very poorly written/or very well written Lake Shore Gold acquired Bell Creek Mill, along with the Bell Creek Mine, from the Porcupine Gold Mines Joint Venture, a joint venture between Goldcorp Canada Ltd. and Kinross Gold Corporation, in December 2007. The Mill and Mine were previously operated from 1986 to 1991 and, over this period, produced approximately 112,739 ounces of gold.
The Bell Creek mill is a conventional gold mill circuit, involving crushing and grinding, gravity and leaching, followed by a “Carbon-In-Pulp” (“CIP”) process for gold recovery. The mill also includes associated buildings and surface infrastructure, offices and an approved tailings area. The facility had been on care and maintenance since 2002. Refurbishing of the mill was completed at a capital cost, and on a schedule, significantly less than would be expected for the construction of a new greenfield facility. At the beginning of 2009, the mill had been refurbished with an initial capacity of 800 tonnes per day and was refurbished to a capacity of 1,500 tonnes per day near the end of the third quarter of that year. The Mill was expanded in 2010 to a capacity of 2,000 tonnes per day. Commissioning of the expansion commenced on October 12 and extended throughout the remainder of the year. For the nine months ended September 30, 2012 a total of 537,723 tonnes was processed for average throughput of 1,962 tonnes per day. Recoveries for the first nine months of 2012 averaged 96.4%.
During the third quarter of 2012, the Company’s mill processed a total of 193,999 tonnes for a record average rate of 2,108 tonnes per day, in excess of the mill’s current operating capacity of 2,000 tonnes per day. The third quarter 2012 throughput level compared to average throughput of 2,013 tonnes per day during the second quarter of 2012 and 1,890 tonnes per day during the third quarter of 2011. Higher throughput levels compared to the same period in 2011 largely resulted from the availability of more feed from the Company’s mining operations, primarily Timmins West Mine, as well as the impact of greater mill availability, largely reflecting more effective maintenance scheduling and improvements to key parts of the milling circuit. Recoveries at the mill remained strong, reaching a new quarterly record of 97.1% during the third quarter of 2012.
The Company is currently expanding the Bell Creek Mill to a capacity of 3,000 tonnes per day. Initially targeted for completion by late 2012, the expansion will now be phased in, with milling capacity to increase to 2,500 tonnes per day during the fourth quarter of 2012 and then grow to 3,000 tonnes per day during the second quarter of 2013 to coincide with the increase in the Company’s mining rate to that level. Due to industry-wide cost pressures, the Company now expects the cost of the mill expansion to total approximately $100 million compared to the initial estimate of $83 million A total of $75.8 million of expenditures had been incurred to the end of the third quarter of 2012.
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