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REGIONAL NEWS - AUSTRALIA/OCEANIA 18 E&MJ; • OCTOBER 2017 www.e-mj.com Cadia East PC1 Production Begins Again The remediation and upgrade work re- quired to recommence use of Cadia East's Panel Cave 1 (PC1) crusher chamber has been completed to a standard consistent with Newcrest's emphasis on safe, strong and sustainable operations. Extraction of ore has now recommenced from two ex- traction drives in PC1, the company said. On April 14, a large seismic event oc- curred near Newcrest's Cadia East mine, an underground panel-cave operation located 25 kilometers (km) south of Or- ange, New South Wales, Australia. At the time of the event, all personnel working in the Cadia East underground mine moved to refuge chambers or safe areas. New- crest's geotechnical engineers inspected the mine accesses, certified those areas as safe, and all personnel were moved to the surface. An assessment was under- taken to determine the extent of damage caused by the seismic event before oper- ations could recommence. Newcrest submitted final ground sup- port plans for the PC1 crusher chamber and extraction level, which were ac- cepted by regulators, who amended a Prohibition Notice, allowing operations to recommence as areas are upgraded. Remediation and upgrade work contin- ues on other areas in the PC1 extraction level, which is expected to be completed by the end of December. Newcrest completed the "test and re- sponse" phase of the Panel Cave 2 (PC2) on July 19, with the ramp-up in produc- tion from PC2 continuing. This phase involved drawing approximately 480,000 metric tons (mt) of ore, while monitoring ongoing seismic response levels to ensure they remain within expected range and limits. The ore drawn during this phase of work has been transported via the under- ground conveyor system to surface where it was subsequently processed. Newcrest expects Cadia East produc- tion rates to be restored to normal by the end of March 2018. Western Australia Hikes Royalty on Gold Production The government of Western Australia an- nounced in early August that from Jan- uary 1, 2018, a tiered royalty rate will be introduced on gold production in the state, with the royalty rate determined by the Australian dollar price of gold. The current 2.5% rate will apply for each month when the gold spot price (aver- aged over a month) is A$1,200/ounce (oz) or less, and an increased rate of 3.75% will apply when the spot price is above A$1,200/oz. At the time of the announcement, the price of gold in Aus- tralia was about A$1,660/oz. Also, the current royalty exemption for the first 2,500 oz/year of gold will be removed for large producers from July 1, 2018. The changes will impact about 50 gold mines in Western Australia. The gov- ernment estimates that the changes will raise A$392 million per year in additional royalty revenue. "These changes are consistent with the 2015 Mineral Royalty Rate Analysis report, which found the gold industry pro- vided a lower return to the state than oth- er commodities," said Western Australia Mines and Petroleum Minister Bill John- ston. "Small producers and prospectors producing under 2,500 oz/y will not be impacted by the changes. The McGowan government understands the challenges smaller producers and prospectors face. "It is only fair that the Western Austra- lian community receives a more appropri- ate return on the state's resources. "Recent increases in exploration ex- penditures, employment, the value of gold sales, and high gold prices indicate strong conditions for the gold industry. Given these strong conditions, and that Western Australia ranked third for invest- ment attractiveness in the recent Fraser Institute 2016 Survey of Mining Compa- nies — ahead of other major gold produc- ers — the changed royalty arrangements are not expected to impact investment in the state's gold industry." Acting Chief Executive of the Chamber of Minerals and Energy of Western Aus- tralia Nicole Roocke disagreed, saying the decision by the state government to increase gold royalties was disappoint- ing and shortsighted. "To introduce such austere measures at a time when the gold sector is just experiencing an improvement in production and sales is unjustified, especially when the majority of royalties raised from this increase will eventually be redistributed to other states through the federal goods and services tax after four years . . . "The gold sector employs 25,000 people — around 23% of the total West Australia mining industry workforce — and many of these jobs may now be put at risk due to this royalty increase. The government should be encouraging investment in the sector, given its pos- itive flow-on effect in job creation and economic growth, not hampering it with higher royalties and taxes. "What is particularly disappointing about today's announcement is that the Labor Party is on the record in saying that any increase to gold royalties would have a negative impact due to the marginal na- ture of the industry. "Gold companies, who have only re- cently started expanding and construct- ing new mines, will feel betrayed by this decision and concerned about the future of the industry." Operations disrupted by a seismic event are expected to return to normal by March 2018.