With regards to achievement of commercial production, the only info the company has provided to the market is that they are expecting to reach that status in H1 2011. Of course, H1 is a very general timeframe - could be January (though unlikely) or it could be June (unlikely also).
I have a thought with regards to the best case scenario to reach commercial production at Lamaque. It means they need to get going with bringing BD online soon though (end of October). Under this best case scenario, they would need to get BD contributing at a level of least 200 tpd effective right at November 1st (assuming Lamaque 2 is still good for 1,000 tpd).
It is not clear what they will be using as required targets to achieve commercial production at Lamaque. I am expecting they will need to process ore tpd at a rate of 60% of (current) life of mine tpd production (2,000), for 90 consecutive days. That would equate to 1,200 tpd (60% * 2,000 ore tpd) for the 90 consecutive day period. I don`t know if they are allowed any grace days in the 90 consecutive day period. I have always assumed that if one day is missed then the counter resets to the beginning. At least it is based on processed tonnes (not mined tonnes). As such, it is important to have some stockpile ore handy. If there are a few bad mining days with less than 1,200 tpd then the company can reach for the stockpile ore to ensure the 1,200 tpd processed ore total is achieved for that day. This would ensure that the 90 day count doesn`t reset all over again.
Anyway, the above is a typical commercial production target/requirement for start up gold mining operations (though number of consecutive days can vary - some are 30 and some are 60 (Lamaque will likely be 90 days though)). Also, it is not clear if there are additional requirements over and above this requirement, such as grade. Though, all examples I have come across in the past were strictly based on throughput (be it per hr or per day).
We actually do have an advantage relative to a brand new start up operation. We have a milling operation in place that has an excellent track record. Mechanical glitches with start up milling operations are sometimes (maybe somewhat often) the root cause of commercial production delays.
If they can get Bedard Dyke to ramp up to 200 tpd starting November 1st then maybe we have a shot at declaring commercial production at the end of January. If we can do that then maybe the Q1 2011 Income Statement can include Lamaque for 2 months. If the 90 days start mid November instead then everything gets shifted accordingly, and so forth with any lengthier delays.
7 comments:
Prodo5
What is the reason we may need to clear 1200tpd for 90 days n not 60 or 30 days to achieve commercial production status?
Is it the chart (5 year)? Comparing 2 others Sulliden and Plexmar both never produced an ounce (stand to be corrected).
Sulliden: Never dipping below ~.25
Plexmar: highly unlikely they will ever mine anything.
It is my contention that we would never have slipped below ~.25 if not for Wega dumping all those shares. JMHO Peter
Hi Wingfong,
I`m not sure of the answer. I`m not sure who sets the requirements and what factors are considered in the decision making process.
Off the top of my head, I am aware of 2 Lamaque production size gold mines that only required 30 days. They are both open pits mines though, as oppose to underground.
1) High River Gold`s Berezitovy mine in Russia. It`s a 100,000 - 120,000 gold ounce per year mine. Here was the Berezitovy definition of commercial production:
``Commercial Production is defined as 30 consecutive days of process plant operation at 60% capacity or better.``
2) High River Gold`s Taparko mine in Burkina Faso, West Africa. It`s a 120,000 - 140,000 gold ounce per year mine. Here was the definition of commercial production:
``The criteria established for Commercial Production stipulated that all components of the processing plant were to operate for 30 consecutive days at 60% capacity or better.``
Although these 2 High River mines only required 30 days, 90 days appears to be more typical in the industry I believe, from what I can recall of the wider population.
Of note, commercial production from the Sigma open pit under McWatters Mining (previous owner of the Lamaque Complex) required 90 days. Granted, that was open pit which is different from our underground start up, but it was on the same land package.
As such, 3 reasons I believe Lamaque will require 90 days:
1) Property previously required 90 days (albeit, the previous time was open pit).
2) 90 days appears to be typical for the industry
3) Century appears to have a commercial production timeframe (H1) that is dragged out, hence suggesting an extended period.
We know that the Lamaque 2 grade has been in the 3.5 - 4.0 g/t range.
Sending low grade mineralized Lamaque muck to the mill during the first phase of the start up was important. It allowed the mill to operate daily and increase mill efficiency by maximizing throughput.
BD will hopefully come online within the next month. It might give the company some flexibility to replace some of the mineralized Lamaque muck in order to improve the blended grade.
I think there is probably less muck now anyway, as Lamaque stopes are more developed and have proved to have extended lives.
Let`s say that the Lamaque 2 grade averages 3.8 g/t (for the purpose of this exercise), broken down as follows:
*stope reserve tpd - 500 @ 4.8 g/t (we know the grade has been coming in close to expected reserve grade)
*stope non-reserve tpd - 350 @ 3.45 g/t (we know that this grade has been coming in slightly lower than the reserve grade)
*mineralized muck tpd - 150 @ 1.25 g/t (we know that earlier in the year this grade was in the 1 - 2 g/t range)
Again, all that blended together averages to 3.8 g/t, with 1,000 tpd at Lamaque 2. Now, let`s lose 100 tpd of the 150 tpd mineralized muck, but keep 50 tpd.
That move would lower the Lamaque 2 tpd to 900, but increase the Lamaque 2 grade to 4.08 g/t.
Now, let`s assume Bedard Dyke eventually ramps up to 400 tpd @ 5.0 g/t grade.
That would bring the combined operation to 1,300 tpd @ 4.36 g/t.
Now, let`s bring on North Wall at 300 tpd @ 4.8 g/t.
That would bring the combined operation to 1,600 tpd @ 4.44 g/t.
It would be a good start if they could at least do that in this next phase - hopefully for early or mid Q1 2011.
They can then spend the balance of 2011 increasing mill feed from both BD and NW until they reach the LOM plan of 2,000 tpd. The additionally BD and NW, in addition to improvements, should be able to massage the overall grade up to the 4.7 g/t area throughout 2011.
I guess we`ll wait and see what strategy they employ once BD comes online in the near future.
Prod05
Thanks for the info.90 days without a glitch in the mill otherwise time count will be resetted seems daunting.For a complex mill with hundreds of moving parts(perhaps thousands)and other technicals, it seems to be rather challenging to maintain a zero glitch operation continuously for a full 90 days period. Hope that it is a 30-days requirement.
Hi Wingfong,
Although anything is always possible, I think our mill will be fine. Our mill has proven itself over time, both during the open pit days and also over the past 5 months (after the mill upgrades). Our processing operation in general has been one of Century`s best performing assets over the years, with consistently delivering a 96% recovery rate, and I don`t recall there being any major issues or shutdowns.
With start up operations, I believe mill problems typically show up right at the start (usually with brand new, unproven, mills) - vibrations issues, incorrect mill setup/configurations, defective parts, etc.
Prod05
Your assessment is noted with thanks
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