A temporary power outage at Hemlo Mining’s (TSX: HMMC) namesake operation in northern Ontario is curtailing underground work, slowing a planned increase in gold production. The stock plunged.
No one was injured in the blackout, which occurred Sept. 4 in the mine’s Alimak zone, and the processing plant and mining in other areas have continued without interruption, Hemlo Mining said late Monday in a statement. A temporary bypass is allowing some mining to continue in the affected area, though development and exploration work will remain limited until full power has been restored.
The incident is expected to affect near-term grades and slow Hemlo’s production ramp-up to 4,800 tonnes per day, which was previously planned for year-end, TD Securities mining analyst Steven Green said in a note. Mine resequencing and operating flexibility should mitigate the impact, however.
The reduced power capacity “may constrain mine development and operational flexibility in the second half, potentially impacting ore mining rates and grades and creating downside risk to gold production,” Scotia Capital mining analyst Ovais Habib said Tuesday.
Habib now expects Hemlo to produce about 59,600 oz. gold in the second half, a 20% decrease. The ounces are probably delayed, not lost, he stressed.
Hemlo Mining shares dropped 8.9% to $7.55 Tuesday morning in Toronto, valuing the company at about C$2.2 billion ($1.6 billion), The stock has traded between C$3.63 and C$8.47 in the past year.
Transition year
The blackout “accentuates [the] transition year” at Hemlo, National Bank Financial mining analyst Don DeMarco said in a note.
The main operational risk “is to the planned ramp-up toward 4,800 tonnes per day, as the affected Alimak production area was an important part of the expansion plan,” DeMarco added. “With access to certain stopes delayed, throughput is expected to trend closer to the 3,800 tonne-per-day level.”
Following a comprehensive assessment of the affected infrastructure, technical and operating teams are advancing repair and expedited replacement plans for the substation, Hemlo said.
Even before the incident, Hemlo Mining had ordered a $250,000 replacement substation as part of a critical-spares program. The equipment is expected to arrive in December.
Crews are also “evaluating opportunities to re-sequence work into other areas of the mine to maintain planned production, development and exploration activities,” CEO Jason Kosec said in the statement.
“With more than 300 km of existing mine development and multiple active mining areas, the Hemlo mine has significant operational flexibility, allowing processing operations to continue without interruption while mitigation efforts advance.”
Fill the mill
After acquiring the property from Barrick Mining (TSX: ABX; NYSE: B) in November, Hemlo Mining has been looking to boost output through a $30 million investment in mobile equipment. It’s also planning to reopen the open pit — which was closed in 2020 — to fill the mill and unlock additional proven and probable reserves.
Hemlo produced about 121,000 attributable oz. of gold last year. The company has said it plans to increase underground mining rates through 2026-28, with the mine’s existing hoisting and processing infrastructure providing room for growth. Hemlo’s mill is now running at about 40% of capacity.
Located near Marathon, about 800 km northwest of Toronto and 350 km east of Thunder Bay, the mine has produced about 25 million oz. of gold from both underground and open-pit operations since production began in 1985.
Hemlo is now estimated to hold 96.9 million measured and indicated tonnes grading 1.55 grams gold per tonne for 4.84 million oz. gold of contained metal, the Toronto-based company said in June. That’s about 1.2 million more contained ounces compared with the resource that was outlined in a 2025 technical report.
Source: https://www.mining.com/blackout-at-hemlo-gold-mine-to-slow-ramp-up/
