KAT Exploration Inc (KATX)

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Mining is back in central Newfoundland How Easy/ Right around the corner
Duck Pond Copper-Zinc Mine

Summary of Environmental Assessment Process:

The proponent proposes the development and operation of a 1,500 tonne per day copper-zinc mine near Duck Pond, 30 km southeast of Buchans. The project was previously proposed in 1988 by Noranda Minerals Inc. and the minister directed the company to prepare an Environmental Impact Statement (EIS). Before the EIS was finalized the project was put on hold as Noranda was unable to discover sufficient reserves to make the project economically feasible. The present proponent has downsized the project to conform with known resources.

The physical features of the undertaking will include the construction of a road, transmission line, temporary construction camp, underground mine workings, processing plant, two open pits, tailings storage area, potable and process water supply, domestic and mine waste disposal area, and chemical storage area. A concentrate unloading/loading marine facility has not yet been selected. Set-up at the site is tentatively scheduled to begin in April-May 2001.


Smooth sailing at Duck Pond


By: Jane Werniuk
If ever there was an example of how small communities and a modest mine could be good for each other, it would be Duck Pond. The owner needs new ore, and the region needs the jobs the mine will bring.

The last generation of miners in central Newfoundland were trained for the Buchans and Daniel's Harbour mines, closed decades ago. The region's last mine--Richmont Mines' Nugget Pond gold mine in Baie Verte--closed three years ago. Duck Pond will be the first mine in Newfoundland for 100% owner Aur Resources of Toronto, whose other producers (Quebrada Blanca and Andacollo) are open pit copper mines in Chile. Its Louvicourt mine in Quebec closed last year when the ore ran out.

The Duck Pond property was optioned from Noranda in 1999 by Thundermin Resources Inc., which entered into a joint venture with Queenston Mining Inc. The consultant MRDI (now AMEC) completed a feasibility study on the property in 2001. The environmental impact statement prepared by Jacques Whitford Environmental was submitted in 2001 and accepted by the provincial government in January 2002. In March 2002, Aur purchased the Thundermin and Queenston interests for the equivalent of $6 million. Falconbridge retains a 2% NSR royalty on production.

Vice-president of development projects Ed Stuart explained that the company spent the next 31 months updating and optimizing the feasibility study, and re-estimating the reserves and resources. During this period of low metal prices, Aur looked hard for ways to minimize costs and ensure profitability of the small but rich deposit. In additional to minimizing capital costs, it concluded that costs would be lower if the plant throughput were expanded from 1,500 to 1,800 tonnes/day. Aur finally made the go-ahead decision in December 2004, and work began immediately.

The polymetallic underground mine lies near the small communities of Millertown and Buchans Junction, and is 45 km from Buchans and 110 km from Grand Falls-Windsor. Local infrastructure has made the development relatively easy. The mine has built a 66-kV powerline from Buchans to the site allowing it to tap into the provincial power grid, with Newfoundland and Labrador Power. The company hired Newfoundland-based Adams Construction to build or upgrade 30 km of gravel road to link the mine to Millertown. This same road will provide access to the TransCanada Highway, for the concentrate to be trucked out. It will be taken to a new shed built at an existing commercial bulk loading facility at Turf Point in the port of St. Georges on the island's west coast. This port is open for shipping throughout most of the year.

The US$94-million Duck Pond mine development is on schedule for startup in the fourth quarter of this year, with commercial production expected early next year. Late in 2005 Aur made the decision to accelerate the underground development at a cost of US$3.7 million and to purchase rather than lease the mine mobile equipment, increasing the capital by US$7.2 million. These moves are expected to optimize mine production in 2007 and reduce operating cash costs in the future.

The 1,800-tonne/day mine and plant will produce an annual average of 41 million lb of copper, 70 million lb of zinc, 536,000 oz of silver and 4,100 oz of gold over six to eight years, from 2007-13. While the mine life is short, the new concentrator may have a longer-term impact. If it were available as a custom mill, it would make other deposits in the area more economically attractive, such as Messina Minerals' Boomerang prospect in the Tulks Valley 70 km away, or Mountain Lake Resources' Bobby's Pond prospect 30 km away.

Discovery

The Duck Pond property lies within the Dunnage Zone made up of Cambrian submarine volcanic and deep-water sedimentary rocks. The mineralization is volcanogenic massive sulphides and stockworks enriched in copper and zinc, with lesser silver and gold credits. The layers vary from relatively flat-lying to almost vertical.

Noranda Inc. (now Falconbridge Ltd.) first discovered the Burnt Pond copper-zinc prospect in 1973 followed by the near-surface Boundary deposit in 1980. Exploration from 1985-91 delineated the three underground zones of the richer Duck Pond deposit 4.5 km to the southwest (Upper Duck, Lower Duck and Sleeper), just south of the new plant.

The total reserves as of the end of 2005 were 4.078 million tonnes grading 3.29% Cu, 5.68% Zn, 59.3 g/t Ag and 0.86 g/t Au. This includes 3.7 million tonnes of higher grade ore at the underground mine and 0.4 million tonnes in the open-pitable Boundary deposit. This is sufficient to support a mine for 6.3 years. In addition, the Lower Duck deposit has measured and indicated resources of 1.073 million tonnes grading 3.04% Cu, 7.05% Zn, 71.2 g/t Ag and 0.81 g/t Au, which could extend the mine life to eight years.

It should be noted that these estimates were made in 2004 using prices and currency exchange that now seem very conservative: copper at US$0.95/lb, zinc at US$0.50/lb, silver at US$5.00/oz, gold at US$275/lb, and an exchange rate of US$1.00 = Cdn$1.47.

As an extra insurance, Aur entered into a forward sales contract in January 2006 for 75% of its zinc production (totaling 116,300 tonnes) from 2007 through 2011, at prices between US$0.84 and $0.63/lb. This transaction has assured the company of US$55.5 million more revenue than it would have if it sold this zinc at the US$0.50/lb zinc price used in the feasibility study. The remaining zinc and all copper production is unhedged. However, given current zinc prices at around $1.40/lb, in hindsight the timing of the contract could have been better.

The payback period for Duck Pond anticipated by the feasibility study was approximately 3.5 years, but with today's metal prices a much faster payback is expected, and a much higher rate of return on investment than the approximately 15% forecast by the study.

Although it is smaller, Duck Pond has quite a bit in common with Aur's former Louvicourt mine near Val d'Or, Que. When Louvicourt closed down in July 2005, Aur purchased most of the mine and mill equipment from its joint venture partners (Novicourt and Teck Cominco), and moved it to Newfoundland. Duck Pond also inherited some of Louivourt's personnel including mine superintendent Guy Belleau who has been Duck Pond's mine manager since July 2003.

The mine development has a small footprint--139 ha--with the surface crusher and processing plant right next to the portal entrance, and the tailings pond nearby. A surface complex houses administration, the mine/concentrator dry and laboratories. As well there will be a primary warehouse and garage. The site camp consists of trailers that house workers, most of whom are on seven-day shifts.

Building the mine

The underground reserves will be extracted via a ramp from surface, with two open pits (North and South) extracting the Boundary deposit ore in the final year of operation.

The underground mine consists of high-value ore that will be mined using maximum selectivity and minimum dilution. Longhole stoping will account for most of the mining, with 20-30-m-high stopes that, once mined out, will be filled with either paste backfill or mine development waste. Bench stoping will be used to recover reserves on the peripheries of the longhole stopes or in areas where the ore is not thick enough for efficient longhole stoping.

Drift-and-fill mining will be used in the relatively thin and flatter-lying fringes of the deposit. Where necessary, these stopes will be filled with paste backfill; however, wherever possible they will be filled with development waste.

The underground equipment is trackless diesel, including jumbo, longhole and down-the-hole drills, 6.8-m3 load-haul-dump units, 30- and 45-tonne underground haul trucks and various service and support equipment. A small amount of new equipment has already been purchased including three 45-tonne Caterpillar haulage trucks, three Caterpillar R1700G remote-capable load-haul-dump units, and a two-boom Altas Copco drift jumbo.

The first round for the portal was blasted in May 2005. The 14.5%-grade ramp runs from the portal in a straight line for 1,100 m toward the ore and then spirals mainly in the footwall west of the deposit. The ramp will extend to the mine bottom--about 446 m below surface. The first longhole stoping will be between 24 and 26 levels (about 250 and 280 m depth, respectively). The stopes will be filled with paste backfill, returning about 54% of tailings to the mine. The next longhole stoping will be done between the 21 and 24 levels.


Milling process

Uncrushed ore will be trucked to the crusher station on surface near the portal, where it will be placed in a 6,000-t stockpile or dumped directly through a grizzly to a 1.1-m x 0.8-m, single-toggle jaw crusher, reducing the size to -15 cm. The crushed ore will be conveyed to a 1,500-t coarse ore bin. An apron feeder beneath the bin will reclaim ore onto a conveyor that will take the crushed ore into the concentrator building to feed the grinding circuit. Outdoor discharge points are being skirted to control dust.


There will be three primary flotation circuits--bulk copper/lead and zinc, each including a regrind stage, plus copper/lead separation. The flotation circuits will consist of a selective rougher flotation stage and a scavenging section followed by one stage of cleaning for the roughers, and three stages of cleaning for the scavenger flotation concentrate. The product will be upgraded in three counter-current cleaner flotation stages. Cleaner-scavenger tailings will be directed to zinc circuit feed together with the copper rougher-scavenger flotation tailings.

All the cells in the copper flotation circuit will be of conventional design, fitted with agitators suitable for fine particle flotation. Each individual cell will be provided with a manual airflow control valve, while each bank will be fitted with an airflow meter and an automatic valve to maintain the required air volume to the bank. Each bank will be equipped with a pulp level transmitter that will activate dart valves located in the discharge boxes.

The final copper and zinc concentrates will be dewatered in thickeners followed by four Larox pressure filters (two for copper; two for zinc) to 9% moisture content. The copper concentrate will grade 24% Cu, while the zinc concentrate will grade 56% Zn. Copper and zinc recovery of 85% are expected.

Following filtration, the copper and zinc concentrates will be discharged by gravity into an unheated load-out area for loading into 10 trucks per day, each holding up to 40 tonnes of concentrate. (The gravel road cannot handle heavier loads.)

The zinc scavenger tails and lead concentrate will be dewatered in a high-capacity, 16-m-diam thickener and sent to the paste backfill plant. There it will be mixed with water and a binder consisting of 90% slag and 10% Type 10 Portland cement using a screw mixer. A 190-kW high-pressure piston pump will deliver pastefill to the mine via a 127-mm steel pipeline.


When in full production, Duck Pond will provide about 180 full-time jobs. As well, the spinoff effect will create or maintain approximately 500 jobs in the area. The development has already had positive effects in the region.

Aur is making a point of hiring local firms as much as possible. That started with choosing an EPCM contractor--Met-Chem Canada--that had previous experience on the island, but mainly because it teamed up with the local firm SGE-Acres (now Hatch) for all the surface construction management and some of the engineering work.


Duck Pond has been positively received at public and industry meetings. Says chief mine engineer Greg Tucker: "People are watching us closely. They are gung-ho about the project."

Hiring began in May 2005. "We made a few phone calls, and overnight we had two crews," says Heath. The large number of resumes that have been received suggests that many Newfoundland-born people are anxious to return.

All the miners are Newfoundlanders. Of the 77 Aur employees at the site now, 91% are from Newfoundland and it is anticipated that most of the rest hired will likewise be Newfoundlanders. One man had 25 years of experience, but had never worked on the island before; he commented that getting a job at Duck Pond was "like winning the 6/49 [lottery]." New employees have come from Hemlo, the potash mines of Saskatchewan and the oil sands in Alberta, as well as the diamond mines of the Northwest Territories. They are bringing together the best practices from many different mines

.Aur Resources Inc.
Friday, 01 June 2007 00:00
The gold standard in copper
After a long period of stagnation, copper is hot. Demand from China and India is huge and Aur Resources Inc. is using a community-friendly approach to help supply it from mines in Canada and South America, as Keith Regan learns from company executives.

This spring, Aur Resources Inc. celebrated the grand opening of the first major new mining project in central Newfoundland in more than 20 years. The copper and zinc mine’s opening is part of Aur’s strategy to address the global surge in demand for base metals, such as copper, that is pushing prices higher. This opening was completed on time primarily because of Aur’s philosophy of working safely and in an environmentally responsible manner and by working closely with regulators, communities and other stakeholders.

“We have a culture that originates from (founder and current CEO and President) Jim Gill, that encourages working hand in hand with all the stakeholders from an environmental, community and health and safety point of view, to make the project a success,” said Wade Stogran, the company’s director of environmental affairs. “We never try to hide anything or be less than transparent about what we’re doing.”

That approach helped the Duck Pond project get up and running in January 2007 after only two years of engineering and construction and less than four years of permitting. The total capital cost of the mine, processing plant and related infrastructure was US$128 million. Aur had acquired the rights to the mine in March 2002. At the time, the current bull market in copper and zinc—driven largely by demand from Asian markets such as India and China—had not yet started to materialize. Today, relatively limited supplies of copper and continued strong demand have helped keep metal prices high.

For Aur, its success in getting Duck Pond up and running comes after it won high marks from regulators and other third parties for its recently closed Louvicourt mine in Val D’Or, Quebec. Located in northern Quebec, that project won accolades for its approach to treating tailings, the residue of the mining operations. The mine worked in conjunction with regulators, universities and federal research facilities to design state-of-the-art sub-aqueous tailings facilities. These facilities have withstood the test of time and are a proven success. The same tailings deposition strategy is being employed at the Duck Pond mine. Another strategy that was used at Louvicourt and will be employed at Duck Pond is the use of tailings to fill unused mined areas underground. Approximately 50 percent of the tailings produced from the ore at Duck Pond will be returned to the underground as backfill.