Goldcorp has plenty of work ahead
As the chief operating officer of Vancouver-based Goldcorp Inc., George Burns usually has his hands full maintaining the production and profitability of the company’s open pit and underground mines, which are located in Canada, the U.S. and Mexico as well as Central and South America.
This year, however, he’s a little busier than usual. After all, Goldcorp is on course to achieve what might be called a mining hat trick.
Barring unanticipated delays or disruptions, Goldcorp will have three new mines in production by year end and Burns, with characteristic understatement, says: “These are pretty exciting times for the company.”
On July 25, the company poured its first gold from its underground Cerro Negro mine in the province of Santa Cruz in southern Argentina and will produce between 130,000 and 180,000 ounces there this year.
Production is also scheduled to begin before year end at Goldcorp’s Cochenour mine in the historic Red Lake mining camp in northwestern Ontario and at its Eléonore mine in the James Bay region of northern Quebec.
Goldcorp acquired both properties from junior mining companies as advanced exploration projects and has spent years bringing them to the brink of production.
Eléonore is located some 200km east of the Cree coastal community of Wemindji and Goldcorp wisely worked hard to win the support of the Cree Nation of Wemindji and the broader Cree Nation Government.
The result, after some five years of careful consultation and sometimes difficult negotiations, was an agreement that could well serve as a template for other resource companies dealing with First Nations and traditional lands.
The standard approach, says John Paul Murdoch, legal counsel for the Cree Nation of Wemindji, is to negotiate an impact-benefit agreement in which the community demonstrates the potential and possible harmful effects of the development and the company provides compensation.
Instead, Goldcorp and the Cree signed a collaboration agreement based on a partnership. “Our chief, Rodney Marks, didn’t want an impact benefit agreement,” says Murdoch. “He wanted to see if we could negotiate as true partners. Goldcorp wanted stability and our chief said ‘Okay, we’ll provide stability. I’m going to work very hard to get my community to buy in.”
To date, the approach has worked well and delivered dividends for both sides. Goldcorp has brought Eléonore from advanced exploration to production without the blockades, demonstrations and court challenges that often stall or kill resource developments. The Cree, meantime, are enjoying durable economic benefits.
“We started by building a relationship first, by understanding the Cree, their vision and what is important to them,” says Burns. “We have an awesome partnership with them.”
Cree lawyers helped the company draft the permits submitted to the Quebec regulatory authorities. Other members of the community assisted with the design and construction of the access road from the coast to the mine site.
“When we were looking for gravel pits and routing, the Cree were very helpful in minimizing disturbance and picking the optimal route,” Burns adds.
Goldcorp created a training program for Cree workers and has employed them in the construction of the ramp and production shaft and they will form part of the mine’s permanent labour force. The company has also built an industrial-scale dry cleaning plant in Wemindji, which will be used to clean coveralls and other garments and will provide benefits to both parties.
It will create jobs in Wemindji and minimize the footprint of the mine site, always an important factor in remote locations.
The Eléonore mine will be a very large underground operation once it is in full production at some point in 2018. The production shaft will be sunk to a depth of 1,500m, but it will be another year before it is fully constructed.
The workforce will number about 1,600 and many of those workers will be flown in from Montreal as well as several Cree communities on the southern coast of James Bay.
The mine will produce about 7,000 tonnes of ore per day and around 600,000 ounces of gold per year. The projected life of the mine is 15 years, but that estimate is based on the reserves discovered to date.
“The deposit is open at depth and we’re intersecting economic grades in the deepest holes we’ve drilled,” says Burns. “Once the production shaft is finished and the ramp is in place we’ll continue to explore and get a better understanding of the ultimate size of this deposit.”
Goldcorp has acquired a significant land holdings around the Eléonore mine and Burns and his fellow executives believe they are on the cusp of something big in James Bay. “Our focus now is on developing Eléonore,” he says. “Once we get it ramped up and into production we’ll be stepping out and looking for the next mine in the district.”
The Cochenour mine in the Red Lake district, located 230km northwest of Dryden, Ont., won’t add to Goldcorp’s annual production. Instead, it will replace the output from the Campbell mine, which has been producing almost 500,000 ounces per annum, but is now nearly depleted after 60 years of operation.
“We’re doing what’s called remnant mining, extracting the last chunks of ore from that historic deposit,” says Burns.
Goldcorp acquired the Campbell mine from Barrick Gold in 2006 and two years later picked up Cochenour, which is located five kilometres to the west. The property has been mined in the past, but it had sat dormant since 1971 when the last mining operation shut down.
A junior company drilled deeper and discovered the Bruce Channel, a high-grade, narrow-vein structure that contains up to two ounces of gold per tonne.Goldcorp has widened the old Cochenour production shaft and driven it 245m deeper, but it will primarily be used for ventilation and as a safety exit once the mine is operating.
The company plans to use the existing mill at the Campbell mine to crush, grind and process the ore and has devised an ingenious solution (an underground railway) to move ore from the new operation to the old one.
Goldcorp has spent the last three years drilling, blasting and developing a haulage drift between the two sites. The drift is 12 feet wide, 16 feet high and five-km long and the ore will be transported by a battery-powered locomotive towing four, 40-tonne cars. When the train arrives at the bottom of the Campbell production shaft, ore will be lifted to the surface for processing.
Constructing the drift has been a costly and time-consuming project, Burns notes, but it saves the company building an entirely new processing facility for Cochenour. It minimizes the surface disruption and allows the company to transport ore under the community of Cochenour, rather than through it.
The new mine is expected to be in production for at least 20 years, based on current estimates of reserves, but Goldcorp expects to be working the Red Lake camp for much longer than that.
The company recently announced a discovery at an old mine north of Campbell and east of Cochenour and plans to rehabilitate some existing drifts in order to conduct an underground drilling program.
“Hopefully this new discovery will lead to some huge value creation for our shareholders,” says Burns. “My view is that this is an unbelievable gold mining camp and there’s lots more to be found.”
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