Dilution resolution

CRESCENT VALLEY, NEVADA. Minimizing ore dilution has enabled narrow-vein specialist Klondex Mines to produce record ounces at its flagship Fire Creek operation – the world’s highest-grade gold mine.

Operator Craig Roberts uses a remote control to navigate a two-yard loader into a stope barely wide enough to accommodate it. He soon maneuvers the narrow-vein unit back out of the stope, its bucket full of high-grade gold and silver ore that will be trucked 100 miles for processing at the mill at Klondex Mines’ Midas operation.

Klondex hauls just 300 tons out of its Fire Creek mine in north central Nevada every day, but at an average gold head grade of nearly an ounce per ton. For general manager Sid Tolbert and his underground mining crews, minimizing dilution is the key to profitability.

<p>Operator Craig Roberts uses a remote control to navigate two-yard Sandvik loaders into the narrow stopes at Fire Creek.</p>

Operator Craig Roberts uses a remote control to navigate two-yard Sandvik loaders into the narrow stopes at Fire Creek.

“The grades at Fire Creek are unlike anything I’ve ever experienced in my 25 years mining,” Tolbert says. “The challenge with those high grades in the narrow vein is keeping your dilution down, which the miners here do a great job at. We’re doing extremely narrow, extremely well-controlled drifting and cut-and-fill mining to ensure we deliver the highest grade possible for the tons that we excavate. We need to make sure that every ton we’re sending to the mill is a valuable ton.”

The soft-spoken Tolbert personifies the quiet evolution of Klondex from a single-property exploration company to a mid-tier gold and silver producer with five assets in the United States and Canada. While Klondex has created much of its success by acquiring and transforming aging narrow-vein operations since president and CEO Paul Huet took the reins in 2012, the growth at its flagship Fire Creek mine has been purely organic.

Originally believed to become a surface mine, Huet had different ideas for Fire Creek. Klondex brought the mine into production under a bulk sample permit in late 2013. Four years later, the underground operation is expected to produce between 105,000 and 110,000 gold equivalent ounces (GEOs) – nearly a 40 percent production increase from 2016 and as much as half of the 213,000-230,000 GEOs Klondex is on track to produce in 2017.

“Fire Creek is an amazing deposit,” Tolbert says. “We don’t yet know the full potential, but as we continue to drill, explore and develop the mine, our resource is getting larger and larger. In every direction, we’re continuing to see minable high-grade vein structures.”

Less than five percent of the world’s known gold deposits have a grade above 10 grams per ton. Fire Creek’s head grade averages more than 25 grams per ton. The mineralization lies between 4,900 feet and 5,700 feet above sea level in the hills overlooking the tiny town of Crescent Valley. Primary veins Vonnie and Joyce range in width from five feet to only six inches, and Klondex uses a combination of long-hole, cut-and-fill and shrinkage stoping to mine the ore.

Such an operation requires a diverse mobile fleet, from the Sandvik jumbos developing 15-foot-by-15-foot waste development drives to the two-yard Sandvik narrow-vein loaders for remote mucking that Tolbert calls the mine’s “workhorses.

“We use them to mine on the vein, on the structure, keeping our dilution down to just over three percent from design,” he says.

Mine general foreman Rosco Hamilton says the nature of the operation makes equipment reliability essential.

Klondex Mines

Mid-tier gold and silver miner Klondex Mines specializes in narrow-vein underground gold and silver production. The Canada-based company operates the Fire Creek mine and Midas mine and mill in Nevada and the True North mine and mill in Manitoba, Canada. Klondex also owns the Hollister mine and the Aurora mine and mill in Nevada.

“Our footprint is so small that if we do have one hiccup, it really kills our tons and then we’re hurting,” Hamilton says. “Everything has to kind of click and work and you don’t get a lot of options for mistakes. There’s no other place to go if you don’t get the tons out of this stope.”

<p>To help guarantee reliability, Klondex partners with Sandvik to perform all mobile maintenance at Fire Creek under a Sandvik 365 Expertise On Site agreement.</p>

To help guarantee reliability, Klondex partners with Sandvik to perform all mobile maintenance at Fire Creek under a Sandvik 365 Expertise On Site agreement.

<p>The Klondex Fire Creek mine holds proven and probable reserves of 294,000 gold equivalent ounces (GEOs) at 1.226 GEOs per ton.</p>

The Klondex Fire Creek mine holds proven and probable reserves of 294,000 gold equivalent ounces (GEOs) at 1.226 GEOs per ton.

To help guarantee reliability, Klondex partners with Sandvik to perform all mobile maintenance at Fire Creek.

“The benefit of that is we’ve got the buying power of Sandvik behind us for parts availability,” Tolbert says. “We’ve got the warehouse here. We don’t have to stock the parts on site, which drives our maintenance costs down considerably. And with them doing the maintenance for us, they guarantee availability on that equipment, which keeps the mining continuing here at Fire Creek.”

Under the Sandvik 365 Expertise On Site service agreement, Sandvik technicians also support Fire Creek with maintenance strategies and scheduling, parts planning and forecasting and troubleshooting.

“Sandvik does a great job maintaining our equipment,” Tolbert says. “It’s a pleasure to work with their staff here, and there’s a great benefit to have partners such as Sandvik.”

Adds Hamilton: “Sandvik is really good about what our needs are on a day to day basis, and those needs do change from day to day. If a loader breaks down and this is the only stope we’re mucking today, the guys drop everything they’re doing and come get it fixed.”

Klondex mobile maintenance manager Neil Miller says that despite an aging fleet at Fire Creek, mobile equipment operating costs hover around 21 percent of total mining costs.

“If we get a truck go down, you know, we’re probably losing $250,000 a day in lost production, so it’s critical that we keep our trucks and loaders, muckers, everything going,” Miller says. “The Fire Creek mine is critical to the profitability of Klondex Gold. It’s high-grade, low tons, so we’ve got to keep all our equipment good. Downtime’s really critical to us.”

<p>Klondex mobile maintenance manager Neil Miller says that despite an aging fleet at Fire Creek, mobile equipment operating costs hover around 21 percent of total mining costs.</p>

Klondex mobile maintenance manager Neil Miller says that despite an aging fleet at Fire Creek, mobile equipment operating costs hover around 21 percent of total mining costs.

Under the agreement, Sandvik provides genuine spare parts and technical training for Fire Creek’s maintenance staff.

Fire Creek mine

The Fire Creek mine is the world’s highest-grade gold operation. Located in north central Nevada, 60 miles west of Elko, Fire Creek holds proven and probable reserves of 294,000 gold equivalent ounces (GEOs) at 1.226 GEOs per ton. The Fire Creek land package covers approximately 17,000 acres. Klondex uses a combination of long-hole, cut-and-fill and shrinkage stoping to mine the high-grade ore.

“The more technical training you have, you see the reliability start to increase right away,” Miller says. “The training is critical for the reliability of our equipment. Reliability is really the critical part of it. You can have high availability, but if the unit’s not reliable, then it’s not ready when we want it to bog headings or truck dirt out of the mine.”

The service agreement has increased mean time between failures and reduced downtime while enabling Klondex to focus on production and core business processes at Fire Creek.

Klondex is concentrating on continuing the mine’s expansion into 2018, developing the primary access and advancing a second portal. Exploration drilling continues to show potential to expand the mineral resource.

“Fire Creek’s future is very promising,” Tolbert says. “We’re stepping out from the mine workings, starting to find more and more veins that are high-grade, and it’s very exciting times. We’re finally into production, and have a steady flow of muck coming out of the mine, and we’re looking to advance that in the near future, and build our future here that lasts decades.”

Sandvik fleet at Fire Creek

3 x Tamrock EJC65 loaders
3 x Sandvik LH410 loaders
2 x Sandvik DD210 jumbos
2 x Sandvik DS311 bolters
1 x Sandvik LH202 loader
1 x Sandvik LH204 loader
1 x Sandvik DD311 jumbo
1 x Axera D07 jumbo