A first-hand look at Osisko’s Malartic gold project

by Atikokan Progress on December 2, 2010

What does three-quarters of a billion dollars look like?

A dozen people from this region (Mayor Brown, Town CAO André Morin,AEDC chair Dave Elder, this writer, 8 leaders from the area’s FirstNations) got a look at just that November 10-11, during a visit toOsisko’s Malartic, Quebec gold mine. The company financed the trip in aneffort to help give NWO residents a better sense of what it hopes toaccomplish at its Hammond Reef project.

Osisko is moving full-speed ahead at Malartic. It estimated theproject at three-quarters complete at the end of September, and says itshould be in full production this spring. So far, it has spent $753million on the effort, with another $123 million committed (according tothe company’s third-quarter report for 2010).

Over 1,000 people are working on the site now. A series of at leastsix major structures are being built: the main mill, a crusher, a truckshop, an office building, an ore storage facility (complete with a 1.2km-long conveyor belt), and a 1.3 km long, 15-metre high berm, known asthe green wall, to shield the town from the open pit operations. All arenearing completion.

Open pit mining has started. The overburden has been removed from the first pit area, and the company has begun stockpiling ore.

Preparatory work – including moving some 150 homes and building a newsub-division in the town – was completed last year. The company boughtout another 53 home owners; there was one hold out, but Quebec SuperiorCourt ruled against him in August, and awarded his property to thecompany. (A provincial tribunal will set a compensation price.) As partof the deal for reconfiguring the town, Osisko built a new school, adultlearning centre, day care center, long-term care centre, and arecreation and cultural centre tied to the high school.

The new site

Osisko’s site HQ is now in a new building next to the mine’sconcentrator (main mill) and truck shop. The concentrator is a hugeplant; it’s designed to handle 55,000 tons of ore per day, to produceabout 1,800 ounces of gold each day.

The open pit operations are on a scale that dwarfs the iron oreoperations here. Two 28 cubic metre (55-ton) electric hydraulic shovelsdo the digging, feeding a fleet of a dozen (growing 19 in later years)227-ton trucks. Once fully operational, 26 loads per hour will be takenfrom the pit.

The gold extraction process involves crushing the ore to grains aboutthe size of those in white table sugar. This starts in the crusher,which reduces the ore to chunks of no bigger than 15 cm. The crusherbuilding, located almost a full kilometer from the concentrator, isseven storeys high – with five of the storeys below ground. A conveyorlinks the crusher with the concentrator (actually, it links with anotherstorage area, under the ‘Chinese hat’, which will minimize dust).

From there, it enters the concentrator, where a series of four ballmills – giant rolling drums containing stainless steel balls ofprogressively smaller sizes – pulverize it. This represents the singlebiggest electrical demand at the site. The SAG mill, the largest of thefour (it’s 38-feet in diameter; there is only one other as big in all ofthe Americas), is powered by a 26,000 HP electric motor. The threesmaller ball mills (they each have a diameter of 24-feet) are rotated bya pair of 8,000 HP motors.

The plant is powered by a dedicated 120kV line and sub-station, builtspecially for the project. The company has a deal with Hydro Quebec for85 megawatts of power at about 4.7¢ per kilowatt hour.

After milling, the ore enters a multi-stage process to separate thegold; these processes include cyanidation and electrowinning. Handlingthat process safely, and ensuring the chemicals being used don’t end upin the environment, is vital.

The company has developed an elaborate plan for the entire mine site,which is a fairly well-contained area covering some 800 hectares. Muchof it is tailings from the old East Malartic mine that has been underprovincial management since that operation closed. The site includesnumerous water control structures, and also includes good sources ofaggregate, which has helped speed up construction of the minefacilities.

Osisko is now controlling run-off from the site – some of which hasto be kept out of the water systems flowing through the area because ofthe acidic nature of some of the old tailings – and directs it into aman-made water body (a polishing pond) that will provide the water forthe chemical processes in the concentrator. Its calculations indicate itwill be able to create a water circuit; that means the operations willnot have to remove any additional water from the area. It is alsoplanning to build a water treatment facility on the site. (The plant isconnected to the Malartic water system for human use; but all theprocess water will come from the polishing pond.)

The operation will generate tailings in the form of a sand, as wellas waste rock. Each will go to its own designated space. With properhandling, the tailings will be able to neutralize the old acidic EastMalartic tailings; the goal is to leave the site in better conditiononce mining is completed.

The over-burden removed from the pit area is being saved, and will beused when reclamation work begins. And that work will begin as soon asnext year; Osisko will work on a reclaim as you go principle.

The company has also adopted a zero carbon footprint goal, and isworking now with First Nations in the area on tree planting programsthat will offset the carbon released through the mining operations.

Still drilling

Osisko has confirmed the presence of some 8.7 million ounces of goldin the Malartic deposit, but it is far from done. The company continuesto drill in at least five other zones around the Malartic deposit (14 to17 drills were operating in these areas during our visit), and it hopesto prove out additional resources in the area, so that the Malarticmilling operations will continue well beyond the 12 years of reserves inthe first deposit.

With a billion-dollar milling operation, there will be a good deal ofpressure to maximize the return on that investment. Twelve years ofproven resources were enough to convince the company – and the moneymarkets – that Osisko had a minable deposit. It won’t take anywhere nearthat kind of additional resource to extend its working life.

During his visit to Atikokan earlier this year, Osisko president SeanRoosen emphasized that the company’s bread and butter is exploration,and that it will remain its most important activity. That was reiteratedseveral times by managers during our visit.

The core shack is located now at the old on-site headquarters ofOsisko, which are at the former offices of the East Malartic mine, anunderground operation that was launched in the 1940s. It’s notable forthe cement head frame (it was built during WWII, when most of thecountry’s metal production was directed to the war effort) and watertower at the site. The site is actually part of the deposit that will bemined, and will become open pit in about a year. The cement head framewill have to go; the company plans to move the water tower.

The core shack and related operations will be moved to the new site HQ once mining is in full swing.

Bienvenue à Malartic

Malartic bears a number of striking similarities to Atikokan. Itspopulation (2006 census) is 3,640. It got its start as a mining town(eight million ounces of gold have been mined at four undergroundoperations, between 1935 and 1983), and peaked in the late 1950s, whenthe population approached 6,000. It is also a forestry centre, and washome to a saw mill that employed up to 350 workers, but that was down to125 when it closed in 2005. Until Osisko arrived on the scene, Malarticwas in serious economic decline.

One of the biggest differences between Atikokan and Malartic is thesetting. Although it is remote – the nearest major city, Montreal, is450 km away – it’s hardly isolated. There are something around 100,000people living within an hour’s drive. Val d’Or, population 33,000, isjust 26 km. east of Malartic, Rouyn-Noranda (population 40,000) is 67km. west, and Amos (population 18,000) is less than 50 km to the north.

This is definitely mining country: Rouyn-Noranda is Canada’s NationalCopper Capital, and Val d’Or – which translates literally as Valley ofGold – is a major gold mining centre, and also home to copper, zinc andlead mining operations.

Those two factors go a long way to explaining why a project as big asOsisko’s could be accomplished without a construction camp. The day wevisited the site, there were at least 600 vehicles in the parking lot atthe mill site.

The Trans-Canada, Highway 117 in this part of Quebec, links Val d’Orand Rouyn-Noranda, and serves as Malartic’s main street, Rue Royale.(Highway 117 goes on to meet up with with Highway 11 at Kirkland Lake,140 km west of Malartic.)

Because Val d’Or is so close – and, no doubt, because of the extendedeconomic downturn Malartic faced – the Malartic business communitystruck this reporter as small. There is just one hotel (it’s owned byAndré Morin’s parents); the chamber of commerce, which shut down in2008, was relaunched in May of this year, according to Radio-Canada. Thetown website offers a comprehensive list of businesses and services inthe town; it numbers 125. (A similar list for Atikokan would come in atabout 150.)

Amenities include a nine-hole golf course (two holes had to be movedto accommodate the new sub-division; one of the old holes is now part ofa playground and skating rink), the Michel Brière Centre (an arenabuilt in 1950, it seats 750 and is known for its unique all-woodconstruction), a 229-site campground, a library (open 40 hours a week,it has a $10 annual membership fee) and a mining museum. (The latter’scollection includes a moon rock, recovered more a meteorite that landedin Oman in 2002, and a 3.8 billion year old rock (one of the oldestknown) from northern Quebec.) The Town has also established a 40-siteindustrial park, but so far it sits empty.

A plethora of sport, cultural and fraternal organizations help drive community life.

Who’s who

In addition to those mentioned above, the November 10-11 travellinggroup included: Antoine ‘Tony’ Sweet and Anne Charland, who are leadingOsisko’s Hammond Reef project here, and Bud Dickson, Osisko HammondReef’s senior advisor governmental and director of Aboriginal relations(and an Atikokan Councillor). The First Nations group included TonyMarinaro, who is with Pwi-Di-Goo-Zing Ne-Yaa-Zhing, the economicdevelopment advisory agency for the seven First Nations in the area (anda former Atikokanite), Dan Mainville (Couchiching), Tyrone Tenniscoe(Seine River FN), Quentin Snider (Lac des Mille Lacs FN), KalvinOttertail (Lac LaCroix), Paul Henderson (Mitaanjigamiing), Wes Smith(Naicatchewenin), and Chief Will Windego (Nigigoonsiminikaaning).

Robert Mailhot, vice-president, human resources and Jean-SébastienDavid, vice-president, sustainable development, assisted by HélèneThibault, director of communications, acted as our hosts. Bob Wares,executive vice-president, CEO, and a company director, joined us brieflyat lunch time. During the visit, Mayor Brown and CAO Morin left thegroup for a short meeting with Malartic’s mayor and CAO.