The December quarter bought the usual flood of updates from miners on their exploration, development and production operations – some being hit by Covid and related labour and resource shortages, rising costs and stretching lead times.
The most exciting news in the quarter came from Chalice Mining (ASX: CHN) and the initial estimate of its world class Gonneville nickel, copper, cobalt and PGE find at Julimar, 70 kilometres (Kms) northeast of Perth.
There was no update in the quarterly report in late January – the November news of the initial resource and then news of potentially news areas near Gonneville was more than enough.
But an update did reveal that step out drilling on an apparently separate anomaly had found mineralisation 170 metres from the Hartog prospect and seemingly close to, if not part of the Gonneville outer edges.
This suggests that at least Gonneville and Hartog (such to drilling) could be so close as to be considered one area that could be mined at the same time once all the data is in.
It now has 70 holes to drill on new areas along the 26 kilometres line of strike, starting with the Hartog-Baudin prospect, 10 klicks (at least) long.
The quarterly report revealed the ‘forward plan’ for the first part of 2022 would “concurrently advance studies for an initial development at Gonneville on private Chalice-owned farmland while continuing to define the full extent of mineralisation along the 26km long Julimar Complex.”
Ongoing and planned activities at Julimar include:
- Reconnaissance, extensional, infill and study-related drilling continues with seven rigs currently operating:
- Low-impact reconnaissance diamond drilling at the Hartog-Baudin Targets within the Julimar State Forest commenced subsequent to quarter-end, initially utilising existing fire and recreational tracks with no disturbance to vegetation.
- Small footprint, track-mounted rigs are being utilised which do not require any mechanised vegetation clearance.
A total of ~70 drill sites are planned across the ~10km strike length, with the ability to drill multiple angled holes at each site.
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Newcrest Mining (ASX: NCM) might have enjoyed an improved December quarter with a lift in production as its gold and copper mines saw a reduction in planned and unplanned maintenance activities.
But half year on half year, the picture wasn’t so positive and will impact on interim earnings when they are released next month.
The damage to production of gold, copper and silver in the six months to December from the planned and unplanned outages was a sharp slide in output of all three metals for the six months, compared to the December, 2021 half year.
Newcrest said gold production in the six months to December 31 fell nearly 20% to 832,298 ounces, silver output was down 18.6% at 362,232 and copper output slumped 26.5% to nearly 51,000 tonnes.
After the recovery in the December quarter, the company is confident output will rise again this quarter (notwithstanding Covid and labour shortages) and it will make 2021-22 guidance of 1.8 million to 2 million ounces of gold and125,000 to 130,000 ounces tonnes of copper. No guidance was (again) given for silver.
December quarter group gold production was 10% higher than the preceding September quarter, with the increase assisted by the improved mill capacity at Newcrest’s Cadia gold mine in NSW.
Cadia produced 115,362 ounces of gold for the December quarter, with the mine continuing its recovery following the planned replacement and upgrade of its semi-autogenous grinding (SAG) mill motor completed in November.
Mill throughput rates were also improved at the ageing company’s Telfer gold operations in WA and Lihir gold mine in Papua New Guinea, which increased their quarterly gold production by 12% and 16% respectively.
Newcrest CEO Sandeep Biswas said completing the mill upgrade at Cadia was an important milestone for the company.
“It was a tremendous achievement for our team to safely complete the replacement and upgrade of the SAG mill motor at Cadia, which is now operating at full capacity,” he said.
“It was also pleasing to receive approval to increase the permitted processing capacity at Cadia from 32 Mtpa (million tonnes per annum) to 35 Mtpa during the period. Across all our operations, we are well positioned for a strong second half and remain on track to meet our 2022 financial year guidance.”
Newcrest’s all-in sustaining cost (AISC) fell% 11 per cent in the December quarter to $US1127 ($1601) per ounce.
Newcrest’s gold production will be boosted by the inclusion of Canadian miner, Pretium Resources.
Pretium is the owner of the Tier 1 Brucejack gold mine in Canada, considered one of the highest-grade operating gold mines in the world.
The $A3.7 billion transaction still requires the tick of approval from the Toronto Stock Exchange and the Investment Canada Act. The transaction is expected to be completed in the current quarter of 2022.
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Meanwhile, lithium and nickel/copper miner IGO Ltd (ASX: IGO) saw an 18% fall in December half sales, but a sharp jump in profits, thanks mostly to the higher prices for the three key commodities – copper, nickel and lithium.
The higher production and prices led IGO to report a group net profit after tax of $52.3 million, 36% higher than the September quarter.
That enabled the company to restore the interim dividend, declaring a 5 cents per share fully franked payment.
That news wasn’t enough to boost the shares on Monday as they dipped 0.8% to $11.75.
IGO said the higher metal prices boosted cash flow from its fully owned nickel-copper-cobalt sulphide Nova mine in WA.
First-half nickel production of 13,876 tonnes has already topped full-year guidance of between 12,500 and 13,500 tonnes. As well, copper and cobalt production was already at full-year guidance.
At the 24.9% owned Greenbushes lithium mine, spodumene production in the first-half was 526,000 tonnes, at a cost of $346 per tonne.
The higher cost was due to the inclusion of the provision of higher royalties. Full-year guidance is for between 1.100 million and 1.250 million tonnes at a cost of between $350 and $400 per tonne.
“Total spodumene concentrate production better than expected,” IGO said in the December quarter update.
This comes as the lithium price continues to increase. IGO says it expects to sell chemical grade spodumene at an average of $US1,770 ($A2,529) a tonne across the first half of 2022. In the second half of 2021, this price was $US592 per tonne.
IGO bought rival nickel/copper miner, Western Areas in December in a deal worth $1.096 billion.
As part of the transaction, IGO will control the Forrestania mine in WA, one of the country’s highest-grade nickel mines.
Subject to necessary approvals, IGO hope to complete the transaction in April 2022.
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Gold Road Resources’ (ASX: GOR) Gruyere gold mine in Western Australia continues to benefit from improved equipment availability and higher grades which gave it a solid end to what turned out to be a tough year.
“Whilst gold production lifted quarter on quarter, the lower than forecast head grades contributed to lower than forecast gold production for the December quarter and 2021 calendar year,” Gold Road said in its quarterly report.
“As a result of the lower-than-expected gold production, AISC per ounce for the December 2021 quarter was higher than expected at A$1,526 (Gold Road attributable) and this impacted annual AISC of A$1,558 (Gold Road attributable),” the company said.
The mine produced a record amount of ore during the December quarter of 2021, mining 3.164 million tonnes of ore, 600,000 tonnes higher than in the September quarter and the one before, according to the company’s December quarterly report.
The quarterly throughput was also at record highs at an annualised rate of 8.9 million tonnes a year as the process plant utilisation lifted significantly during the quarter.
Gruyere produced 67,813 ounces of gold at an all-in sustaining cost (AISC) of $1,526 per attributable ounce during the December 2021 quarter, compared to the September quarter which saw 59,371 ounces at an AISC of $1697.
The quarter-on-quarter improvement was largely the result of increased plant availability supporting record quarterly processing throughput and improving head grades, the company said.
Despite the improvement, quarterly production was down slightly on expectations due to delays accessing higher grade ore in the second stage pit, partly attributable to labour force delays and wet weather at Gruyere during December.
Gold Road said “Gruyere and Gold Road experienced no material production impacts resulting from the COVID-19 pandemic. Gold Road continues to operate within the agreed Western Australian government guidelines.”
Mined grades lifted to an average grade of 1.00 grams a tonne (g/t). However, it was lower than expected for the quarter, also due to the delayed progress in advancing to the higher-grade parts of the stage two pit.
Gold Road though is looking to an improvement this year. Mined grade is expected to rise through 2022 as mining advances through the deeper sections of the stage two pit, along with the mining of higher-grade oxide and fresh ore from the stage three pit.
Annual production guidance for 2022 is increasing to 300,000 – 340,000 ounces (150,000 – 170,000 ounces attributable to Gold Road) at an attributable AISC of between $1,270 – $1,470 an ounce.
“Production rates are anticipated to progressively improve during the year, largely reflecting improving head grade and plant utilisation, following scheduled relines of both the SAG mill and the ball mill in the March 2022 Quarter,” the company said.
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And progress in the ambitions of rare earths miner Lynas Rare Earths (ASX: LYC), which said this week it had received state ministerial approval for a processing facility in Kalgoorlie in WA’s Eastern Goldfields.
“Lynas is very pleased to be progressing this important project to establish a Critical Minerals value added processing facility in Kalgoorlie which meets the strict environmental conditions of Western Australian regulators,” the company told the ASX.
The company still needs secondary approvals for the cracking and leaching plant, which was first announced at the end of 2019.
The facility will upgrade the rare earth concentrate extracted from Lynas’ Mt Weld mine.
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Still in WA’s Goldfields and an investment that is not about a new mine, but is all about the future of the industry itself.
Construction has started on what could very well be one of the world’s largest off-grid mining solar and battery energy storage systems to power BHP Nickel West’s Mt Keith and Leinster operations in WA.
The Northern Goldfields Solar Project, which was announced last year at a cost of more than $A70 million, includes a 27.4-megawatt (MW) solar farm at Mt Keith, a 10.7 MW solar farm and a 10.1 MW battery at Leinster, which will be integrated into TransAlta’s Northern Goldfields remote power grid.
The project will replace power currently supplied by diesel and gas, and will help BHP Nickel West cut its scope 2 emissions at its Mt Keith and Leinster operations by 12%, resulting in an estimated reduction of 54,000 tonnes of carbon each year.
The project is expected to produce its first solar power by November this year.
“The Northern Goldfields solar project is BHP’s first off-grid large-scale renewable energy project across our global operations and, significantly, will remove the equivalent of up to 23,000 combustion engine cars from the road every year, supporting our greenhouse gas reduction targets,” BHP Nickel West asset president Jessica Farrell said in a statement.
The announcement last year of the planned new power sources followed the nickel supply agreement BHP Nickel West signed with Tesla in July.
It will enable Tesla to claim that its nickel for its batteries and EVs being sources from BHP is being produced in a sustainable low carbon way.
This is another example of where the image has to be backed by reality in the word of renewables and lowering and eliminating the use of carbon and emissions.
The project aims to employ Traditional Owners from the Tijwarl Native Title Holders following TransAlta’s contractor, juwi, awarding Cundaline Resources with the primary civil contractor role on the project.
TransAlta also unveiled it had entered into an agreement with BHP to identify potential wind sites for a 40 to 50MW wind farm, which would connect to TransAlta’s northern grid and reduce scope 2 emissions at BHP’s Mt Keith and Leinster operations by an estimated further 30 per cent.
It is the latest in remote site reneweable power sources being built – OZ Minerals has a similar idea in South Australia, wind farms and batteries are being built in north Queensland with the same idea in mind, as well as supply domestic consumers and solar farms, batteries and wind farms are being built in remote areas of NSW and Victoria.
Newcrest is powering the Cadia mine in the central west of NSW from a wind farm near Yass, north of Canberra.
