Over 100,000 tons of waste rock and ore are removed from the granite pit each day.
While mine operators haven’t had an easy time in the last few years, it has been doubly difficult for those looking to expand their properties. The commodity price spike created long delays in the supply chain and pushed up costs of everything from protective clothing to major equipment. Then, just as the suppliers were beginning to catch up, the world economy did an about-face, leaving many operators to wonder how they would to pay for the investment they’d just completed.
Despite the pitfalls of the times, Taseko Mines is on the verge of completing a massive expansion at their Gibraltar operation, a copper-molybdenum surface mine located in south-central British Columbia, about four hours north of Kamloops. Even more significantly, according to company president and CEO Russell Hallbauer, the first phase of the expansion was completed on time and on budget. Nearing completion, the second phase of the expansion is expected to do the same.
In part, said Hallbauer, Taseko’s success in completing the expansion can be attributed to good timing — the expansion was initiated at the very beginning of the price spike, so by the time supplier shortages truly made themselves felt, Taseko had already locked in its contracts and prices, and had ample time to get the necessary components into place. But the good fortune was helped by quick action. In March 2006, when the company’s executives saw copper prices getting stronger, they got the expansion plans approved by their board of directors and went to work.
By May of the same year, Taseko had contracted with Farnell-Thompson, a Montreal-based engineering firm, to provide the new semi-autogenous grinding (SAG) mill. The 34-foot mill would be more efficient and larger than the old rod ball mills at the mine, and would allow Gibraltar to almost double its grinding capacity, with a matching increase in recovered copper.
“The old mill ran to a maximum of 36,000 tons per day when it had really soft ore, but realistic capacity was about 28,000 to 30,000,” Hallbauer said of the increase. The new mill, with the right ore, can process as much as 60,000 tons per day.
Driving down operation costs
The next part of the upgrade involved replacing the 96 original Denver 600H flotation cells (dating back to the 1970s) with ten Outotec 160-cubic-metre cells. The new cells allowed the mine to keep driving down its operating costs, Hallbauer explained, and not just because of the greater efficiency of the larger, more modern equipment. Simply going from 96 cells to ten would eliminate a great number of parts such as pumps and motors. The decrease in required maintenance and repairs is a clear advantage for Taseko.
The replacement itself was an engineering challenge, Hallbauer said, because the mine continued to operate throughout the expansion. This meant installing a new cell to maintain capacity, shutting down and ripping out one bank of old cells, installing the new ones and bringing them online, and then repeating the process with the next set, until all of the new cells were in place and running. “Imagine renovating your kitchen while your family is in the house, cooking dinner and using the fridge,” Hallbauer explained.
With the concentrator part of the expansion bearing a $76 million price tag, Taseko had plenty of motivation to try and extend the mine life. The company undertook two extensive drilling programs starting in 2007, said Hallbauer. The results were very promising, upgrading the reserves from 149 million tons, first to 200 million and then to nearly 500 million. Today, according to Hallbauer, the expected mine life stands at 25 years, based on a throughput of 55,000 tons per day, the new SAG mill’s optimal capacity.
As the plan progressed, Hallbauer recalled, it started to
evolve. At the end of the first phase, with copper prices still
looking strong, the company made the decision to also
upgrade the mining fleet. The modernization included three
new Komatsu and four Terex 240-ton trucks, and a P&H 4100
shovel. An older, P&H 2300 shovel is due to be replaced with
a Bucyrus 495 in the near future. These upgrades were put
into place with the mine’s entire, 25-year lifespan in mind,
“All the old equipment will eventually be gone,” he said.
“You have to get new equipment every once in a while. Since
we’re a lower grade operation, we want to make sure we’re
down on the cost curve, and the only way to make sure of
that is via modern equipment.” But there will also be an
immediate payback on the investment, Hallbauer added, in
lowered operating costs. This is an important consideration in
today’s world of decreased demand and depressed prices, a
point which was brought home for Taseko in 2008.
Phase III on hold
The first two expansion phases and the equipment
upgrades cost Taseko $250 million. Phase III, which would
have taken the mine up to 85,000 tons per day and added
a new molybdenum recovery circuit at the cost of
another $350 million, was approved in May of last year.
Much like the first two stages, Hallbauer said, most of the
cost would have been met by Taseko’s internally generated
cash flow. A May 13, 2008 news release announced
that only 30 per cent of the expansion costs would be
raised through the debt markets.
“But that cash flow was predicated on three-dollar-apound
copper,” Hallbauer explained, “and when copper
went down to $1.70 and continued down to $1.20 and we
couldn’t access the credit markets, it was a perfect storm in
terms of our ability to not just continue with our capital
projects, but also to ensure our operating costs were such
that we could pay off all the money we’d spent and keep all
our suppliers paid.”
Most of the first two stages of construction were performed
by Taseko employees, Hallbauer said. To meet the
needs of the expansion, the company went from 330
employees at Gibraltar to 470.“We were training people up
and getting organized and that was one problem, when our
cost structure got ahead of us,” he added. “That’s one of the
reasons we unfortunately had to have some layoffs.When
the price of copper retreated, we didn’t have the cash flow
to move ahead with some of our expansion initiatives.” The
company has now returned to its pre-expansion worker
numbers at Gibraltar.
Hallbauer did not dismiss the possibility of revisiting
the expansion plans at some future point, but said that
the company would first need to see evidence of sustained
high copper prices. At the moment, the markets
seem to hold little chance of that, and Taseko is focusing
on optimizing its existing facilities and bringing them to
Prosperity in the future
In terms of new expansions, Hallbauer added, Taseko is
looking towards its Prosperity gold-copper property.
Currently awaiting environmental permitting, Prosperity
may begin construction in the spring of next year. Taseko is
currently looking for partners to help fund the project,which
promises to be one of the largest gold mines in Canada.
“People don’t realize that Gibraltar is the second
largest copper mine in Canada, with the longest lasting
reserves of any open-pit mine in the country,” Hallbauer
pointed out. “Our total metal production isn’t that great
because our head grade is significantly lower than that of
many others. But the size of the physical structure, i.e.
55,000 tons per day through the concentrator makes it a
big mine.” But then again, big seems to be the order of the
day at Taseko.