Effective December 31, 2007 the Company owns 100% of the Bjorkdal Gold Mine. In 2006 the Company acquired an option from Minmet plc to purchase the holding company for the mine, Bjorkdalsgruvan AB, and on December 31, 2007 the Company exercised its option and acquired all the shares of Bjorkdalsgruvan AB. Bjorkdalsgruvan is now a wholly owned subsidiary of Gold-Ore. The assets of Bjorkdalsgruvan include the fully-operational gold concentrating plant, all necessary environmental permits, the tailings management facility, the open pit and associated mineral resources, and 100% ownership of approximately 70 sq.km. of exploitation and exploration concessions.
Since the date of acquisition of the Bjorkdal Mine, the Company has been generating cash flow from gold sales from the operation of the plant at the mine, fed by stockpiled material, some newly-mined open pit material, and material from underground development operations. However, as the Company continued to carry out substantial underground development at the Bjorkdal mine during 2008, the net expenses associated with mining activities and operation of the plant at Bjorkdal, were included in the Bjorkdal mineral property mine development costs as of the 2008 Year End. Starting in the First Quarter 2009, management considered the Bjorkdal Mine to be substantially complete, as effectively all of the feed for the plant was being sourced from newly-mined open pit and underground operations. A mineral resource and reserve statement was completed in October 2009 (see below - "Resources and Reserves"). The statement---when taken with the extensive operating history of the mine---confirms management's estimate of the life of the mine and the appropriate rate of amortization.
Location and Access
The Bjorkdal gold mine is located 30 km along paved highway northwest of the city of Skelleftea and 750 km north of Stockholm, Sweden. Skelleftea is a modern city with daily flights to Stockholm. The area has a long history of mining and strong economic ties to the industry. Developed infrastructure includes railway and paved highways connecting the community to all of Sweden. Low cost hydropower and a skilled labour force further support the industry. The climate in this area of northern Sweden is moderated by the Gulf Stream and is very similar to Timmins, Ontario.
Property History
The Bjorkdal mine was discovered by Terra Mining AB by regional till sampling. The first anomalous gold values in till samples were found in 1983 and bedrock values were discovered in 1985. Definition drilling was started in early 1986; the feasibility study was finished in May 1987 and a production decision was made in July 1987. The first shipment of gold concentrate was made in September 1988.
Late in 1996, Williams Resources Inc of Toronto purchased Terra Mining and took over ownership of the mine. However, gold prices plummeted shortly thereafter and Williams placed the mine into receivership in June 1999. The property was dormant until 2001 when private concerns purchased the assets from the banks and started processing low grade stockpiles. Minmet acquired 50% of the mine in March of 2003 and the remaining 50% in October, 2003. Minmet extracted ore from the open pit during 2 brief periods in 2003 and 2004 and has principally processed low grade stockpile material.
The tables below summarize the production from the Bjorkdal mine. Table 1 provides the data for the period 1988 to 1999 when the open pit was in full scale operation. Table 2 mainly reflects the processing of low grade stockpiles until 2009 when feed for the mine again was newly-mined ore from the open pit, and now from underground as well.
Table 1. Björkdal Production 1988 to 1999
Year
Mill Feed (tonnes)
Head (g/t Au)
Gold Produced (Ounces)
Recovery (%)
1988
147,658
2.26
9,559
89.1
1989
475,313
2.86
39,810
90.9
1990
612,892
2.56
45,383
89.9
1991
764,504
2.65
58,466
89.8
1992
872,395
2.95
74,287
89.9
1993
839,793
3.33
81,552
90.7
1994
877,247
2.63
68,162
92.0
1995
1,156,756
2.11
71,288
91.0
1996
1,275,584
2.31
86,191
91.0
1997
1,288,382
2.49
92,498
89.6
1998
1,330,373
1.77
67,299
90.0
1999
635,231
1.5
27,514
N/A
Total
10,276,128
2.41
722,009
Table 2. Björkdal production 2001 to 2009 (Calendar Years)
Year
Mill Feed(tonnes)
Head (g/t Au)
Gold Produced (Ounces)
Recovery (%)
2001
302,740
1.10
8,926
84.2
2002
1,190,206
1.02
33,754
86.2
2003
1,198,341
1.30
43,207
86.4
2004
1,193,719
0.94
30,601
84.8
2005
1,197,330
0.68
22,240
84.8
2006
1,209,599
0.61
20,503
87.2
2007
1,109,483
0.63
19,198
85.5
2008
1,169,769
0.89
29,296
87.5
2009
1,063,743
1.24
37,568
88.6
Total
9,634,930
0.92
245,293
86.1
It is expected that Bjorkdal will produce its millionth ounce of gold sometime in 2010!
Resources and Reserves
Wardell Armstrong International Ltd. (WAI) provided Gold-Ore with an updated resource and reserve estimate for Bjorkdal in October 2009. The new reserve estimate outlines 4.0 million tonnes of ore sufficient for another 3.7 years of operations. The measured and indicted resources generate an additional 6.9 million tonnes available for conversion to reserves.
The resource statement separated the deposit into resources amenable to open pit mining and those that would be mined underground. WAI used Datamine software and Indicator Kriging, incorporating all drill data up to March 2009, a total of 4,475 drill holes with a nominal spacing of 30 metres. The resource estimate complies with JORC 2004. Table 1 lists the tonnage and grade for the open pit and underground resources, and Table 2 lists the corresponding ounces of gold for each category.
Table 1: Open Pit & Underground Mineral Resource Estimate - Tonnages and Grade
Resource
Type
Cut-off
Measured
Indicated
Measured + Indicated
Inferred
Au
(g/t)
Tonnage
(000's t)
Au (g/t)
Tonnage
(000's t)
Au (g/t)
Tonnage
(000's t)
Au (g/t)
Tonnage
(000's t)
Au (g/t)
Open Pit
0.60
394
2.25
4,071
2.07
4,465
2.09
5,743
1.79
Underground
1.00
796
2.79
1,611
2.94
2,407
2.89
1,927
2.62
Evaluation (2.5 m Selectivity) Adjusted for a 91% Mining Recovery and 30% Mining Dilution
Table 2: Open Pit & Underground Mineral Resource Estimate - Ounces
Resource
Type
Cut-off
Measured
Indicated
Measured + Indicated
Inferred
Au
(g/t)
Au
(Ounces)
Au
(Ounces)
Au
(Ounces)
Au
(Ounces)
Open Pit
0.60
28,505
270,964
299,469
330,546
Underground
1.00
71,410
152,294
223,704
162,339
Evaluation (2.5 m Selectivity) Adjusted for a 91% Mining Recovery and 30% Mining Dilution
After completing the resource estimate, WAI calculated mineable reserves for open pit and underground mining. To establish open pit reserves WAI completed a Pit Optimisation Study using Net Present Value Scheduler software and evaluated four different resource scenarios at different gold prices. The scenario selected for the pit mine design was the one that only included measured and indicated resources that would not impact the underground development. The Open Pit Design Module of Datamine was used to delineate the reserves. The mineable reserves include a dilution factor of 30% and 91% mining recovery. The economic cut-off grade was determined to be 0.45 grams per tonne gold at a gold price of $200 Swedish krona per gram (US$806 per ounce).
To calculate the underground reserves WAI updated the underground resources based on modelling individual veins for the area extending beyond the north wall of the current pit and within the area bounded by the current mine development. Of the Measured and Indicated resources considered, approximately 30% was included in proven and probable ore. Measured and Indicated resources, north and south of the area examined in the study, will be added to reserves as additional diamond drilling and development in these areas allows conversion. This resource estimate was based on a minimum vein thickness of 1.0 metres. No dilution was applied to the estimate. The resource estimate for this part of the study used ordinary Kriging.
The mine design, including the stopes, was modelled in Mine 2-4D software. A dilution factor of 25% was applied and a mining recovery of 95%. A cut-off grade of 1.3 grams per tonne gold was used for the development and a cut-off grade of 1.0 grams per tonne gold was used for the stopes. Proven and probable reserves for the open pit and the underground are listed in Table 3.
The economic parameters used for converting resources to reserves were based on actual operating conditions at Bjorkdal for the period December 2008 to August 2009 and are listed below:
Mechanized underground mining methods -- long hole stoping and lateral sub-level jumbo development
Open pit methods using blast hole drill rigs on 5 metre benches using standard truck and shovel excavation
Processing throughput of 3,200 tonnes/day for 350 days/year or 1.1 million tonnes per annum
Processing flow sheet includes crushing, grinding with gravity and flotation beneficiation to recover gold
Average plant recoveries at 90%
Refinery and smelter contracts established with payable gold at 94%
Average underground costs including mining, transportation, milling and G&A at Swedish krona $233 (US$ 29.20) per tonne
Average open pit costs including mining, transportation, milling and G&A at Swedish krona $110 (US$ 13.78) per tonne
Average Swedish krona to US dollar exchange rate (Dec 2008 to August 2009) at 7.98:1
Geology
The Bjorkdal Mine is located in the eastern part of the Paleoproterozoic Skelleftea district. This 1.9 billion year old volcanic arc hosts close to 100 Zn-Cu-Au-Ag volcanic-hosted massive sulphide deposits (VHMS) of which 28 have been mined historically. The best known mine in this area is the famous gold-rich Boliden deposit which is located just 12 km from the Bjorkdal mine. The Skelleftea district consists of a lower volcanic sequence (Skelleftea Group) overlain by a younger sedimentary sequence (Vargfors Group). The 3 km thick Skelleftea Group is composed of mainly felsic volcanic rocks and the upper part of the Group hosts most of the VHMS deposits. The supracrustal rocks of the Skelleftea District were later cut by a variety of intrusions.
The gold at Bjorkdal is associated with cm to m wide subvertical quartz veins within a biotite-altered granodiorite. The gold mineralization is localized near the contact between the intrusive and the overlying Skelleftea Group. The veins mainly trend NE and NNE and terminate at the sediment-intrusive contact. The gold is found both as free milling gold and also associated with pyrite.
The Bjorkdal belongs to the class of gold deposits known as "Intrusion Related Gold Systems" or IRGS. This class of deposits includes some new multi-million deposits such as the Fort Knox mine (6.7 Moz Au), Pogo (5.1 Moz Au), Donlin Creek (23 Moz Au) and Dublin Gulch.
Processing Plant
The processing plant at the mine, which operates at a capacity of 3,400 tonnes per day, was built in 1988 and has been well maintained. The plant consists of a coarse crusher, a rod and ball mill, gold gravity concentration circuit (including a Knelson concentrator) and flotation circuit for gold bearing pyrite. Feed material is sourced from underground, open pit and stockpiles. Gold recoveries average almost 90%. The tailings from the plant are very benign, containing no deleterious material, and have been classified by Swedish authorities as non-toxic.
Detail of Mining Methodology
The gold-bearing veins at Bjorkdal range from less than one metre to six metres in width and commonly occur as swarms. The veins are vertical and the granodiorite host rock is extremely competent. The underground mining method being utilized is longhole stoping or blast hole open stoping with sub-level spacing of 20 metres. This mining method has been used successfully in many different mines throughout the world.
Using this mining method a gold bearing vein is developed with sublevels driven along the vein. The six veins planned for testing in our initial exploration program all showed gold bearing zones, with good lateral continuity that varied in width from 3 meters wide to 6 meters wide, and in length anywhere from 15 meters long to 110 meters long. These zones are being divided into mining blocks, or stopes, with a maximum strike length (distance along the vein) of 30 meters. Wherever the gold bearing zone is longer than 30 meters, it is divided into blocks with a maximum length of 30 meters leaving a small unmined pillar between each block.
A typical 30 metre block 3 metres wide is mined as follows. An upper, (drilling) sublevel is driven 3 metres wide by 4 metres high on vein 20 metres above the lower, (mucking) sublevel, which is the same size and is driven on same vein directly below the drilling sublevel. At the far end of the drilling sublevel a production drill drills a slot raise, or initial hole, that is drilled between the bottom of the drilling sublevel to the top of the mucking sublevel. Because the sublevels are 20m apart the production drill holes are 16 metres long. Behind the slot raise the production drill drills lines of blast holes until the 30 metres long block is completely drilled.
When drilling is completed the slot raise is blasted. The slot raise is blasted retreating upwards in a series of blasts that remove between 2 and 5 vertical meters of the raise with each blast. The broken rock is removed after each blast via the mucking sublevel using a scooptram (a low profile front end loader). Once the muck from the slot raise is removed the production drill lines are blasted into the void produced by the slot raise. These lines are blasted in groups of 3 to five lines with enough muck removed between blasts to allow sufficient void for the following blast. When the entire mining block is blasted the scooptram mucks out the remaining broken ore. The scooptram is fitted with a remote control to allow mucking of material beyond the blasted brow during the final clean up.
By leaving small pillars, and changing the mining sequence, this mining method can be adapted to changing ground conditions, and can be modified to drill production holes either down towards the mucking sublevel as described, or up towards a previously developed sublevel or known mining boundary.
