PERTH (miningweekly.com) – Junior gold miner Anova Metals is looking at alternative development models to continue mining its Second Fortune gold mine, in Western Australia.

The first mining campaign at Second Fortune started in November last year and was completed in July, resulting in the production of 3 701 oz of gold from the milling of 37 637 t of ore.

ASX-listed Anova flagged geotechnical problems at the operation, which resulted in additional costs that were incurred for ground support in shallow areas of the decline. This resulted in dilution and the loss of areas of the stope, Anova said on Wednesday.

The additional ground support and the impact of the dilution on haulage and processing costs resulted in a near A$2-million increase to costs above that forecast, while total gold recovered was some 1 800 oz less than forecast, primarily due to the losses on the first level and negative reconciliation with the block model.

Anova said that the combined impact of both higher costs and reduced revenues resulted in negative cash flows for the campaign.

However, the company said on Wednesday that the problems of poor ground conditions were limited to the weathered shallow parts of the mine in the early decline and first level, and were not expected to be of further concern. Furthermore, dilution could also be adequately managed by using narrow development drives.

A new mine plan has now been developed with smaller development drives, and with updated assumptions on geology and resources. Under this plan, the continuation of mining deeper levels is considered to be viable.

Anova is now in discussions with various parties in relation to the continuation of mining at Second Fortune, with the company saying that alternative development models were also being explored that could reduce some of the costs and risks associated with the previous campaign.

The company was hoping to secure lenders for terms to extend the repayment of its working capital facility, while indicative terms have been agreed to extend the term of its A$3-million financing facility.