Engineering & Mining Journal

MAR 2014

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16 E&MJ; • MARCH 2014 www.e-mj.com Saracen Acquiring Idle Norilsk Gold Operations in Western Australia REGIONAL NEWS - AUSTRALIA/OCEANIA Saracen Mineral Holdings is acquiring Norilsk Nickel's Thunderbox and Bannock- burn gold operations in Western Australia's North-Eastern Goldfields. The operations are inactive and have been on care and maintenance since 2007. The acquisition includes a modern, 2.5-million-mt/y, car- bon-in-leach gold treatment plant adjacent to the Thunderbox mine and extensive supporting infrastructure, including a 268- person accommodation village and an unsealed airstrip. Consideration payable by Saracen to Norilsk for the acquisition comprises A$20 million cash on settlement; A$3 million cash upon the sooner of commencement of com- mercial production, or if, after a period of 24 months following settlement, the prevailing gold price has exceeded A$1,550/oz for a calendar month; and a 1.5% net smelter return royalty on the Thunderbox operations, capped at A$17 million. Saracen also will assume all environmental rehabilitation obli- gations related to the assets. The Thunderbox gold assets were seen as non-core assets by nickel-focused Norilsk. The sale is expected to close in the first half of 2014. Thunderbox produced 155,000 oz of gold in 2006, its last full year of operation, processing 2.2 million mt of ore at a grade of 2.3 g/mt gold and cash costs of $352/oz. Based on the current open-pit ore reserve of 728,000 oz, Saracen estimates that Thunderbox could produce approximately 140,000 oz/y of gold at an all-in sustaining cash cost of approximately A$1,100/oz over an initial mine life of five years. Saracen estimates that total redevelopment capital expenditure will be approximately A$45 million to $A55 million, inclusive of all capital and pre-strip mining costs. Saracen is targeting restart of produc- tion within 18 months of settlement. Saracen expects to find synergies between Thunderbox and its current Carosue Dam operations, about 300 km to the southeast, with respect to operating personnel and open-pit mining equipment, given both operations are planned to utilize similar-sized equipment. Saracen said it will emerge from the acquisition with significantly enhanced mining assets, including: • Total gold mineral resources of 6 mil- lion oz; • Total gold ore reserves of 1.6 million oz; • Existing gold production of 120,000 to 135,000 oz/y, with potential to double this once the Thunderbox operations have been developed; • Total milling capacity of approximately 5 million mt/y; • Diversification across two key operations in separate but relatively close geograph- ical locations; and Alkane Pours First Gold at Tomingley Alkane Resources' newly developed Toming- ley gold mine in New South Wales poured its first gold bar in mid-February, following successful commissioning of the stripping and elution circuit of the processing plant. The first pour, weighing 8.191 kg and con- taining approximately 230 oz of gold, was the final milestone in delivering the project on time and on budget. Tomingley is located in the central west region of New South Wales, 425 km west of Sydney. The medium-sized open-pit and underground project has approximately 921,000 oz of gold in current defined resources and will produce 50,000 to 60,000 oz/y of gold over a minimum mine life of 7.5 years. Alkane is currently targeting eventual mine life of more than 10 years. The Tomingley CIL processing plant has throughput capacity of 1 million mt/y. Feed grade is 2.00 g/mt gold, and recovery is 93%. Cash operating costs averaged over the 7.5-year minimum mine life are esti- mated at $A1,000/oz. In the month leading up to the first gold pour, the Tomingley milling circuit achieved continuous operation at more than 90% of design capacity, with peak rates above design. Alkane said it would focus on maximizing mining and process- ing productivity. Alkane has executed a gold hedge of 25,000 oz for Tomingley at A$1,449 for delivery on May 16, with Credit Suisse International. Gold can be sold into the hedge or the contract may be rolled forward depending upon the spot price at maturity. Existing SAG and ball mill installations at the inactive Thunderbox gold operation in Western Australia. (Photo courtesy of Saracen Mineral Holdings) The CIL plant at Alkane Resources' Tomingley gold mine. (Photo courtesy of Alkane Resources) EMJ_pg04-27_EMJ_pg04-27 3/3/14 10:32 AM Page 16

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