Dig­ging for gold in iron ore coun­try

Pilbara News - - Pilbara News - Nick Evans

There is no doubt there is gold in the Pil­bara hills con­trolled by Mil­len­nium Min­er­als.

The hundreds, if not thou­sands, of ar­ti­sanal mines that dot the hill­sides of the com­pany’s 250sqkm of Pil­bara ten­e­ments are tes­ta­ment to that.

The small shafts and trenches of ear­lier work­ings — some dat­ing to the 19th cen­tury — are eas­ily vis­i­ble from al­most any­where on Mil­len­nium’s ground.

There is also a fair bit of gold on the flats that sur­round the rocky hills, where Mil­len­nium’s ter­ri­tory sits neatly be­tween Gina Rine­hart’s Roy Hill iron ore pro­ject, Fortes­cue’s Chich­ester mines, and BC Iron’s Nul­lagine pro­ject.

There’s no iron ore there, but chief ex­ec­u­tive Glenn Do­vas­ton reck­ons it would be dif­fi­cult to pick a bit of ground on the ten­e­ments where you wouldn’t hit at least some gold in a drill hole.

He’s only half jok­ing — a bore hole drilled by Mil­len­nium not long ago ac­ci­den­tally hit an in­ter­sec­tion of 12m grad­ing 5g a tonne gold. The prob­lem is not so much find­ing gold, as ex­cit­ing the same kind of in­vestor in­ter­est as other, higher pro­file, WA gold stocks. Part of that is his­toric. Mil­len­nium built its two mil­lion tonne-a-year pro­cess­ing fa­cil­ity cheaply and well in 2012, but strug­gled to move from builder to miner.

It took a bat­ter­ing af­ter ini­tially fail­ing to meet pro­duc­tion and cost guid­ance. But a new man­age­ment team and a $21 mil­lion cap­i­tal rais­ing late last year fixed the com­pany’s most press­ing debt prob­lems, and Mil­len­nium is now a re­li­able per­former on track to pro­duce 80,000 to 85,000 ounces this fi­nan­cial year, at an av­er­age all-in-sus­tain­ing cost of $1180 to $1220 an ounce.

Part of the prob­lem is also in the na­ture of Mil­len­nium’s pro­jects.

Where oth­ers are rid­ing high on mul­ti­mil­lion ounce de­posits feed­ing long mine lives, Mil­len­nium pro­duced its 23,166 March quar­ter ounces from four open pits.

Its 159,000oz re­serve — about two years mine life — is spread across 10 de­posits. Nul­lagine is a sched­ul­ing whirl­wind, as its fleet mines out a small de­posit — the most re­cent pit, Junc­tion, was opened and mined within eight weeks — and moves on.

The fact that Mil­len­nium kept its costs down and spat out $7.1 mil­lion in free cash in the March quar­ter is tes­ta­ment to the skill of its young op­er­a­tional team.

And while its ex­plo­ration reg­u­larly pro­duces re­sults most in­vestors would be happy to see, they also come from a head-spin­ning num­ber of prospects and new dis­cov­er­ies.

Un­til re­cently Mil­len­nium’s most press­ing need was to re­plen­ish its re­serves and deal with the fi­nan­cial legacy of ear­lier fail­ings.

That is start­ing to change, ac­cord­ing to Mr Do­vas­ton.

Mil­len­nium’s cash­flow is now free for its own use, and $10 mil­lion will go to­wards ex­plo­ration to add re­serve ounces and find the next pit, but also to look be­yond those press­ing needs.

Mr Do­vas­ton says Nul­lagine re­minds him of the Kal­go­or­lie Gold­fields’ ear­lier days.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.