Transitioning into a low cost producer
In late 2010, NAP commenced a major expansion of its Lac des Iles (LDI) mine to increase underground production and reduce cash costs per ounce. As of the end of Sept. 30, 2012, NAP has invested approximately $262 million to date on the mine expansion.
The key development aspects of the mine expansion include:
1. Sinking a shaft to transition underground operations from mining via ramp to mining via shaft. The Company is currently sinking the shaft 825 metres from surface. Once completed, since the shaft can transport more ore much faster, the Company will be able to increase its underground mining rate. The Company expects to start hoisting Offset Zone ore from the new shaft in Q3, 2013, with full operational benefits of the shaft to be realized starting in 2014.
2. Setting up underground infrastructure to mine the Offset Zone using a high volume bulk mining method (long-hole stoping with primary and secondary stoping blocks). This includes expanding the ramp at depth, building new mine levels, and setting up mining stopes for production. The underground development is critical to the mine expansion and is being developed concurrently with the shaft, as it will effectively provide increased ore feed for the new shaft.
3. Setting up surface infrastructure to service the expanded underground operations. This includes the construction of the headframe, the hoist house, the service, auxiliary and production hoists, the electrical sub-stations, etc. Through the substantial investments made in 2011 and in 2012, the surface infrastructure is now essentially completed with most key structures fully operational.
Through the utilization of the shaft and the bulk mining method, operations are expected to benefit from increased mining rates and decreased operating costs, transforming LDI into a low cost producer with a rising production profile.
Recent Progress:
During the fourth quarter, the Company made significant progress advancing the critical aspects of its mine expansion.
On surface, the major construction components are now completed. The headframe, the main substation, the hoist house building, the service hoist (which is used for shaft sinking) and the auxiliary hoist are all fully operational and 100% completed. The installation of the production hoist has commenced and commissioning is scheduled for the first quarter. The remaining work on surface includes the installation of the main skip dump and the surface ore bins.
Underground, shaft sinking is progressing well, in line with the Company’s scheduled rates of advancement. The shaft sinking is currently at a an approximate depth of 475 metres below surface, representing almost 60% of the total 825 metres planned for the first phase of the shaft sinking. Installation of the 740-metre level loading pocket is scheduled for the first quarter, and the ramp and stope development is also progressing on schedule.
