Goldcorp: Musselwhite MineÔÇ¿

Keeping pace  GoldcorpÔÇÖs Musselwhite mine complex has been a major producer of gold since 1997 and has long been seen as an example of how mining operations can peacefully co-exist with First Nations peoples. Keith Regan learns from the mineÔÇÖs general manager how the foundation is being laid for possible production expansion to feed the continued record-high demand for gold.  Since it went into operation in April 1997, GoldcorpÔÇÖs Musselwhite Mine has produced more than 2.85 million ounces of gold, including more than 230,000 ounces in 2009 alone. Now one of the most remote mining operations in the fast-growing Goldcorp operational portfolio, the mine continues to feed a hungry market while its owners explore opportunities for maximizing output as the operation continues up to and possibly even beyond the current expected mine life target date of 2018.  The Musselwhite Mine has evolved over the dozen-plus years since it opened, with trucking to the surface being augmented in 2003 by a conveyor system as the mine moved to ever-deeper parts of the ore deposit. And now Goldcorp is looking ahead to its next major infrastructure improvements that will pave the way for extending the mine or increasing production in the meantime. ÔÇ£We plan to use this year to continue to do our exploration and understand what we have, and get even more confidence on what we have ahead of ourselves so we can make that right decision,ÔÇØ says mine general manager Gil Lawson, who worked for former mine owner Placer Dome when it brought the project through the feasibility process and helped bring it into production in the mid-1990s. ÔÇ£WeÔÇÖre studying different options on what the next 10-year material handling approach will be, whether thatÔÇÖs a new shaft, continued trucking or an expanded conveyor system.ÔÇØ Even as it prepares for that decision, Goldcorp is constantly investing in the mine, having sunk C$90 million into the operation in 2009 alone, with upgrades to the mineÔÇÖs ability to handle additional tailing capacity and upgraded underground ventilation installed. The mineÔÇÖs heavy equipment fleet is also constantly being updated through partnerships with manufacturers such as Caterpillar. Lawson says Goldcorp is also in talks with regional authorities about ways to improve the existing hydroelectricity grid in the northern reaches of the province of Ontario, a grid to which the mine is currently connected via a single transmission line that runs along the all-season road built when the mine was under construction. To provide additional capacity and redundancy until that upgrade can happen, the mine has installed 8 megawatts of diesel-powered generating capacity. ÔÇ£WeÔÇÖd rather not rely on that long-term because it does add to our cost profile, but it at least gives us the capacity we need as we work with the First Nations communities and the government to look at various options for bringing more capacity into the region,ÔÇØ Lawson says. ÔÇ£Overall, we feel we are in great shape as far as our infrastructure goes right now.ÔÇØ Musselwhite is one of almost 20 active gold and silver properties in the Goldcorp portfolio worldwide and one of three active operations, along with mines at Red Lake and Porcupine. Goldcorp also has a fourth Canadian mine under development at the ├ël├®onore Property, where extensive exploratory drilling took place during 2008 and 2009, as well as operations or projects in development in the United States, the Dominican Republic, Argentina, Mexico and Honduras. Goldcorp recently announced that it ended 2009 with probable and proven gold reserves of 48.8 million ounces and another 1.3 billion ounces of silver. Musselwhite, located on the southern shore of Opapimiskan Lake, more than 180 kilometers from the nearest town of Pickle Lake, OntarioÔÇöwhich has a population of less than 500 peopleÔÇöand almost 500 kilometers north of Thunder Bay, has long been seen as a model for its First Nations relations. The Musselwhite Agreement, forged in the mid-1990s as the mine was being planned, places priority for Goldcorp to employ First Nations from signatory communities and support business development. The mine currently contracts with a local First Nation-owned business that provides catering and cleaning services. In addition, the main air charter service used to move employees and cargo in and out of the mineÔÇöan all-season road is used solely for large, truck-based deliveries of mine equipment and suppliesÔÇöis a First Nation-owned firm. ÔÇ£In terms of those relations and agreements, this mine has pretty much set the standard on how to do things properly,ÔÇØ says Lawson. The agreement also includes environmental remediation and monitoring of the lake and other waterways surrounding the mine site. ÔÇ£We take a lot of pride in the cooperation we have earned from our host communities.ÔÇØ The resource at Musselwhite is not as high in grade as some other Goldcorp mines, meaning there is pressure to increase overall throughput of ore while keeping costs in check. Ongoing programs focus on energy management and reducing the use of consumables. ÔÇ£This resource requires that we focus on throughput and production rates. Moving rock is not for free, and we have to guard that bottom line and try to do things efficiently,ÔÇØ Lawson says. ÔÇ£Our mantra is always about operational excellence. We know we can never change the cost structure unless we make changes to what we do. WeÔÇÖre constantly examining what we do and trying to engineer ways to do things better and cheaper.ÔÇØ Partnerships with suppliers are another key element of keeping costs stable and low. ÔÇ£WeÔÇÖre always negotiating with suppliers for best pricing and forging partnerships that take the long view,ÔÇØ Lawson says. ÔÇ£We plan to be around for a while, and our suppliers know and appreciate that.ÔÇØ Alliances with heavy equipment providers help keep fleets young and costs down. A program to replace older equipment got under way in 2007 and resulted in a new fleet of mucking equipment, a new hauling fleet, and soon the replacement of support vehicles such as scissor lifts and boom trucks. The mining approaches have changed over the years that Musselwhite has been in operation, but no major technique changes are anticipated going forward. One area of possible future mining activity may require backfilling with cement-like fill to support ore removal. ÔÇ£WeÔÇÖve perfected the processes we need to follow to mine this property,ÔÇØ Lawson says. ÔÇ£ItÔÇÖs just a question of matching the best approach to get the most out of the resource while keeping our cost profile as low as possible.ÔÇØ While the resource is large, the most valuable asset at Musselwhite may well be the people who operate the mine and related operations. Most of the workforce works at the remote location on a two-week-in, two-week-out schedule. The workforce is a blend of First Nations peoples and miners from elsewhere in Ontario as well as more distant provinces such as Newfoundland and British Columbia. ÔÇ£Those people are our greatest strength,ÔÇØ Lawson says. ÔÇ£ItÔÇÖs just an incredible team.ÔÇØ He credits GoldcorpÔÇÖs solid reputation as a great place to work and the investment that Goldcorp has made in both mine infrastructure and training and workforce development. An extensive health and safety program at Musselwhite helps keep the mine safe, and its mine rescue team recently reached the finals in the Ontario Provincial Underground Mine Rescue Competition. ÔÇ£WeÔÇÖre the lowest cash-cost gold company out there, so we have that capacity for the large-scale investment thatÔÇÖs required to make a facility a safe, clean and positive place to work,ÔÇØ Lawson adds. ÔÇ£Miners know we have the stability and resources, and thatÔÇÖs appealing in an industry where they otherwise might have to move more often to chase the work. They know if they come to work here, they will know where theyÔÇÖll be working for a good number of years.ÔÇØ As it looks to plan the proper infrastructure going forward, the mine is looking to move into several new zones of gold-bearing ore. Areas dubbed the ÔÇ£ThunderwolvesÔÇØ and ÔÇ£MooseÔÇØ zonesÔÇönamed by mine employees after regional hockey teams they cheer forÔÇöhave shown promise for future exploration. Goldcorp invested around C$10 million on drilling and other exploration efforts at Musselwhite in 2009 alone. ÔÇ£For the past 12 years weÔÇÖve been working in our core resource, and now weÔÇÖre starting to look beyond that and see where some new opportunities might be available to us as we look to keep the mine producing at the highest levels possible,ÔÇØ Lawson states. ÔÇ£We know the mine is going to be around a number of years more,ÔÇØ Lawson adds. ÔÇ£The question weÔÇÖre really trying to answer now is how much growth in capacity do we have available to us and what the best way to go about getting that ore out of the ground will be. ItÔÇÖs not so much a question just of longevity but what the potential for growth in output is in the years in between.ÔÇØ