St Andrew Goldfields (SAS)

Continued advancements

How many companies can you recall with 26-plus years of gold mining experience, success and acclaim? It surely takes a lot of business acumen, gumption and an adroit edge on peers to achieve such a milestone as St Andrew Goldfields Limited (SAS), a Toronto-headquartered international miner/explorer.

Founded back in 1983 and today famed for its portfolio, which includes an extensive land package in the Timmins mining district of North-eastern Ontario, SAS underwent somewhat of a management team shift in 2007—which has certainly paid off since. The company says that its new president and CEO, Jacques Perron, formally the VP of Operations for North and South America at IAMGOLD, brought with him a ‘mandate for change.’

“Mr. Perron spent the last few years building the new management team, cleaning up the balance sheet, focusing the company’s efforts, and spent a significant amount of time preparing the existing operations to be run as efficient and profitable mines,” SAS says of its revamp. “The plan for 2010 is to have all three assets (Holloway, Hislop and Holt) up and running by the end of 2010.”

With approximately 3.8 million ounces in resources on the books (in all categories and from all projects) SAS is braced for a very busy year. And if recent highlights are anything to go by, ‘the plan’ is coming along swimmingly.

The SAS Portfolio: The Holloway Prospect

With so much mineralisation in the ground, spread amongst its three principle projects, understanding the company’s operations landscape is key to comprehending just how lucrative its portfolio is today. First up is the Holloway Mine, an underground operation located at the eastern portion of St Andrews’ land package in the Timmins Mining District. SAS acquired all of the shares in Newmont Mining’s wholly owned subsidiary Holloway Mining Company, which owned the Holloway-Holt Gold Mines, back in 2006, and commenced production at Holloway in October 2009, rating at 1,000 tonnes per day.

Ore is trucked 1.5 kilometres to the company’s Holt Mill where a grinding circuit, two cyclone cluster circuits, a thickener, and a Carbon-in-Leach (CIL) circuit within the plant facilities are used for processing. Holloway hosts 119,000 ounces of current reserves (639,000 tonnes at an average grade of 6.9g/t) and currently boasts a mine life of 2.5 years. Exploration zones include the Smoke Deep Zone, an area of mineralisation which saw its first phase of drilling in November 2009 to follow up on limited testing that took place towards the end of 2007.

“The results confirmed a new zone of mineralization with characteristics similar to that of the Lightning Zone,” SAS says, mentioning the established historical mining zone nearby. “A recent second phase of drilling that was released in April showed very promising results with one intersect returning 5.83 g/t Au over 80.3 metres. Further drilling is still being conducted and more results are pending.”

There is also the Deep Thunder Zone, located about one kilometre of the Blacktop Zone (which is the company’s current production zone). Historical drilling here has turned up some great results and the company has two surface drills turning on this property and expect to release results sometime this summer.

The SAS Portfolio: The Holt Mine and Mill

The second area is SAS’ Holt Mine, including the mill which facilitates Holloway. The Holt underground operation sits on the eastern end of St Andrews’ extensive land package in the Timmins Mining District, on the south side of the Ontario Provincial Highway 101 East and reaching almost to the Québec border. SAS acquired this project along with Holloway when it took over the Holloway Mining Company, again in 2006. On January 1, 2007, SAS amalgamated with that company in order to retain 100 per cent interest in Holloway and Holt.

To bring us up to speed, this project is now on care and maintenance (fully de-watered and accessible) with development work slated to begin in the second quarter of this year. Initial production rates aim for 500 tonnes per day which will be skipped and transported via conveyor to onsite Holt Mill for processing. In total, there is 486,000 ounces of current reserves (2,680,000 tonnes at an average grade of 5.6/t) and a five-plus year mine life. An interesting aspect of Holt is the dual-benefits it offers: a great development project, plus a vital mill to serve this and the Holloway sites. The history of the Holloway mill dates back to September, when it was custom milling approximately 100,000 tonnes for Apollo Gold’s Blackfox Mine, low-grade stockpile. This custom milling arrangement was completed in mid-October after which the mill was fed with ore from the Holloway Mine at 1,000 tonnes per day, leading to the company’s first gold pour within that same month on October 31, 2009.

“Until the mill has reached full capacity with SAS ore feed (from all three mines), SAS will continue custom milling for parties in the area to maximize the mill feed and reduce fixed costs,” the company says, showing that the Holt mill benefits continue to play out and the SAS way of utilising all opportunities as its operations develop remains as standard.

With Holloway and Holt, one project appears to facilitate the other. This is a smart way of advancing both projects, but it isn’t all that SAS has on the table either.

The SAS Portfolio: The Hislop Mine

About 85 kilometres by road east of Timmins, Ontario and 50 kilometres by road west of the Holt Mill, is the Hislop Project where SAS has quite a history already. “In 1999 and 2000, St Andrews conducted open-pit mining operations at the Hislop Property,” the company says.

“Production during this period totalled 185,100 tonnes of ore, processed at an average grade of 3.4 g/t gold, producing about 20,000 ounces. The operations were placed on care and maintenance in late 2000 because of the then-prevailing low gold prices.”

Now comes the return of Hislop, a 571-hectare open-pit project. SAS completed an independent Pre-feasibility Study in September of 2009 and as a result of the encouraging results achieved, production is slated for end of first quarter 2010. Ore is planned for a production rate of 1,500 tonnes per day, with ore being trucked the 42 kilometres to the Holt mill. It is another attractive prospect for SAS, totalling 142,500 ounces of current reserves (1,912,000 tonnes at an average grade of 2.3g/t) with a plus-four year mine life.

“Ore mining activities at the Hislop Project commenced in March 2010. Ore mined will be stockpiled and transported to the Holt Mill for processing at a reduced level until the half load restrictions on the highway is lifted,” the company says.

“Currently all facets of the pit mining activities are in place and performance has been satisfactory. The Company anticipates the Hislop Project will produce approximately 25,000 ounces of gold in 2010.”

The SAS Plan

SAS has made more than a few milestones of late. The company reached 18,838 ounces of gold produced for the fourth quarter of 2009, results from its first phase of drilling at the Smoke Deep Zone, End Financial Results showing cash costs at US$456 (including 47 per cent under budgeted amounts for Holloway) and a second phase of drilling on the Smoke Deep Zone with significant intercept, to name but a few.

“SAS has achieved success over the past 2.5 years and will continue to deliver on its promises over the next months as we bring all three mines into production. Exploration activity has commenced with a base $5 million dollar per year drill program over the next three years,” the company says. “There is a lot more good news yet to come, and the story will only continue to grow as we continue to advance our projects through exploration, development and production.”

Look out for SAS on the newswires because this company is sure to get an awful lot of attention throughout the coming year. This is a prime example of acquiring projects smartly, timing your work to a tee and taking a multi-asset, financially minded and goal-focused approach which looks set to bring great success.