A golden moment

Few people knew about the La Ronge gold project in northern Saskatchewan before a man was trapped in and rescued from the site’s mill last week.

Only a few days earlier, Golden Band Resources Inc., the province’s first new gold producer since the 1990s, poured its first 500-ounce gold bar at the site.

The incident involving 61-year-old welder Rocky Arsenault had a happy ending, but the sudden reminder of the dangers of mining is one the company is taking to heart.

"From our point of view, we want to understand what went wrong, how he got himself into the predicament that he did, so we can learn from it, but also he can learn from it as to what needs to change so that it doesn’t happen again," said Gary Haywood, the company’s COO.

"Obviously, these sorts of incidents are the ones that we just cannot, cannot have. You get into these sort of high-risk situations, they’re the things that at times you have to deal with, but they are the things that we absolutely do not want to have happen."

Arsenault’s accident happened at the Jolu mill, where gold ore comes to be processed. The Roy Lloyd mine (formerly known as the Bingo deposit and recently renamed after a former company director) provides the ore.

After more than three years of work preparing the Roy Lloyd site and half a year of refurbishment work at Jolu to prepare the mill to receive gold ore, Golden Band staff were particularly pleased to see the first gold bar.

"That gold bar has become the superstar within the company. It’s probably been photographed more than anything else," Haywood said. At Monday’s price of $1,344.50 an ounce, it’s worth $672,250.

"A lot of us who have been around for quite a few years with the company, we’ve put our hearts and souls into this thing and it’s very, very gratifying to sort of see it through and become a producer."

The company plans to produce 45,000 ounces of gold this year, a figure it expects to see rise as it brings more projects into production. The Roy Lloyd mine sends enough ore to Jolu for the mill to process 400 tonnes per day, but during the course of 2011, Jolu will begin producing 700 tonnes of ore per day as the company brings the EP deposit into production.

Golden Band expects its annual gold production to rise to between 65,000 and 75,000 ounces as more deposits within its La Ronge gold project come into production, such as the formerly producing Komis mine and a new discovery called Golden Heart.

As the Jolu mill expands to process 1,000 tonnes of ore per day, Golden Band anticipates producing up to 100,000 ounces of gold annually at the northern Saskatchewan site – enough to pour 200 of its 500-ounce gold bars.

For now, the life of the mine is estimated at 10 years. Haywood said the Saskatoon-based company foresees that increasing, too.

"There’s 750 square kilometres that we currently manage and when you look at that sort of size area, we’ve barely scratched the surface," he said.

"So there is very, very good potential for finding a nice deposit, we’ve always believed that. Given the current resource base . . . there is no reason why with further exploration and resource development we can’t be up to 15, possibly 20 years. Who knows? It has that potential."

FIRST NATION PARTNERSHIP

The gold operation is run through a unique partnership with the Kitsaki Procon Joint Venture, part of the Kitsaki Management Ltd. Partnership – the for-profit arm of the Lac La Ronge Indian Band.

Kitsaki Procon, Arsenault’s employer, operates the mining, milling and construction activities within the La Ronge gold project, while Golden Band employees take care of the site management, engineering, geology and metallurgical aspects of the operation.

The startup of the project created about 85 jobs, Haywood said.

With gold currently selling at between $1,340 and $1,400 an ounce, Golden Band is feeling solid about the economics of its operation. Haywood said gold would have to drop to between $800 and $900 an ounce for the company to reconsider mining at the site.

"Certainly I think we’ve got to a point here where the longer-term pricing for gold will remain quite buoyant. I certainly don’t see that we will see $300 an ounce for gold ever again. I think those days are gone," he said.

Golden Band has an agreement with Sprott Asset Management, which helped finance the project, under which the firm can purchase gold when it wants to. The company will also sell its product directly to a refinery in Ontario, Haywood added.

The company plans to hold a grand opening celebration for the operation later this year.

For now, the firm is content with being thankful for Arsenault’s escape and proud of its first gold bar.

"To hold that gold bar after a lot of blood, sweat and tears going into it, and the amount of work we’ve put into this project, it was an absolute joy holding the gold that we worked so hard to find," Haywood said.

SASK.’S GOLD MINING HISTORY

1859 – Gold is first discovered in Saskatchewan, found in the North Saskatchewan River near Prince Albert

1900s – The province begins producing gold in small quantities through panning and dredging methods on the river

1930s -1940s – Gold is produced in significant quantities at mines near Uranium City, Prince Albert and Creighton (Flin Flon). Between 1930 and 1987, more than 60 per cent of Saskatchewan’s gold production is a byproduct of the copper-zinc mine in Flin Flon.

1980s – A gold boom during the last half of the decade sees the first widespread gold exploration effort in the province

1987-1991 – Several deposits northeast of La Ronge are developed and mined, including Star Lake, with 76,947 ounces produced; Jolu, with 203,751 ounces produced; and Jasper, with 82,697 ounces produced

1990s – The Contact Lake (total production 167,380 ounces) and Komis (total production 26,845 ounces) mines briefly come into production in the late part of the decade

1991 – Claude Resources Inc. brings its Seabee gold mine into production. The mine, which has an annual production of between 45,000 and 50,000 ounces, is the province’s only producing gold mine between 1997 and 2010. As of early 2011, the mine has produced a total of 930,000 ounces of gold

2011 – Golden Band Resources Inc. brings the Roy Lloyd mine into production. It, along with nearby deposits, is expected to produce 325,000 ounces of gold during the next five years

Source: Province of Saskatchewan