold price? The company has the flexibility to decrease expenditures fairly rapid. Claude has already decreased overall expenditures in 2013 by 20% from 2012 and plans to make further adjustments.
The company began a review of cash flow optimization in November 2012, well ahead of the softening gold price. It is scrutinizing the non-revenue generating business units.
Nonetheless, the company remains bullish on the longer-term price of gold. That, coupled with plans to double output, will leave it in an excellent position to prosper.
The opportunity to double production – from about 50,000 oz/year to nearly 100,000 oz – is directly attributable to the discovery of not one but two high grade deposits in 2011. Both are near the Seabee operation, so they can be developed using much of the existing infrastructure.
The first discovery is the 8.8-g/t Santoy Gap deposit. It is east of the Seabee mine and mill and north of the Santoy 8 mine, and will soon be reachable from Santoy 8 by an 800-metre exploration ramp. With resources of 281,000 indicated oz and 357,000 inferred oz, Santoy Gap is the best discovery ever made in the Seabee gold camp.
It’s a big game changer for Claude, and the company is moving as quickly as possible to get it into production during the second half of 2014. That as much as anything will provide the expected boost to output.
The other recent discovery is the L62 deposit that is west of, and accessible from, the Seabee Mine. L62 contains approximately 110,000 oz of gold at a grade of 7.6 g/t. Daily mucked tonnage is variable depending on the development schedule.
More success on the horizon
With so much exploration success near its Seabee operation, Claude is also turning its attention to two other projects.
It owns the Madsen gold project, a former producer 16 km west of Red Lake, Ont. A restart there could be accomplished very quickly thanks to the existing infrastructure. The land package includes a fully permitted 500-t/d mill, tailings management facility and underground mine with a 1,220-metre shaft.
Production from 1938 to 1976 totaled 2.45 million oz. There remain 2.3 million indicated tonnes at 8.93 g/t Au for 928,000 contained oz and 788,000 inferred tonnes at 11.74 g/t for 297,000 contained oz.
The 2012 Madsen drill program extended the 8 zone at depth and confirmed the conceptual potential beneath the Austin Tuff. Work is currently underway on a scoping level analysis of the project.
Claude’s other notable exploration property is the Amisk gold project located in Saskatchewan, 20 km southwest of Flin Flon, Man. The project is still in its earliest stages, but 30.15 million indicated tonnes at 0.85 g/t AuEq and 28.65 million inferred tonnes at 0.70 AuEq has the company thinking this deposit may have open pit potential. The deposit is classified as a volcanogenic massive sulphide gold-silver occurrence.
The company is completing a preliminary economic study for Amisk, and it was to be completed by the end of June 2013. However, the estimated 1.4 million contained gold-equivalent ounces is not enough to justify development at current gold prices.
To take advantage of its exploration successes in northern Saskatchewan and elsewhere, Claude Resources has assembled a loyal workforce, many of whom have been with the company for 20 years. The company has also recently beefed up its environmental and technical departments with new hires from other mines. The people and the assets together will ensure a profitable future for a well-managed junior.