The Birth, Death and Rebirth of a Mine

Charles Barclay -
July 26, 2017
The Birth, Death and Rebirth of a Mine

The overriding benefits of the Bluebird approach to the conventional exploration model are:

  • The timeline to production is far shorter
  • No, or minimum, need for expensive exploration – the old timers did it for us
  • No matter what condition original development is, it is far cheaper to refurbish than to redevelop
  • Far better understanding of the orebody shape, grade trends and characteristics

 

There is no average time to create a mine. It can vary from 3 years to 25 years plus.

Whether it is by walking over miles of ground kicking rocks, investigating changes in vegetation, looking at various rock formations, examining satellite images or merely flying over an area, the finding of a mining prospect can take a long time; at times decades.

Once it is found, the timeframe of proving the prospect potential and delineating a resource can take anywhere from 3 to 20 years.

It is dependent on expertise, luck, timing and availability of cash to mention just a few parameters. To begin with, the risk is enormous as the investor places his trust in the proponent of the prospect and his/her history of success. If results are immediately positive, risk diminishes as confidence rises. It is, however, a fact that the ratio of prospects to producing mines is well over 50:1. As the risk diminishes, the costs rise dramatically with the need for drill metres.

Assuming a critical mass of resource is delineated, the project now enters the proof era. Do the potential mining and processing costs along with capital requirements create a potential cash flow that generates profit?

If positive, the capital is invested, the mine constructed and production commences.

The mine will continue to produce gold until one or more of the following happens:

  • Dramatic and sustained rise in cost of production – consumables, labour etc
  • Dramatic and sustained drop in Gold price
  • Social Interference
  • Change in government policy
  • An unforeseen technical challenge
  • A disaster
  • Exhaustion of resource

 

If any of the above issues cause the management to believe the company cannot continue to operate, the mine closes. Whether the mine is considered a success will be evidenced by how much profit it generated over the years it was operating and whether investors made money.

The Bluebird Mission: Bringing Old Mines Back to Life

Bluebird is NOT an Exploration Company.  As a group of mining professionals, we don’t have any exploration qualification between us with the exception of our Senior Technical Advisor, Doug Kirwin, who is considered one of the world’s top geologists.  As a rule, we look for projects from which we can generate cash flow within 30 months of access to the project.

Our approach is based on the belief and experience that virtually no underground mine that has operated in the past ever exhausted its resources and that by reviewing old operations on several fronts, feasible plans can be made to reopen them.

Having identified a potential target, desktop work on publicly available information is carried out to increase confidence in the target. This type of work typically yields varying degrees of the following information.

  • When the mine closed
  • What type of orebody it was
  • How many orebodies there were as well as their shapes, grades and characteristics
  • What configuration the ore bodies had
  • The extent of the workings
  • How much the mine produced
  • Any high profile social problem
  • Opposition to mining

 

With an increased level of  confidence, Bluebird concentrates on the format of any deal with the previous owner/operator.  Such agreement must include a due diligence period.

Conclusion of a successful due diligence and a win-win agreement signed, the next stage of the process is to create a feasible plan.

Basically, this is a continuation of the targeting process but is now augmented by the ability to investigate underground workings for unmined blocks and broken ore, initiate a credible sampling program, review the development infrastructure in terms of access and stability. On surface, we can examine tailings containment for possible retreatment.

One very important point to consider, identified in the initial evaluation, is the date of closure of the mine and the reason for closure.

The year of closure determines a gold price which when combined with information such as any recovery percentage and mined grade reports, gives us an idea of the financial mine plan. Even knowing the resource grade and nothing about the mine will give weight to a considered assumption.

Digitising old plans together with all the information gleaned from underground investigation assists in making a mine plan.

Metallurgical test work carried out up to 50 years after the mine last operated is vital and will determine the viability of modern equipment and consumables in improving recovery and reducing the costs thereof.

Having reached a point where a report on the feasibility of reopening the mine is completed Bluebird will review the capital requirement and funding thereof.

To reiterate: The overriding benefits of the Bluebird approach are;

  • The timeline to production is far shorter
  • No, or minimum, need for expensive exploration – the old timers did it for us
  • No matter what condition original development is, it is far cheaper to refurbish than to redevelop
  • Far better understanding of the orebody shape, grade trends and characteristics