TORONTO (miningweekly.com) – Junior miner Banks Island Gold has declared commercial production at the Yellow Giant gold project on the west coast of Banks Island, in British Columbia.

The Vancouver-based company said on Friday that despite not fully meeting its criteria for declaring commercial production, the board had resolved to proceed to the commercial phase of the project as it had sustained gold recoveries of 85% for 277 days last year. This excluded a small amount of gold that would be reprocessed.

The original criteria to declare commercial status was that the Yellow Giant mine had to sustain production approaching mill throughput of 200 t/d, achieve gold recoveries of 90% and an output rate of 77 oz/d of gold equivalent.

Average gold output had not reached the desired 77 oz/d level owing to higher-than-expected dilution encountered around mining the old workings at the Bob zone, Banks Island explained.

The company recorded its maiden revenue in February last year. For 2014, it sold 12 181 oz of gold and 32 473 oz of silver, which was equal to 11 533 oz of gold equivalent.

Banks Island is one of the only operators in the world that is successfully operating a dense media separation (DMS) plant to preconcentrate a primary gold ore. Using the DMS, the preconcentration phase rejected up to half of the mined mass in a coarse gravel-sized product, resulting in sufficient void space in underground workings to dispose of all tailings underground.

The company planned to continue to expand its gold output at the 16 000 ha Yellow Giant property, which had several advanced prospects and numerous gold showings that remained virtually unexplored. High priority targets included the Quartz Hill and Kim zones.

Banks Island reported that it grappled with significant challenges at Yellow Giant last year, including higher capital costs, unexpected mining dilution and working capital shortages. The junior miner said it would probably need more financing to lift output and meet its goals.

The company explained that it had been able to “substantially increase” the capacity of the DMS preconcentration circuit of its process plant. With additional working capital, it planned to expand its parts and supplies inventory to ensure continuous production was possible and buy a second fleet of smaller underground mobile equipment that would increase production and decrease mining dilution.

The company’s TSX-V-listed stock closed 5.88% lower on Friday at C$0.16 a share.