Drilling innovation directs Alamos to island gold products
John A McCluskey, President and CEO of Alamos Gold, tends to look forward, not back, when he talks about the strategic decisions the listed miner in Toronto and New York made during his 18 years at the head of the company.
While discussing the acquisition of Richmont Mines, which included the flagship asset of the Island gold mine in Ontario, he allowed himself a brief rumination on the first market impressions of the transaction: “We have acquired the asset. for approximately $ 620 million as of November 2017. The consensus seen in the market was that we overpaid for the asset.
This consensus view considered 1.8 Moz of mineral reserves and resources and production of around 100,000 oz / year, among other factors.
“In less than three years, we’ve had Island above the 4 Moz reserve and resource threshold – we’re now closer to 5 Moz – and the consensus valuation of the asset by the analysts covering us is d ‘about $ 1.4 billion. “
The new valuation takes into account an increase in production – the company forecasts gold production of 130,000 to 145,000 ounces this year – and long-term growth prospects for the asset. This latter point is evidenced by an expansion study for phase three of the island published last year which provided for a 2,000 t / d (currently 1,200 t / d) operation capable of producing 236,000 oz. / year from 2025.
Although McCluskey says the company was aware of these growth prospects in November 2017, most market watchers will be surprised that they were proven so quickly after the Richmont Mines transaction.
They probably underestimated what the use of directional surface drilling could do on Island.
Originally operated by Chief Geologist of Richmont Mines and now Chief Geologist of Island Gold, Raynald Vincent, in 2015, the exploration technique allowed Alamos to successfully exit and fill the holes that Richmont and its predecessors had drilled before.
Scott RG Parsons, vice president of exploration for Alamos, said the directional surface drilling, combined with the exploration team’s understanding of the controls of gold mineralization at Island and Alamos’ financial support for exploration, helped the company to rapidly develop the asset.
“The significant growth in resources and reserves on Island over the past three years – adding 3 Moz net of 500,000 mine depletion – was largely due to directional surface drilling,” he said. I AM. “We could not have taken the asset forward in such a meaningful way without him.”
The use of what Parsons says are “standard” surface drill rigs and DeviDrill ™ steerable wireline corers from Devico allow the company to reach mineralization well below the mine’s existing underground infrastructure. . The DeviDrill tool can create multiple branches from a pilot hole, significantly reducing time spent and cost of drilling compared to standard coring methods. At the same time, you don’t waste time moving the drill rig between bypass holes, as the core barrel can be steered from the surface to complete optimal drilling patterns.
The company drilled 240 surface directional drill holes on Island for approximately 200,000 m of drilling using just 27 drill sites, Parsons explained.
“Using conventional surface drilling, the 240 holes would have required a lot more drill sites,” he said.
This would have involved moving the rig more frequently, which would have made the process much slower and more expensive.
Instead, through this directional drilling technique, the company is sitting on an additional 3 Moz of gold resources and reserves accumulated over the past three years. This came with a discovery cost of just $ 11 / oz.
Another advantage of this technology is precision, as Devico pointed out.
“Surface directional drilling is not only more efficient than standard drilling practices, but we can also hit our targets with 1% accuracy,” Parsons added. “So if we drill a 1,500m hole, we can usually meet our target within 15m of the plane, 1,500m downhole. This predictable drill spacing is critical to defining a mineral resource with the appropriate level of confidence.
“You could never do that with standard surface drilling. “
This technique is not, however, a silver bullet for exploration. According to Parsons, it doesn’t work everywhere.
“It really depends on the quality of the deposit and our understanding of the deposit, the controls and the mineralization,” he said. “Knowing that we need some drill spacing to be able to define inferred mineral resources, we strategically target the deep extensions of ore deposits. “
At Island, these ore veins – which are the high-grade parts of the deposit – are extended laterally in the lateral and vertical directions, Parsons explained.
“With directional surface drilling, we are able to specifically target these extensions when diving,” he said. “With one or two pilot holes and branch models, we can assess a large area at depth and along the direction of existing mineral reserves and resources. In some cases, other gold deposits may have less predictable or less extensive ore veins, so it would be difficult to apply directional surface drilling without having a good understanding of these deposit controls for targeting.
And, it should be remembered, this requires an investment in exploration that goes beyond simply replacing reserves and resources on an annual basis. Richmont, a much smaller company, could not fund such a strategy.
Alamos is committed to doing so, as evidenced by the 16-year mine life described in the Island Phase III study and the $ 25 million it intends to invest in exploration. this year.
The use of directional surface drilling is expected to continue to bear fruit beyond this study, as the company recently drilled its best hole to date taking advantage of this technique.
Hole MH25-08 – 71.21 g / t Au (39.24 g / t cut) over 21.33 m – is the hole in question. This hole, in addition to the previously reported MH25-04 (28.97 g / t Au (26.89 g / t cut) over 21.76 m), has actual widths approximately four times the average width of the large block. high-grade inferred resources. defined top-diving of them. This, the company said, demonstrates that the area has widened in this area, offering even more potential beyond the company’s current growth plans.
“This one – MH25-08 – is the best drill hole ever drilled on Island,” Parsons said. “And that’s after 1.3 million meters of drilling and over 7,000 drill holes dating back almost 100 years.
“This speaks to the potential for this deposit to continue to grow through exploration, and also highlights the prospectivity of the Michipicoten greenstone belt.”
With 27,500m of directional surface drilling slated for 2021 – and only 6,683m completed as of May 31 – several of these high-grade intersections may soon come to light.
And Parsons says the company can continue to use directional surface drilling about 500m below where it is currently drilling to Island.
In addition to this, the company, having put in place the necessary underground exploration infrastructure, is equipping its underground rigs at Island for directional drilling, with 24,000m of underground directional drilling planned this year (3,233m completed. at the end of May).
“This allows us to reduce our cost per meter compared to directional surface drilling and allows us to drill more targets in a shorter time frame,” Parsons said. “We will continue to apply directional drilling technology as long as the deposit continues at depth to drill these ore deposits.”
At Young-Davidson, the company’s other main asset in Ontario, Canada, the company is also considering using underground directional drilling.
“One of our plans through 2022 is to assess opportunities to use directional drilling from underground exploration drifts established at Young-Davidson’s lower and middle mines to target mineralization at depth,” Parsons said.
More generally, Parsons believes the company’s exploration team can leverage their understanding of the technology on other assets.
“For us, it’s a competitive advantage,” he said. “With a solid geological understanding of the deposit you are examining and an understanding of the application and benefits of directional drilling, we can recognize the opportunities of what could happen at depth where others might not see the potential for a long time. after the basement. the infrastructure is established in depth.
There are obvious advantages to using directional drilling in terms of cost, time and accuracy, but there is another advantage that can be lost along the way.
Without the need to constantly move surface drilling rigs between rigs, the footprint of these rigs is reduced.
McCluskey says the technology has brought another ESG benefit to Island as well.
By being able to quickly drill more targets and convert them into a resource base, Alamos was able to think long term with its Island Gold Phase III expansion and justify the expense of a well backfill and pulp plant.
This is accompanied by a 35% reduction in emissions compared to using the existing mine ramp and diesel truck transport, he said, explaining that much of the network of the l He Ontario is powered by renewable hydroelectricity.
“This technology has given us exploration success which has been converted to scale and allowed us to think longer term and allow us the infrastructure to make it a ‘greener’ operation,” he said. he declares.
With such a long list of benefits, more and more companies will turn to directional drilling to extend the life of their assets and make long-term decisions that make economic and sustainable sense.