STLLR Gold Inc. believes the Colomac Gold Project has the potential to be a profitable and sustainable gold mine in the future. Here’s how we collaborated with them.
Two hundred kilometers north of Yellowknife in Canada’s Northwest Territories lies large gold mineral resources hosted in a greenstone belt with immense potential. A land of lakes, ridges and boreal forest, STLLR’s aggressive drilling program has yielded millions of mineral resource ounces that make up the Colomac Gold Project. It’s a place that is accessed by ice roads during the coldest months of winter and by air for the rest of the year. It is a dramatic landscape, steeped in history, biodiversity, strong local communities, and untapped mineral wealth.
More than 500,000 ounces of gold were produced at this site in the 1990s, but the gold mine did not survive. After four years of production in a low gold price environment, the previous operator went bankrupt, leaving the government and the local community responsible for restoring the site. Millions were spent on reclamation and the tailings storage facility, in particular, was an ongoing risk.
When STLLR acquired the site in 2012, the junior mining company took on a big challenge. The company needed to significantly grow the mineral resources at the site, demonstrate that there could be a profitable mining operation at the property, and ultimately, generate long-term prosperity to the surrounding community. STLLR also needed to demonstrate that the site could be managed in a sustainable way that is respectful of Indigenous peoples, their governments, and territorial and federal agencies.
Innovation within limitations
The executives at STLLR knew that a multi-disciplinary and modern approach was needed to advance the Colomac Gold Project successfully. Partnering with a team that is innovative, collaborative, and passionate about sustainability and community enrichment was essential for STLLR and the Ausenco team was the perfect fit.
Working together with STLLR and a range of technical specialists, we explored the various challenges and limitations related to the site. For example, the main processing area was nestled between two important lakes, and no work could be done within at least 50 m of the shorelines. Some of the deposits were located up to 25 km away from the main site. And there was the existing tailings facility that needed to be considered and protected.
STLLR also had specific goals for the design. The company wanted to minimize the environmental impact of the conceptual mine operation – not only by better managing waste rock and tailings but also by harnessing renewable energy to reduce their carbon footprint. To realize and implement these goals, the economics had to be more than viable; the project had to show robust returns on capital for investors.
Ongoing collaboration and engagement by STLLR with local communities and First Nations was also extremely important.
Finding the right balances
Drawing on our full range of multi-disciplinary capabilities, we conducted multiple trade-off studies – getting down to a granular level – to understand and model the different site plan options, design specifications and operational processes. We explored different tailings solutions. We tested a range of processing plant designs and flowsheets. We looked at the economics of each deposit. And we thought carefully about energy efficiency and use.
With all this information, we came up with a plan that will see the site develop sequentially in a way that, over time, will ensure the future mine remains viable, economical and sustainable. An existing open pit operation close to the proposed processing plant, for example, is sequenced to be exhausted early, thereby allowing the empty pit to be converted into a safe and secure tailings facility. Some of the deposits will be mined as open pit, but with the intention of moving to underground operations once the accessible near-surface mineralization has been exhausted.
At every step, the team needed to carefully balance economics, sustainability and terrain. For example, the financially optimal location for the tailings facility would have been right up against one of the lakes, which would create risk and impact the project’s sustainability. To address this problem, we came up with a smart way to co-locate the new tailings facility at the historic tailings site. That solution reduced the overall disturbed area of the mine, was respectful of First Nation wishes, while giving the historic tailings facility greater focus and investment.
The proof is in the PEA
We led the development of the Colomac Gold Project Preliminary Economic Assessment (PEA), which was published in Q2 of 2023. The headline numbers are impressive. The project is expected to deliver an after-tax IRR of more than 34 % (assuming a base price for gold of US$1,600/oz – below current market prices at the time of writing). The after-tax NPV (at a 5% discount rate) to Initial Capex Ratio (essentially the value generated for one dollar of initial capital) is estimated to be 1.8x. Only a handful of undeveloped gold projects can boast similarly favorable economics.
STLLR’s President, CEO and Director, Keyvan Salehi, P.Eng., MBA believes that the PEA is just the beginning “… there is runway for the Project to continue to grow as we start exploring for other meaningful deposits across our massive greenstone property.”
Importantly, the PEA also outlines plans to develop sufficient renewable and sustainable energy infrastructure to deliver up to 60 % of the project’s energy requirements. Given the low levels of sunlight in the winter, wind turbines will provide the majority (11 MW) of the power, with solar providing a further 2 MW. That will allow STLLR to offset over 11 million liters of diesel annually – helping to cut costs and significantly reduce carbon emissions. The mine is expected to be one of the most sustainable in the country once operational.
Delivering our vision to achieve their vision
For us, STLLR’s Colomac Gold Project was an inspiring exercise. It allowed our team to leverage our multi-disciplinary approach, bringing together a diverse team of engineers, tailings, sustainability, processing design, permitting and risk management professionals to design a better way for our client. It gave our team the opportunity to think differently, to innovate and to collaborate to find the optimal outcome. And it allowed us to help the industry raise the bar on lower-carbon mining techniques and approaches.
Questions? Please contact Keenan Bence.