The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Jonathon Naylor Editor Production at a long-idle gold mine near Sherridon will resume this year if the company that owns it has its way. Auriga Gold Corp wants to start production at Puffy Lake Mine by the second half of 2013, The Northern Miner reports. But the Toronto-based junior miner needs an estimated $18.1 million to restart the mine and another $26.6 million to sustain operations over a projected seven and a half years. According to the Miner, Auriga is now considering financing options, including a gold prepay loan agreement on which it already has an indicative term sheet. Interim CEO Gorden Glenn insists the company won't rush into something that does not make economic sense. 'We will wait until the market pays proper value for our resource base and the value that Puffy represents,' he told the Miner in a November interview. A study released last year confirmed that the potential restart of Puffy Lake makes financial sense. Auriga said the updated preliminary economic assessment showed the project would be 'economically attractive.' The study, conducted by an independent firm, examined a proposed open pit and underground mining and milling operation at what is now known as the Maverick Gold Project. The study forecast about 2,039,000 tonnes of mill feed would be produced from five open pits and an underground mine. The ore would be processed at the existing Puffy Lake mill, which would be refurbished. The mines would last a total of seven and a half years, producing about 348,000 ounces of gold for the commercial market in that time, the study suggested. The existing mill and infrastructure would be refurbished concurrently with the development of the initial open pit. Cost forecast The average production cash cost was forecast to be CA$950 per ounce of gold. Of late, the value of gold has been hovering around US$1,649 to US$1,650 an ounce. Auriga has previously projected the need for roughly 100 workers at the site. Richard Sutcliffe, then Auriga's CEO, said last year he was optimistic the project could stretch beyond the seven and a half years indicated in the study. 'We will continue to explore and develop known gold mineralization at the Puffy Lake and (adjacent) deposits with the intent of further extending the Maverick Gold mine life,' he said. Last year's study was conducted by the respected ACA Howe International Limited (Howe) and was based on a mineral resource estimate prepared by a separate consulting firm. The Howe study was an update to a previous preliminary economic assessment for a proposed open pit and milling operation at the site, located near Sherridon 65 kilometres northeast of Flin Flon. In the newer assessment, the open pits are mined out in the third year of operation. The existing underground mine decline ramp and workings would be dewatered, rehabilitated and used to service a test stope in the first year. The open pit operations would operate simultaneously with a modified underground mining program that could help feed the mill in the event of a temporary shortfall in underground production. But Auriga noted the projections and estimates in the new study constitute forward-looking statements, so the public should not place 'undue reliance' on them. Puffy Lake Mine produced over 28,000 ounces of gold in 1988 and 1989 before closing due to poor economics. November's Miner article explained why the mine failed, noting that its initial owner, Pioneer Metals, built an overly large mill that jacked up operating costs and doomed the operation.
