Barrick going lean at Hemlo – by Carl Clutchey (Thunder Bay Chronicle-Journal – January 24, 2014)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

While Barrick Gold sells off mines and other assets to remain profitable, the company’s renowned Hemlo camp remains one of its flagship operations. But to stay that way, it faces a lean 2014 in the aftermath of a steep plunge in the price of gold.

Hemlo operations general manager Andrew Baumen said the 30-year-old mining camp is going “crew by crew” to come up with ways to keep costs down and make the operation more efficient.

“That’s our big push right now,” Baumen said Thursday from the Highway 17 complex about 40 kilometres east of Marathon.
“This is all being driven by the collapse in the gold price,” he added. “We’re operating at a break-even point.”

Baumen said if Hemlo can realize $19 million in overall operational savings and efficiencies, it should be able to remain on track to continue operating for another five to six years as previously forecast.

Hemlo, which consists of the David Bell and William’s mines, remains a large employer with a combination of 800 direct employees and contractors.

But the site will have shed 100 jobs come May when mining at David Bell comes to an end, as planned, after nearly three decades of continuous production.

After David Bell closes, Williams is to continue mining about one million ounces of proven and probable reserves as a combined underground and open-pit operation.

Baumen said the plan is to realize savings without having to cut jobs at Williams or jeopardize the operation’s good safety record.

Ways to save include selling off older equipment, reducing the operation’s energy bill and negotiating “relief” from suppliers.

“We have already got some good cost-saving ideas from our many experienced employees,” said Baumen.

Before gold nose-dived to its present selling price of about US$1,200 per ounce, Barrick spent $180 million over four years at Hemlo on capital improvements, including new equipment.

“That put us in a good position to weather the present storm,” said Baumen.

Though exploration drilling around Hemlo was significantly curtailed last year, Barrick is to spend $2.5 million in 2014 on “definition drilling” to firm up the site’s existing gold reserves.

Barrick, with Thunder Bay native Jamie Sokalsky as CEO, has over the past six months sold off $850 million in assets, including five Australian mines and an Alberta-based oil and gas operation.

Public environmental hearings are to begin next month into a proposed copper and palladium mine north of Marathon’s airport.

The mine proposed by Stillwater Canada is expected to create about 350 direct jobs just a short drive from downtown, if it receives federal and provincial approval.

 

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