Australia’s Silver Lake Resources (ASX: SLR), new owners of the Sugar Zone mine in Northern Ontario, is looking spend between A$35 million and A$45 million over the next two years on operational improvements and cost reductions on the struggling project, the company said in its recent quarterly report.
Silver Lake acquired Sugar Zone in February after winning the bid for the mine’s previous owner Harte Gold. Harte Gold had been in financial turmoil after rushing the gold mine into production without a feasibility study and failing to overcome a series of operational issues. It eventually sought creditor protection and was put up for sale.
Located 30 km north of White River, the Sugar Zone underground mine has been in production since 2019 and is one of Ontario’s most recent and highest grade gold mines. Its mineral reserve is estimated at 797,000 oz. grading 7.18 g/t, which is similar in nature to the Rothsay and Mt Monger mines that Silver Lake operates in Australia. In 2021, the Sugar Zone mine produced 257,281 tonnes at 6.5 g/t for 51,453 oz., which was consistent with Harte Gold’s revised guidance range.
Starting this year, Silver Lake is seeking to enhance the mine’s long-term performance and profitability through a series of investments, which will include the latest generation drilling, loading and haulage fleet to replace the existing fleet, which, in many cases, exceed 10 years of operational service. These are expected to increase mine capacity, improve operating efficiency, increase productivity and reduce unit mining costs. The new mining fleet investment will occur over a two-year period and is expected to cost approximately A$16-A$18 million.
The company will also replace the existing crushing circuit, which represents a high cost bottleneck to increase processing throughput. The new crushing circuit will have capacity of 125 t/h and allows the crusher to match and exceed the milling and flotation capacity of the existing processing plant to facilitate an increase in processing throughput to 1,000 t/d.
The Sugar Zone mine has also been redesigned to eliminate one of two declines accessing the Sugar Zone lodes. Level intervals will increase from 15 to 17 metres with the replacement of older generation pneumatic long-hole drill rigs with modern electro-hydraulic, long-hole drill rigs. The middle zone will continue to be accessed via the single decline from the upper Sugar Zone decline. The redesign helps to reduce development metres over the life of mine, increase operating efficiency and reduce costs.
In terms of surface infrastructure, the existing enclosed crushing facility will be converted to a fit for purpose mobile maintenance workshop, associated warehouse and secure enclosure for site critical spares. Silver Lake is also assessing the opportunity to relocate the White River camp, eliminating the approximate 50-minute travel time between Sugar Zone and White River.
On the exploration front, investment will prioritize in-mine, near-mine and district-scale opportunities to target growth. The main Sugar Zone loads remain open laterally and at depth along a 3 km trend. According to Silver Lake, limited drill coverage and inadequate exploration work beyond current mineral resource (1.64 million oz. grading 10.9 g/t) limits provides the potential for highly accretive new discoveries.
Plans are in motion to enhance the geological model with an A$7 million (67,000 metres) grade control and resource definition drilling program.