Yellow Giant Mine Failure : Canada’s Flailing Against Declining Grades and Rising Production Costs

At its heart the Yellow Giant Mine failure which Van Couver Sun journalist Gordon Hoekstra, thankfully and with good research, is keeping front and center is about an improperly vetted and proven use of  pre-concentration technology.  The asset had not been proven as a resource at the time of approval by BC MOM and the selection of  pre concentration process technology was based on limited sampling .  The selected DMS concentration, is a relatively costly system which produces actual wet tailings slurry .  ( This link is to Vancouver Based Sepro Systems.  Their system has not been named as the system in use at Yellow Giant)
Sudbury 2011, an annual mining conference on innvoations in mining, featured pre concentration as  a possible approach to Canada’s mining crisis of tumbling grades and rising production costs calling on Canadian Miners to be more bold and forward thinking in the to create a “culture of innovation”  Sudbury 2011 correctly pointed to pre-construction as worthy of more attention in Canada for mine expansions , de novo mines,  underground mines unable to expand  within existing and those not able to provide concentrate at global market standards.. It offers the possibility of all that was focused on at Sudbury 2011 but the publicity it has gotten in Canada through the Yellow Giant Mine failure and stop work order does not serve the technology and its possibilities for Canadian mine problems well.
“Best Practice’ almost by definition requires  both “best knowledge” and “proven efficacy”.  Best Practice is not at all inherently incompatible with the call to innovation made at Sudbury 2011 on behalf of Pre-Construction.
But that does not appear to be  the story at Yellow Giant Mine.  What happened there is more like the “try it any way it might work” mentality of  the U.S. A’s  well funded and very influential mining industry/extraction industry lobby,   ITRC.  ITRC actually “trains”  state regulatory  personnel in the use of unproven technologies and requires a cult like pledge of State Agency members  to allow and promote them in mine expansions and de novo mining .
Proven Efficacy & Customary Place of Pre-Concentration
Pre-Concentration is a method of separating up to 50% of the non ore bearing wastes underground before hoisting to the surface for finish processing.  The separated non ore bearing underground waste in most ystems directy bacfills as produced, That reduces the throughput volume ( what goes to the mill for finish processing to concentrate ) by 50% as well  and  elevates both the concentration of ore in the concentrate and also the overall grade of the concentrate viz global standards while minimizing the above ground footprint including the footprint of an existing TSF.
It’s proven efficacy, according to the pre-concentration sector is both to improve margins ( ie make a mine economically feasible that might not otherwise be performing)..it’s an extra step in the process of creating a final marketable concentrate meeting global standards.   The system at Banks Island committed to deliver concentrate at AU56g/t gold, well above what is normally achievable without pre concentration.
In its more customary uses pre concentration  at a site also producing concentrate would then still have a tailings residue at the end of the process and would still need a tailings management plan for that waste, essentially the other 50%.
Backfill at Yellow Giant Apparent Source of Pollution
Backfill deposition and evaluatin of materials is as much an issue in pre concentration systems as in any other backfill.  Yellow Giant has 5% total sulphur and has very high arsenic and is therefore potentially acid generating.

Thus, backfilling of underground workings is

often regarded as best practice for the rehabilitation of mining voids (e.g.,

MEND, 1995). Such backfilled waste is often regarded to be as chemically

and physically secure as the original mined ore. In particular, the disposal

of tailings below the groundwater table reduces the amount of reactive

material that would be available for oxidation. Nevertheless, if the tailings

are stored above the groundwater table without a dry or wet cover,

oxidation may generate metal-rich acid leachate (Morin and Hutt, 1997).

The leachate in most cases will be transported in the saturated zone of

surficial aquifers where the prevailing groundwater flow will produce metal

and metalloid rich plumes down gradient from the mine workings (e.g.,

Warren et al., 1997; Younger, 2000). This study is based on seasonal

groundwater measurements and sampling and the results of kinetic leaching

experiments in combination with hydrological modelling. ”

http://www.imwa.info/docs/imwa_2004/IMWA2004_12_Thienenkamp.pdf

System designs directly dispose of wastes as generated out of the  sorting system  as produced.

The B.C. MOM stop work order requires submission and approval of a waste management plan. The February 2013 technical report by Baldwin, now posted up at Banks Island’s website does not address or describe the specifics of the back fill/ separated waste materials.

Here is an excellent study exploring the efficacy of pre-concentration in mafic ores at several mines in Sudbury struggling wiith declining grades and rising costs..  This is the “culture of innovation” Sudbury 2011 pointed to and the level of work  that should attend any mine expansion or attempted save.
Yellow Giant Mine Deviation From Proven Applications of Pre-Concentration
At Yellow Giant Mine there are no details in the NI 43 101  on Yellow Giant Mines’ “scheme” nor have we found any other  sources with details on the  management plan for the 50% that stays underground and is usually directly applied as backfill.  It is materials of a uniform pre specified size and contains all the same minerology except lower levels of the targeted ore .  So its geochemical and metal profile is unaltered . Without pre concentration all would have ended up in tailings above ground after mill throughput.
The permit at Yellow Giant Mine did allow the underground deposition of the pre separated waste from pre concentrated ore but we have no details on any pre testing that was done on the waste stream or underground deposition plan.  The NI 43-101, which offers the best overall summary of history, study, mine pan etc.  also offer no details on that part of the plan dealing with the pre-concentration waste and its management. It does though characterize the entire scheme as “possible” based on lab tests viz the production of pre-concentrate .  It also repeatedly emphasized that the asset itself was not a proven resource based on all drill core and analysis which existed as of the time of the  permit application and fund raising via TSX.
 
The Fiscal Acrobatics of the Yellow Giant Mine Plan
The Gold’ Report’s Louis James, a specialists in promising pecative gold ventures is an investor and promoter of the Yellow Giant project calling it the “little mine that could”
The original Yellow Giant Mine version of Pre-concentration was to ship the pre -concentrate to Nevada. ( Imperial Metals acquired the Yellow Giant Mine asset in 2009 along with Ruddock Creek and also owns an asset in Nevada.  The destination smelter was not named.  Banks Island Gold leases from Imperial who have not been confirmed to have any direct role in operations or control).  It appears that in stead Banks Island entered an offload agreement with a small  NY  commodities broker, Metallica Resources Ltd.  The agreement required delivery monthly to them of a certain volume of concentrate grading not less than  AU56g/t.  Banks Island announced its proof of success in producing “marketable concentrate” claiming a  “realized price of $1,493” and a grade of AU67g/t.
 Feasibility assumes gross revenue ( before costs) to be 80% of market price.  A market price of $1360 was specified as the minimum for financial feasibility.At the time of the report the price of gold was briefly at $1,700 per oz.
According to the February 2013 NI 43-101 the , the Bob Zone, the main focus of the extraction plan , had total sulphur level of 5.0% & and high arsenic levels in new samples analyzed in 2011 and 2012..  It required a mill capable of handling the high arsenic.   Global arsenic standards are 0.5%  for concentrates. Excess of this level have price penalties  or will not be accepted at all .
At the time B.C. Ministry of Mines approved this permit the global price of gold was around $1,095/oz. .At the time the Imperial Metals subsidiary announced its success in producing a marketable concentrate the price of gold was already below the level required for financial feasibility at $1,200.
B.C. Ministry of Mines and Environment Canada Co-Responsible for Yellow Giant Mine public will bear whatever Costs there are for damages
The level of financial risk the B.C. Ministry of Mines and Environment Canada seems to be willing to tolerate in its struggle to overcome 70 years of below world average head grades and rising production costs will very clearly exponentially elevate environmental security risks if this “culture of innovation” doesn’t  also require careful vetting of both financial and environmental viability.
Further Reform Needed At TSX
It is important to note that the TSX bears some scrutiny as well.  Should a non proven resource even be allowed to raise capital in public markets for other than exploration and feasibility? This group ( the Board of Yellow Giant Mine) raised $25 million for an actual mine operation for a resource that wasn’t even proven.   Recently the stock was trading at 0.02 so presumably those investors are out that $25 million.  It is clear from the financials of this group that any correction or clean up will be entirely at the publics expense.  ( There are no details available on closure security, if any)
See notes below on corrections and retractions TSX require to the Yellow Giant NI 43 101/
They still allowed TSX listing for operations and production for an unproven resource. Id this allowed on the American or NY exchanges?
August 5, 2015 Stonington Maine
Lindsay Newland Bowker, CPCU, ARM Environmental Risk Manager
Bowker Associates
Science & Research In The Public Interest
*****************************
 
UPDATES AMD ADDITIONAL INFO
February 2013 Banks Island announces production of marketable concentrate.”Gold concentrates, representing 55.4 tonnes, averaged 66.7gpt Au, 286gpt Ag, and 6.7% Cu. The minimum required quality for gold concentrate under the off take agreement is 50gpt Au.” off take agreement is  with Metallica Commodities Corp.  The price was $1,200.  $1300 plus was needed for financial feasibility.
July 31 2015 Gitxaala Leaders say they never approved the mine ( which is onheir unceded lands) and that it as affected harvest areas important to the Gitxaala people.  Banks Island refuses to obey shut down order.https://ricochet.media/en/537/banks-island-gold-refused-to-shut-down-mine-after-spill-in-remote-coastal-bc
Harsh Commentray and supporting data on Banks Island Financials  criticism of promotion of mine as a good investment  http://incakolanews.blogspot.com/2015/07/a-comment-on-banks-island-gold-bozv.html
Retractions & Correctpns to Ni 43101 for Yellow Gant that were non complianthttp://www.banksislandgold.com/s/NewsReleases.asp?ReportID=569853&_Type=News-Releases&_Title=Banks-Island-Gold-Ltd.-Clarifies-Technical-Disclosure
Banks Island Gold Statement on Shut Down Order & Circumstances Prompting It
“It is notable that the Yellow Giant project has no surface storage of tailings. Banks Island Gold Ltd. is one of the only operators in the world that is successfully operating a Dense Media Separation (“DMS”) plant to pre-concentrate a primary gold ore. Pre-concentration rejects up to 50% of the mined mass in a coarse gravel sized product resulting in sufficient void space in underground workings to dispose of all tailings underground. “
TRADE  MARKETS FOR GOLD CONCENTRATES
North American Broker offering quick settlement on gold and silver concentrates .http://www.crestonebusinessgroup.com/gold-silver/  Crest One has not been identified as in anyway associated with the Yellow Giant/Banks Island  project.  provided as general background on  trade and markets in gold and silver concentrates.
 http://finance.yahoo.com/news/bcgold-corp-signs-agreements-sell-124000305.html BCGold Corp. (BCG.VNews)(BCGOF.PKNews) (or the “Company”) is pleased to announce that it has entered into a concentrate purchase agreement (the “Purchase Agreement”) with Auramet Trading, LLC (“Auramet”), a New Jersey-based precious metals merchant, to facilitate the sale of approximately 0.8 dry metric tonnes (dmt) of gold-rich gravity concentrate produced during bulk sampling at the Engineer Mine in 2011. Auramet has arranged a secondary agreement between BCGold Corp. and Sipi Metals Corp. (“SiPi”), a precious metal refinery situated in Chicago, Illinois, with respect to refining terms and treatment charges for the recovery of gold and silver from the concentrate.”
 In April 2015 Yellow Giant reached definitive purchase agreement for silver with Silver Stream  SECZ http://finance.yahoo.com/news/banks-island-gold-executes-definitive-210000770.html
 
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About lindsaynewlandbowker

Bowker Associates, Science & Research In The Public Interest, is an independent non profit providing self initiated pro bono analysis on key issues with a potential for massive adverse environmental impact . Bowker Associates has been an internationally recognized and cited voice in analysis of the Samarco failure, its consequence, and the possibilties for recovery. In 2015 Bowker Associates collaborated with globally respected geophysicist David M. Chambers to recompile global authoritative accounts of significant TSF failures in recorded history and to analyze these data in the context of gloal mining economics 1910-2010 ( Risk, Economics and Public Liability of TSF Failures, Bowker/Chambers July 2015) In 2014 Bowker Associates commissioned globally respected geophysicist and hydrogeologist Dr. David Chambers to undertake two technical works: (1) development of technical go no go criteria for vetting mine applications tp://lindsaynewlandbowker.wordpress.com/2014/01/05/a-new-statutory-regulatory-framework-for-responble-sulfide-mining-should-this-mine-be-built/ and (2) a case study of Maine's Bald Mountain, an un mined low grade high risk VMS deposit demonstrating the efficacy and accuracy of two risk assessment tools in vetting mine proposals https://lindsaynewlandbowker.wordpress.com/2014/02/28/mountain-x-would-you-issue-a-permit-to-this-mine/ In Maine, Bowker Associates has deeply engaged and been a public voice in the Searsport DCP LPG Tank, The Cianbro proposal for a Private East West Toll Road, JD Irvings rolling pipeline of Bakken crude to its plant in St. John and review of Phase II plans at The Callahan Superfund site in Brooksville, Maine, and Maine's revisitation of mining in statute and regulation... Our only “client”: is always “the pubic interest”. Our model is to focus on only one or two issues at a time so that we have a substantive command of the relevant field as our foundation for ongoing engagement. Our core work is in envirommental risk management, science and technology as well as bringing any available “best practices” models to the fore. The legal and regulatory history/best models are also a major thrust of our work in building and evaluating public policy. Director/Principal Lindsay Newland Bowker, CPCU, ARM is a recognized expert in Environmental Risk Management., Heavy Construction Risk Management and Marine and Transit Risks and has more than 3 decades of engagement in buiding public policy. Appointed by Governor Mario Cuomo to New York State Banking Board (served 1986-1996); President New York Chapter Chartered Property and Casualty Insurers; Environmental Committee, Risk and Insurance Management Society; Director, Convenor/Co-Chair Bermuda Market Briefing "From Captive to Cats" Hamilton Bermuda. Published Articles of Significance The Risk Economics and Public Liability of Tailings Facility Failures, co-authored with David M. Chambers, July 2015 Beyond. Polarization: Superfund Reform in Perspective, Risk & Insurance Managing Risk For Loss Prevention & Cost Control (Jan. 24, 1997). Lead Hazards and Abatement Technologies in Construction: A Risk Management Approach CPCU Journal 1997 Employee Leasing: Liability in Limbo Risk Management June 1 1997 Environmental Audit Privilege and the Public interest Risk & Insurance Managing Risk For Loss Prevention & Cost Control, April 1997 Asbestos:Holes In Abatement Policies Need To Be Plugged, Lloyd’s Environmental Risk International, May 1993 Editor Published Letters Evironmental Risk Management Beware of Facile Policies Like Fetal Protection Business Insurance 1995(?) High Court Review May Increase Sale of Bank Annuities Business Insurances August 8, 1995 Professional Profiles Protecting the Big Apple’s Core Managing Risk For Loss Prevention & Control December 1996 Major Career Highlights First rigorous analysis showing Relationship Between declining ore grades and TSF Failures of increasing consequence ( July 2015) FIrst Documentation that Gentrification Has Same Impacts as Unassisted Displacement from Urban Renewal Sites Direted Court Ordered EIS of FHA Mortgage Scandal Created Nation's First Homeownership Program for Low Income People (SHIP) Created Earliest Geographic Information Systems Using Defense Technology Developed By IBM Designed and Conducted Parallel Census Count to Show Systematic undercount in minority neighborhoods Documented Bias in ISO Territory Rating Plans for Private Passenger Auto Insurance Using ISO's own Rating Techniques Demonstrated Inherent Bias in Mortgage Policies of Banks With Inner City Branches Demonstrated that NY Telephones Plan for Area Code Split To accommodate anticipated cell phone demand was not efficient and would exhaust in 5 years ( which it did) Undertook First Systematic Evaluation of Child Protective Services Caseload Using Multi Variate Analyic Techniques Developed Child Protective Caseload Management and Tracking System (CANTS) and directed implementation in 4 client states including Illinois, Florida and New York Created and Ran Office of Risk Management for NYC DEP the Nations largest Water & Sewer Authority . Designed, Created and Administered Nation's First Owner Controlled Insurance Program (OCIP)for High Risk Tunneling Education Masters NYU Graduate School of Public Administration BSC New School For Social Research Maine Public Schools Deering High School
This entry was posted in Bowker Associates Science & Research In The Public Interest, Canadian Mining, Gordon Hoekstra, High Total Sulphur, Imerial Metals, Lindsay Newland Bowker, Mine Risk Management, Pre Concentration, Public Liability & Financial Risk, Sudbury 2011, Tailings Risk Management, Yellow Giant Mine, Yellow Giant Mine Failure. Bookmark the permalink.

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