PERTH (miningweekly.com) – Gold miner Red 5 has unveiled plans to transition its Darlot underground mine, in Western Australia, into an additional medium-term, high-grade feed source for its new King of the Hills (KOTH) processing plant.
“Following an exhaustive review of the Darlot operation, we are pleased to announce a new streamlined mine production plan for Darlot, based on trucking and processing the ore at our new KOTH processing plant as part of what we are now referring to as our KOTH processing hub strategy,” said MD Mark Williams on Monday.
“Under this strategy, we are in effect reversing the original operating strategy developed when we undertook the dual acquisition of the Darlot and KOTH projects four years ago.
“Darlot has until now served as a central processing facility under our ‘truck-to-Darlot’ strategy but, with the impending completion of the new state-of-the-art KOTH processing plant and its substantial latent capacity, we have a unique opportunity to treat other ore sources over and above those proposed in the KOTH mine plan.”
Williams told delegates at the Diggers & Dealers conference, in Kalgoorlie, that Red 5 would take advantage of significant latent capacity in the KOTH mill, meaning no additional capital investment would be required for the strategy.
Some 700 000 t/y of ore will be sourced from the Darlot operation, with a further 4-million tonnes a year coming from the KOTH operation, ramping-up KOTH mill capacity to 4.7-million tonnes a year
“With forecast processing costs of just A$11.83/t, the KOTH processing plant is a low-cost production centre and provides an opportunity to capitalise on this strategic advantage by trucking underground ore from Darlot to KOTH. The impact on our cost base gives us the flexibility to implement a more aggressive mine development plan to unlock the significant resource base at Darlot to reduce our dependency on remnant stopes,” said Williams.
Production at Darlot in 2022 is guided at between 62 000 oz and 72 000 oz at an all-in sustaining cost of A$2 300/oz to A$2 400/oz. With the future implementation of Darlot ore processing at KOTH, Red 5 is targeting in 2023 to reduce Darlot’s all-in sustaining cost to between A$1 700/oz and A$1 900/oz.
“The metallurgy of the KOTH-Darlot ore blend is well understood as we have been processing these combined ores at Darlot for some years. This allows for the seamless integration of Darlot underground ore into our future milling and production plans at KOTH, providing an additional high-grade ore feed in the early phases of the production ramp-up.
“Importantly, the plan also provides clarity and certainty for our Darlot employees at Darlot, with non-mining and processing personnel to be transferred to KOTH. This workforce transition strategy also significantly reduces the recruitment and labour risk for KOTH in the current tight labour market,” Williams said.
Williams told delegates at Diggers & Dealers that Red 5 had also awarded underground mining specialist Redpath with an initial 12-month contract to advance the development of Darlot underground, to fast-track access to the 1.3-million-ounce mining inventory at the project.
Meanwhile, Williams noted that financial close of Red 5’s $55-million divestment of its Siana gold project would be settled in the September quarter of this year.
The company at the end of July entered into a binding agreement with TVI Resource Development to divest its interests in Philippine company Greenstone Resources Corporation, which holds both the Siana gold project and the Mapawa gold project in the Philippines.
The agreement includes a $19-million cash payment on the completion of the transaction, and a net smelter return royalty of 3.25% payable for up to 619 000 oz of gold will be payable from first gold from the restart of the Siana processing plant.
Operations at Siana were suspended in 2017 following delays in receiving approvals for an amendment to the environmental compliance certificate to enable construction of the new tailings storage facility to proceed, along with uncertainty regarding regulatory and government mining policy in the Philippines.
Red 5 has previously said that the divestment of its interests in Siana was consistent with the company’s strategy to focus on its KOTH and Darlot gold mines, with the aim of becoming a substantial midtier Australian gold producer.