Osisko’s billion dollar Canadian Malartic mine is the single largest gold reserve in production in Canada. General manager Denis Cimon talks about the challenges and achievements of this unique project.
The town of Malartic, Quebec is sitting on a gold mine—literally. To be more precise, it used to sit on a gold mine until part of the town was moved to facilitate mining operations. But more of that later.
Established in 1998, Osisko is based in Montreal. Initially focusing on mineral exploration, the company evolved into a mining corporation when it decided to develop the Canadian Malartic Project on its own.
It must be an extremely rewarding feeling when a project involving a billion dollar investment starts to pay you back; even more so when it comes in ahead of schedule. Much has happened since we last spoke to Denis Cimon, general manager of Canadian Malartic in February 2010. Construction of the mill was completed in late February 2011. Following a cold testing period of the processing plant, ore was introduced into the mill in early April and first gold was poured on 13 April 2011, a mere six years after the initial drill hole in March 2005.
After the original target was set for August 2011, commercial production was achieved three months earlier than that. With the full design capacity of the first milling plant being 55,000 tonnes per day, gold industry protocol meant that it had to operate at 33,000 tonnes per day (60 per cent of capacity) for 30 consecutive days to be deemed to be in commercial production. The 30th day was reached on 17 June, making 19 May the first day of commercial production.
“We have almost finished building a new secondary crushing circuit to increase production to between 600,000 and 650,000 ounces,” said Cimon. “The construction program is on target to deliver the first unit near the end of March and the complete program by the end of June.”
The cash cost is expected to decrease substantially as the plant reaches full capacity. Cimon sees the mine’s cost per ounce in 2012 likely to be between $510/oz to $575/oz, placing Osisko in the lowest quartile for gold mining companies (below $650 per ounce). “Our primary focus in 2012 is on optimizing the mine development and synchronization between mining and milling,” he added. “The key is stabilization.”
Canadian Malartic is Osisko’s first productive mine, and is expected to produce over ten million ounces of gold from now until 2027. Gold production reached 79,718 ounces in the fourth quarter of 2011 and 200,137 ounces for the year. Significantly, the mine currently represents the single largest gold reserve in production in Canada and it’s still looking for (and finding) more through ongoing drilling on adjacent mineralized zones. Year-end gold reserves increased by 200,000 ounces to 10.7 million ounces, effectively replacing 2011 production.
At the inauguration ceremony on 30 May 2011, Sean Roosen, president and CEO of Osisko, reminded those in attendance that the success of the billion-dollar-plus project was the result of a collaborative effort involving thousands of people. He particularly emphasized the support from the town of Malartic and its citizens, more than 200 of whom allowed their houses to be moved to the northern edge of the town, to allow for open pit mining where some of those original homes used to be.
The Malartic property is owned 100 percent by Osisko, and has been worked in the past. Between 1935 and 1983, deep mining of the high-grade Malartic and Barnat veins yielded over 5 million ounces of gold, but subsequent exploration failed to find further deep high-grade gold resources. Convinced of its potential, however, Osisko acquired the property in December 2004 and began looking for lower-grade deposits closer to the surface. Combining its own exploration data with that of previous explorations, the company found what it was looking for: a large area with the potential to become an extensive and highly profitable surface mine.
Although the project came in ahead of time, creating a new mine has never been plain sailing and the navigation of projects like this has taken on an extra dimension of complexity since the mining industry embraced the concept of sustainability, from an economic, environmental and social point of view.
To give due credit, Osisko built in a sustainable development program right from the start.With part of the gold resource being literally under the town of Malartic, it could hardly do anything else, but it’s how you do it that counts. “We had to reach out to the local community, communicating with the town council and the citizens, building relationships, exchanging information and forming a community consulting group,” said Cimon. “When we realized that we had the acceptance of the town council and over 85 percent of the population, we started a program of drilling to define the area of the deposit.”
The southern boundary of the town is now shielded from the open-cast mining operation by what the company calls a ‘green wall’— a wall of earth seeded with grains and planted with trees, not only cutting out noise and dust but also providing a leisure facility. The company also worked with the town’s mining museum to build a viewing center so that people can see the pit and see the operations. A new park will be built this summer along the ‘green wall’ – it will include baseball and skateboard facilities, fountains for children and even an area where elderly people will be able to do some exercices.
A variety of other sustainable measures were adopted, including hydro-electric power to reduce the need for fossil fuels, and the use of electric shovels to make it one of the first customers for the new generation of trucks with motors that meet the EPA's Tier 2 emission standards.
Another sustainability choice was to progressively restore vegetation at the mine site rather than waiting until the end of the mine’s life cycle. The process of continuous rehabilitation was made possible by the decision to use thickened tailings technology, which allows indigenous trees to be planted while mining continues.
On top of that, the ‘Osisko Forest’ project is a reforestation program for various municipal land lots in the region. This involves the landscaping and reforestation of 100 hectares of land each year for nine years. An additional benefit is that the project will provide jobs for local people who will work under the expert guidance of the environment department.
A major challenge for Osisko (and other miners in Canada) is workforce attraction/retention and its associated costs, as there is a worldwide shortage of technical skills. Cimon predicts that the next couple of years will see some projects ‘parked’ due to a lack of skilled people to build and operate them. For less technical skills Osisko carries out its own training, but a mining engineer needs four years of university coursework. Osisko has started to hire people in their 3rd year at university to attract them to work for Osisko full-time after graduation.
The company is also pursuing exploration on a number of other properties, including the Hammond Reef Gold Project in Northern Ontario. This project currently hosts an NI 43-101 compliant inferred resource of 6.70 million ounces of gold, giving Osisko the potential to become a one million ounce per year gold producer by 2016. Additional drilling has continued to allow for the upgrade of the entire in-pit deposit to indicated category by the end of the first quarter of 2012 and measured and indicated by the end of the second quarter.
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