Labour shortage hampers Minto mine plans

Capstone Mining Corp. plans to spend $32 million to beef up its Minto mine in central Yukon this year. The company is going to put $14 million of that toward building an underground mine in 2012.

Capstone Mining Corp. plans to spend $32 million to beef up its Minto mine in central Yukon this year.

The company is going to put $14 million of that toward building an underground mine in 2012. It’s expected to go into production in January 2013.

That’s one year later than initially expected, said Darren Pylot, Capstone’s president and CEO.

And he blames the delay on the difficulty recruiting qualified underground workers.

“The big challenge, not just at Minto, but everywhere in the mining industry, is that there aren’t enough qualified people to do these high-level jobs, such as mining underground,” he said.

Underground construction should boost Minto’s workforce, currently at approximately 300 workers, by “at least” 50, said Pylot.

Based on the most-recent available numbers from mid-2011, northern residents made up slightly less than a third of the mine’s workforce. Twenty-four workers were aboriginal.

“We fly workers in from their point-of-hire. Whether they live in Alberta or British Columbia, we get them to the site,” said Pylot. “We’d love to have as much a local workforce as we could. But there’s just very little unemployment in the Yukon.”

Capstone is currently looking at what incentives could be offered to persuade workers to settle in the Yukon, said Pylot.

The mine is still processing a stockpile of ore from its main pit, which was exhausted in the spring of last year.

By April, fresh ore ought to be available from a second pit dug at a site called Area 2/118. That should provide enough copper until underground mining starts.

What’s left from the main pit is partially oxidized ore. That makes milling difficult, as the metal reacts unusually to chemicals, said Pylot.

These technical challenges caused Minto to fall below its production target during the fourth quarter, said Pylot. In 2011, Minto churned out 37.1 million pounds of copper, which was shipped to China.

Capstone’s spending splurge at Minto this year will also see $7 million put toward camp renovations. Staff will see new, bigger accommodations as well as an expanded gym and other common areas.

Another $4.5 million will help to upgrade the company’s milling operations and $4 million will go toward water treatment.

Minto isn’t Capstone’s only mine. It also operates the Cozamin copper-silver-zinc-lead mine in Zacatecas, Mexico.

Currently, Minto and Cozamin produce roughly equal amounts of copper. But Cozamin is producing a growing share of Capstone’s metal. And it does so at roughly half the costs of Minto.

The company pays approximately one dollar for each pound of copper produced at Cozamin, while it costs between $2.10 to $2.30 to produce a pound of copper at Minto.

No wonder Cozamin now comes ahead of Minto in Capstone’s investor presentations. Yet Minto remains crucial to the company’s plans to continue to grow, said Pylot.

That’s why the company is sinking so much money into its Yukon operations this year, he said.

Capstone wants to build a copper-iron-gold mine at its Santo Domingo project in Chile, in partnership with a Korean crown corporation. And it aims to build a copper-zinc-gold-silver project in northern BC

Capstone plans to spend $4.8 million on exploration at Minto this year, to drill 23,500 metres.

“That’s really to drill the gaps between the different deposits,” said Pylot. “We’ve been able to link up most of these deposits. Year after year, it’s looking like Minto is one big deposit.”

Last summer Capstone discovered a new area, called Fireweed. This summer’s drilling will focus on that area and on proving up resources at Minto South and Ridgetop.

Mining at the Minto property is expected to last until 2020, but Pylot expects this date to continue to be pushed ahead as newly-found resources are converted into proven reserves.

Copper is currently selling for about $3.80 per pound. That’s down from $4.50 per pound in February, 2011.

Contact John Thompson at

johnt@yukon-news.com

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