As Timmins city councilor Steve Black noted Monday night, for two weeks in a row the city has heard exceptionally good news about Northern gold mining companies.
Black made the comment after hearing an in-depth report from Lake Shore Gold senior vice president of operations Dan Gagnon outlining how his company is “poised to reach new heights in 2013”. Last week, similar news was presented to council by representatives of Iamgold, which is planning to develop a new mine near Gogama.
Lake Shore Gold (LSG) is the newest commercial gold mining operation in Timmins, having gone into commercial production just two years ago this week.
Gagnon (PHOTO at left) told council that 2012 was an exceptionally busy year for local LSG operations, with the company being able to meet its production target of producing more than 85,000 ounces of gold.
“We met pretty well every one of our expansion objectives, meaning that we drove development at our mines, we built the mill etcetera and we met all of our objectives,” said Gagnon.
He said this included expansion of the mining and milling capacity by 25 per cent. He said LSG is now mining and milling 2,500 tonnes per day and by the middle of next year, Gagnon expects local operations to be producing at 3,000 tonnes per day.
“We did all of this expansion spending less money that anticipated,” said Gagnon.
As far as actual gold production, Gagnon said the target this coming year is set at 120,000 to 135,000 ounces of gold.
“We expect to be at roughly 150,000 ounces in 2014,” Gagnon told council.
He added that 2013 would be the year that LSG begins generating more cash flow for the shareholders.
Gagnon said the Timmins West Mine, in the city’s west end along Highway 101 near Highway 144, will continue to produce most of the gold for LSG. The Timmins West Mine complex includes the original Timmins Mine; the Thunder Creek lower ore zone and the 144 Trend. Nearby, about six kilometres away near the Tatachikapika River, is the new Gold River Trend.
He added that the rejuvenated Bell Creek Mine, in Whitney Township, will also produce roughly 20,000 ounces in the coming year.
He added that exploration continues at the Bell Creek mine with an eye to expanding the gold zone on that property. Gagnon said this might even result in driving the shaft at Bell Creek even deeper.
“This year is the year that we are going to understand how much gold is beneath our feet and what we need to go get it,” said Gagnon.
Bell Creek is also where the company is in the midst of a $100 million dollar expansion of the mill.
Gagnon said LSG is also developing a property east of Matheson, the Fen Gib property, which is destined to become an open pit and is estimated to have more than a million ounces of gold.
SPENDING MILLIONS IN THE NORTH
Gagnon also noted that LSG continues to make a significant economic contribution to Timmins with more than 500 fulltime employees at the Timmins West and Bell Creek worksites, along with an additional 200 contractors at the mine and another 125 contractors at the mill construction expansion project.
Gagnon said in real dollar terms this includes $138 million dollars spent in Timmins last year alone. Another $90 million was spend on non-local goods and services.
Gagnon said it is LSG policy to spend as much as possible on local goods and services, but said there are some items that are not provided locally.
“So sixty one per cent of our spend was in the Timmins area,” said Gagnon. Also, of the non-local spending ($90 million) Gagnon indicated roughly $53 million was still spent in Northern Ontario.
“We are really trying to keep our dollars as close to Timmins as we can,” Gagnon told council.
He added that the spending for this coming year for the West Timmins Mines, the Bell Creek Mine and the Bell Creek Mill is estimated at $169 million.
Gagnon also revealed that the LSG’s cost of producing an ounce of gold is $800 to $875 dollars an ounce, which includes the cost of paying off company debt.
That compares with a price of gold in excess of $1680 an ounce this week.
The company is also well financed at this time, said Gagnon, with no need to borrow money. He said the company ended 2012 with more than $60 million in bullion.
Gagnon gave a forecast of company production as follows:
Timmins West Mine up to 150,000 ounces by 2014.
Bell Creek 75,000 to 150,000 ounces in three to five years.
Gold River Trend 50,000 to 100,000 ounces in five to eight years.
Fen Gib 100,000 to 200,000 ounces in five to ten years.
Gagnon said LSG is pleased that it continues to enjoy success as a gold miner, but he said the main focus for the company is to try to ensure that workplace safety is integrated into every company operation.
“My commitment to the families and to the people is really on safety,” said Gagnon, adding that economic success is one thing, but it won’t count if people are not working safely.