Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
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JUNE 2014 • E&MJ; 65 www.e-mj.com PA N A U S T exploration they had conducted to date, and we negotiated a deal—a modest deal as we were a very small company." PanAust understood enough from the data that there was potential at Phu Kham, and, although copper prices at that time were low, research revealed some gold grades in the upper levels of the copper deposit that presented PanAust with a starter opportunity that eventually flour- ished to where it is today. "It was a low strip ratio mine and when you start thinking about the capital costs of developing the project, we got lucky. There was a main power line transmitting relative- ly inexpensive hydro-electricity about 12 km away from our project, a new road had been put in that gave us better access and things just started falling into place," Stafford said. "We started putting together a feasi- bility study that began to make sense." Plant Expansion The Phu Kham process plant had an origi- nal annual design capacity of 12 million mt/y and was upgraded in mid-2012 to 16 million mt/y through the addition of a sec- ond 13-MW ball mill and additional flota- tion capacity. Improved recovery rates were achieved during the September 2013 quarter fol- lowing commissioning of the Increased Recovery Project, and were maintained during the December 2013 quarter with recovery rates consistent with the mix of transitional ores processed. "In the last 24 months, we've expanded from the initial capacity to 16 million mt/y and already we're operating at more than 18 million mt/y, and we think we can go higher still—now we're really beginning to test some of the equipment in the plant," he said. "When it was first installed it had lots of overcapacity, we had to make certain assumptions about how far we could push that equipment, and were finding that with good management we could get more out of the equipment. We're a bigger operation these days. "The reason we expanded the plant was because the scheduled grade of the ore body fell from the early years when we had a lot of near-surface transitional ore, which was partly oxidized and the grade had been slightly enriched. It was difficult ore, it was not easy to recover the copper and gold from it, but it was quite high grade. "This year, our grade is at the lowest it will be for the life of the mine with a high- er strip ratio. We wanted to make sure that when we entered this phase we had the expansion built," Stafford said. "We've got in-house skills to manage the construction of our own projects. We bring in some contractors but we don't outsource our management. We have a core team of people in Brisbane that are experts in build- ing and developing projects, managing large workforces and training them. We found in Laos that it's more efficient to manage construction in-house. For anybody new coming in, it's a learning curve and we don't really want to pay for somebody else to go through that learning curve." In October 2013, PanAust announced a revised life-of-mine plan for the Phu Kham operation based on a new resource model, additional processing capacity and improved recovery performance provided by the upgrade completed in 2012, and the Increased Recovery Project completed in 2013. From 2015 to 2019, scheduled increases to head grade will lift copper-in- concentrate production to peak annual lev- els of around 90,000 mt in 2018 and 2019. Gold grades are forecast to be vari- able for production in the range of 60,000 to 80,000 oz of gold-in-concentrate through to the end of this decade. "The expansion was meant to cost more than $100 million, but we brought it in for about US$90 million, and the Increased Recovery Project was supposed to cost $45 million and we brought it in for less than $35 million," Stafford said. "The Increased Recovery Project was designed to maximize recovery of copper and gold from the ore because the metallurgy at Phu Kham is not as simple as it is in other ore bodies. There was an opportunity that we have successfully realized." Phu Kham ended 2013 with strong final quarter production and cost perform- ances. Copper-in-concentrate production for the full year of 64,885 mt was at the upper end of the guidance range (62,000- The Phu Bia contract area, which comprises the two operating mines and several other prospects. EMJ_pg64-71_EMJ_pg64-71 6/3/14 4:20 PM Page 65