When the mill comes into full operation, Alexis expects to decrease its overall milling and shipping cost by between $10 and $15 per tonne by next year.
One market truism, from which the mining industry is certainly not exempt, is that reputations generally have to be earned. So, while rising gold prices quickly boost the market caps of larger, diversified players, smaller ones often have to work harder to get noticed. One such company is Alexis Minerals Corp, whose Lac Herbin mine, located in Quebec’s Val-d’Or region, went into full production late last year.
Led by CEO and long-time industry veteran David Rigg, Alexis Minerals’ strategy is to use the cash flows generated from its Lac Herbin mine and its Lac Pelletier reserves, slated to go into production this year, to fund a full-scale research, development and operations player. “These are substantial ore bodies,” said Rigg. “We call mines with the resource potential of Lac Herbin “company makers” because they have the potential to be the backbone of long-term integrated mining businesses.”
Rigg isn’t kidding. Gold is being discovered at the Lac Herbin operation faster than it is being extracted. As of the end of last year, measured resources at the Lac Herbin mine stood at 124,800 tonnes, grading 9.2 g Au/t for 37,100 ounces of gold — an impressive 180 per cent increase as compared to December 2007. Furthermore, the grading of those measured resources represented a sharp increase from the previous measurement (6.8 g Au/t). Total measured and indicated resources at the mine by year end 2008 were 856,300 metric tonnes, at an average yield of 7.5 g Au/t. That works out to 206,600 contained ounces of gold, or five years’ supply at the company’s projected production rate of 40,000 ounces per year.
Val-d’Or: a long-time active mining district
Quebec’s Val-d’Or region (the rough translation is “valley of gold”), where Lac Herbin is located, hosts an abundance of highly attractive mineral resource deposits. The area has been an active mining district since the early 1930s, when the Lamaque mine first began production. Since then, with the help of the Quebec government, the region has attracted a steady flow of investors seeking to leverage those resources.
According to the Fraser Institute, Quebec is the number one location in the world in which to conduct mineral exploration, development, extraction and processing. The lead time required to get permits and to round up the required authorizations are respectable by international standards. Furthermore, although the generous tax credits that the provincial government offers pure exploration companies have decreased as Alexis has graduated to becoming a producing mining company, these were a significant factor in attracting Alexis Minerals to the province.
That said, according to Patrick Sévigny, mine manager at the Lac Herbin operation, the Val-d’Or region offers developers advantages that go far beyond the resources available there. “Because there are so many mines already in operation around here, it’s a great place to do business,” observed Sévigny, who grew up in Val-d’Or and considers himself fortunate to able to pursue his career in his home town.
“There are a lot of suppliers here that support the industry,” said Sévigny, pointing to buildings bearing names such as Komatsu, Hewitt Equipment and, with a chuckle, one marked Molsons. “There are also between 30 and 35 reputable drilling and other mining contractors around town, which helps out a lot.”
The area around Lac Herbin has been known to contain gold deposits for some time. Two other operations, Dumont and Ferdeber, had previously been mined on the Alexis Minerals properties, not far from the Lac Herbin site. But it was only in 2003 — the year that CEO Rigg joined — that the company first took a stake in them. Since then, Alexis has amassed the largest land package in the area, totalling over 1,000 square kilometres.
By the middle of 2007, a feasibility study of the Lac Herbin project, conducted by Golder Associates, was completed. The study, which focused on the measured and indicated mineral resource estimates compiled earlier by InnovExplo, concluded that the deposit was economic to produce at then prevailing gold prices. A similar study, conducted around the same time, concluded that another nearby site, the Lac Pelletier gold deposit, to which Alexis Minerals also held the rights, was economical to operate and could generate results roughly similar to Lac Herbin.