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PERTH (miningweekly.com) – Gold hopeful Excelsior Gold on Friday reported that it could reduce the expected openpit mining costs at its Kalgoorlie North project by between 10% and 20%.
The estimate was made after Excelsior received proposals from 28 mining contractors in response to calls for definitive mining submissions for mining operations at the Western Australian project.
The gold developer said that the significant reduction in the openpit mining costs had the potential to increase the size of the openpit, in particular at depth, to allow access to additional higher-grade sulphide material, and to improve cash flows from the operation.
A May prefeasibility study had estimated that the Kalgoorlie North project would have an average C2 cash operating cost of A$1 065/oz, which would include government- and project-specific royalties.
The study estimated that the project would require a capital investment of A$68.7-million; however, a subsequent milling agreement with ASX-listed Norton Gold Fields has saved the company investment in the processing plant. The capital cost for the plant was later estimated at $56-million.
The milling agreement allowed Excelsior a minimum allocation of 2.5-million tonnes at Norton’s Paddington mill, with the allocation expected to be used at a rate of 500 000 t/y over a five-year period.
Excelsior has committed to partly contribute to the capital expenditure required to potentially upgrade and refurbish the Paddington mill, with the company’s commitment capped at A$12.5-million.
Excelsior chairperson Peter Bird said on Friday that the company was seeing significant competition for long-term mining contracts in a still reasonably challenging market.
“A considerable reduction in mining and earth moving costs opens up the possibility for Excelsior to increase the mine tonnage, hence expanding the mine-life, or maintain the existing mining profile and transfer the savings to higher margins.”
The miner was expected to narrow down the preferred submissions by the end of this month, and final submissions based on revised openpit mine optimisation and pit designs would be submitted by the end of October.
Mining was initially expected to start from the Zoroastrian deposit, with first treatment expected in early 2016.