Gold miner Silver Standard looking to expand reserves
New joint venture option agreement will involve exploring 33,993-hectare project
Carl Edmunds is going to do a little gold prospecting this summer.
The chief geologist for Silver Standard Resources Inc. is planning an exploration program in an area adjacent to his firm’s Seabee and Santoy mine holdings.
Silver Standard acquired Claude Resources Inc., and its two gold mines, for $450 million in May 2016. Located about 125 kilometres northeast of La Ronge, the sites are Saskatchewan’s only producing gold mines.
The Vancouver-based firm signed a joint venture option agreement with Eagle Plains Resources Ltd. to explore its 33,993-hectare Fisher project a few months after acquiring Claude Resources.
Edmunds says Eagle Plains’ Tim Termuende contacted him about the potential of the project shortly after Silver Standard came to the province.
“He basically told us that they had a land position adjacent to Seabee, that was of considerable size and contained the extensions of the same geology that’s present at Seabee,” says Edmunds.
Termuende also told Edmunds that the area also had numerous gold occurrences and that a limited amount of exploration in the 1980s and 1990s had indicated there were interesting grades and widths found by early test drilling.
“So it was checking off the boxes for me,” says Edmunds. “That’s what drew me to doing the option.”
Under that deal, Silver Standard can spend $4 million on exploration over the next four years in exchange for a 60 per cent stake in the project. It will then have a one-time option to buy an additional 20 per cent for $3 million.
“We have a crew of three geologists and somewhere between four and six assistants who will be working on it this summer. And they’ll be focused primarily on the existing showings and that extension of the Santoy shear zone,” says Edmunds.
At the European Gold Forum in April, Paul Benson, president and chief executive of Silver Standard, said the quality of the grades being mined since the Santoy mine opened a few years ago attracted him to the Claude Resources opportunity.
“It’s been in operation for 26 years, and probably the first 22 or 23 weren’t that worthwhile from a shareholder’s point of view, but there was a change in grade with the discovery of the Santoy deposit, and that’s what attracted us to that mine.”
He said the joint venture adds 150 per cent additional ground in the company’s operational area within trucking distance of the current plant.
“We expect to be investing significantly in drilling over the next three to five years, and hopefully past then,” said Benson.
Since acquiring Claude Resources, Silver Standard has increased the share of revenue stemming from its gold operations to about 70 per cent. In March, the company, which owns another gold mine in Nevada and a silver mine in Argentina, asked its shareholders to approve a change of name. If it goes through, Saskatchewan’s only gold miner will be known as SSR Mining Inc.
In the first quarter of 2017, the Seabee mill produced 21,023 ounces of gold, a seven per cent increase from the 19,711 ounces produced during the fourth quarter of 2016, primarily due to high-grade ore from the Santoy mine.
Mining efficiently, and controlling costs, is a huge focus for Silver Standard. It has been able to increase production, while shaving cash costs, since the purchase.
W. John DeCooman Jr., vicepresident of business development and strategy, says the company’s Operational Excellence program can be credited with helping the Seabee/Santoy operation improve.
“I think a lot of it has to do with processes and the people that we have,” says DeCooman. “It’s an area of expertise that I believe we’ve continued to differentiate ourselves by with the market.
“If you look at Seabee and what we’ve done there, we have put primarily all of the human resources at the mine site, so that they are closest and most familiar with what’s going on. I think that’s had a lot of good, lasting impacts over the course of the last year in particular.”
In its first year, Silver Standard has been able to increase its reserves at Seabee, in both tonnes and in grade, through changes in the drilling program and methodologies used to estimate the reserves. It has also worked diligently to find efficiencies in operating the plant.
“We’ve continually worked to find improvements and increases of throughput,” says DeCooman. “So we did a trial back in the late summer of 2016 that demonstrated that the plant was able to process material at approximately 1,000 tonnes a day, which is about 15 to 20 per cent better than what it had been operating with historically.
“Our goal for 2017 is to run in excess of 900 tonnes a day, with the idea that we need to make improvements around mining and demonstrate that the ore faces would be available in order to support the larger throughput.”
He says a third area of improvement has been in achieving a couple percentage points of efficiency in plant recoveries, to about 98 per cent from historical levels of 95 and 96 per cent.
In the third quarter of 2017, he says Silver Standard is anticipating putting out a five-year plan that accounts for the various reserve, plant and mining improvements at the Seabee operation.
While a new owner and a year of changes can be stressful for employees, Edmunds says he’s seen a favourable response from the workforce, especially on the geology and exploration side of the business.
“It has been a game-changer for them,” he says. “The operation, previously being a one-mine company, would go through periods where funding was very tight for longer term activities. In my area we’re trying to build as long a future, with as high-quality resources, as we can, and that will spill over into reserves.
“Your whole planning platform for the operation changes when you’ve got a well-defined set of reserves that you can plan the underground development upon.”
It’s an area of expertise that I believe we’ve continued to differentiate ourselves by with the market.