Goldfields Behemoth
After Chinese-owned suitor Minjar Gold walked away from a takeover deal in April, JV owners of the KCGM Super Pit have continued to mull over plans to extend both open pit and underground mine life.
124 YEARS after the discovery of Kalgoorlie’s ‘Golden Mile’, the prized gold district celebrated the pouring of its 60 millionth ounce of gold, extracted from the super-massive Kalgoorlie Consolidated Gold Mines (KCGM) Super Pit.
In 1893, prospectors Paddy Hannan, Thomas Flanagan and Dan Shea found nearly 100 ounces (oz) of gold in the dry red soil of what is now the town of Kalgoorlie-Boulder.
This sparked a gold rush and the discovery of the Golden Mile, one of the richest gold deposits in the world.
By 1903 there were 49 operating mines, 100 headframes and more than 3000 kilometres of underground workings on the Golden Mile.
Small mining operations remained dotted in the Golden Mile region until the 1980s, when in 1989 the entire area was combined and KCGM was created to manage the assets and operations of Normandy and Homestake.
Existing smaller pits were amalgamated into the Fimiston open pit – originally nicknamed the Big Pit, later becoming known as the Super Pit.
It wasn’t until 2001 that interest in operating the Super Pit sparked a bidding war; Normandy had attracted interest from South African gold miner AngloGold and US-based Newmont.
Newmont came out on top, securing the takeover at $2.04 per share which valued Normandy at $US4.56 billion.
Canada’s Barrick Gold snapped up Homestake for $US2.2bn, making it the second largest gold miner in the world at the time.
Since then, Barrick and Newmont share KCGM in a 50:50 joint venture (JV).
In late November last year, Minjar Gold – a subsidiary of Chinese property developer Shandong Tyan Home – bid $1.35 billion for Barrick Gold’s 50 per cent stake in the Super Pit.
The move was welcomed by Barrick, as it was markedly higher than the next best previous offer of $900m, and would help reach its target of paying down $US2 billion worth of debt during FY17.
However the transaction would not eventuate, as Minjar walked away from the deal.
Operation
The Super Pit was Australia’s largest open cut gold operation until 2016, when Newmont’s Boddington gold mine opened south east of Perth.
It covers more than 26,000 hectares of land, made up of about 260 mining tenements, and is about 3.5km long, 1.5km wide and 570m deep.
Within is contained 1000 individual ore lodes, some extending up to 1.8km long, 1.2km deep and 10m wide.
The Fimiston open pit ( Super Pit) is currently 3.5km long, 1.5km wide and more than 600m deep; and will be 700m deep by the end of its projected mine life.
Kalgoorlie’s processing plant was first commissioned in mid-1989 and has since undergone two major expansions (1991 and 1995).
The Fimiston plant processes ore from the Super Pit and Mt Charlotte underground mine.
Both ores are processed via two milling circuits, which consist of two SAG mills and associated ball mills capable of treating up to 40,000t per day.
Excess concentrate, which is unable to be treated on site, is sold to overseas smelters for processing.
In 2015, the two roasters at Gidji were decommissioned and a new 30 tonne per hour (tph) ultra-fine grinding mill was installed.
This was in addition to the already existing 10tph ultra-fine grinding mills at Gidji since 2000 and at the Fimiston processing plant since 2002.
When scheduled open pit mining at Fimiston ends in 2019, KCGM will begin processing stockpiles of low grade ore until 2029.
Looking to the future
Gold production in 2016 was 752,000oz at all-in sustaining costs (AISC) of $US706/oz, and proven and probable mineral reserves by the end of that year stood at 8.2 million ounces (moz).
Production guidance for 2017 was expected to be between 750,000oz and 850,000oz, at all-in sustaining costs of between $US665/oz and $US715/oz.
Both JV partners were looking at options to extend the mine life of the historic operation.
In 2014, KCGM identified the Hidden Secret underground ore body at Mt Charlotte, which has an estimated 665,000t of ore at 3.56 grams per tonne (g/t) of gold equating to 76,000oz.
In May 2015, 11 new positions were created at Mt Charlotte after approval was given for the Hidden Secret project, extending mine life until 2018.
With the Super Pit close to the end of its mine life, and mining of the Mt Charlotte underground mine due to finish in 2018, KCGM turned its focus to the Morrison extension of the Super Pit – currently in the definitive feasibility stage.
JV partner Newmont said it was considering a $US100m, two-year development of the extension, and would make a final investment decision by the end of the year.
Newmont chief operating officer Tom Palmer told analysts in a 25 April conference call the company still saw growth potential in the Super Pit.
“You’re looking in the order of $US100 million for the capital cost of that layback and we’d be aiming to approve that in the latter part of this year and achieve commercial production in early 2019,” Mr Palmer said.
Mr Palmer said further drilling work could also be planned to extend mineral reserves.
“I’d look at over the next two-year timeframe us doing further work on what those opportunities might look like and what that drilling might look like,” he said.
More recently, September saw the accession of Cecile Thaxter to the role of General Manager at KCGM, taking over from Ian Butler who had held the position since 2014.
Ms Thaxter joined KCGM from Newmont’s Phoenix/Lone Tree operations in Nevada where she was general manager.
Since 2008, Cecile had served in a number of roles at Newmont, including as Regional Chief Financial Officer for North America, and is the company’s first female and financial professional selected to fill an executive operational role.