Coeur to spend $4 million on Kensington exploration this year

Coeur d’Alene Mines Corporation is spending $4-million on exploration at its Kensington Gold Mine this year. But company officials say they’re focused on stabilizing existing operations at the nearly two-year old mine in Berners Bay, about 45 miles north of Juneau.

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Kensington Gold Mine General Manager Wayne Zigarlick. (Photo by Casey Kelly/KTOO)

Kensington General Manager Wayne Zigarlick says the mine has “outstanding potential” beyond its 13 years of proven reserves. But as it develops there will be plenty of time to look for new gold.

“Right now we’re focusing on primarily in the next three to four, five years to make sure that we have a sustainable future,” Zigarlick says. “And then start focusing on growing the resource.”

Zigarlick and Coeur d’Alene Mines CEO Mitchell Krebs spoke at a joint Juneau and State Chamber of Commerce luncheon Thursday. While they did not mention specific areas where exploration is taking place, Coeur officials previously have said they are looking to the west and south of the main Kensington ore body.

The company ramped down production at the mine during the last quarter of 2011 in order to build up its infrastructure. That includes a new 200-bed dormitory, a new warehouse, a new administration building, and a new underground paste plant, which comes on line later this month.

A paste plant uses leftover tailings to make concrete that can be used to backfill drill holes and stabilize the mine shaft. Zigarlick says it’s essential to future growth at Kensington.

“We had mined a year and a half without a paste plant, which means we were creating voids and starting to run out of places to mine,” he says. “If you don’t have the backfill mechanism in place, then it was creating problems for us.”

Zigarlick says it cost the company about $1,068 to produce an ounce of gold at Kensington last year. He says that’s fine when gold prices are over $1,600 an ounce. But he thinks the mine can be more efficient.

“We think that Kensington can be an $800 or $900 dollar an ounce producer, and maybe more than that, depending on what sort of optimization things that we can realize,” Zigarlick says. “We’re really not in that phase yet. We’re really looking to try and stabilize production, stabilize our workforce, stabilize all of our infrastructure, and then we’re going to really start to focus on cost reductions.”

Right now Kensington has about 260 employees and a $35-million payroll. Zigarlick says about 70 percent of the mine’s employees are Alaskans, and about 50 percent live in Southeast. Another hundred contractors are working at the mine at any given time.

Coeur d’ Alene Mines CEO Mitchell Krebs. (Photo by Casey Kelly/KTOO)

As a publicly traded company, CEO Krebs says Coeur’s main focus is getting a return on shareholders’ investment. He says Coeur believes the way to do that is by protecting the value of the company.

“That is really in three areas. That’s in the safety, in the environmental, and in the community relations aspects of an operation and of a mining company,” Krebs says. “We put those things ahead of sales, ahead of cash flow, ahead of ounces produced, because if you don’t produce them in an environmentally responsible way, in a safe fashion, it doesn’t matter.”

Coeur d’Alene Mines involvement in the Kensington project began 25 years ago. Krebs has been with the company for 16 years, serving as Chief Financial Officer before being promoted to CEO. Zigarlick started at Kensington in March 2011 as assistant general manager. He was promoted to GM earlier this year.

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