PRODUCTION has commenced at CBH Resources’ Rasp mine near Broken Hill in NSW, with operations expected to reach full capacity by the end of the year.
In what was a significant milestone for the Sydney-based company, CBH received NSW Government approval to develop the zinc-lead-silver mine in January 2011, enabling it to complete construction in April this year.
The $155 million project is one of two mines operated by CBH, the second being the underground Endeavour mine in Cobar, NSW, which began operations in 1983.
CBH, which was purchased by Japanese company Toho Zinc in late 2010, also owns NewcastleShiploader: a facility that provides export services for the Endeavour and Rasp operations, along with other NSW mines.
The Endeavour mine, 700km from Sydney, is the largest zinc-lead-silver mine in the Cobar region and has reserves of more than 5 million tonnes.
Since CBH acquired the operation in 2003, both the mine and processing plant have been upgraded to support an extended mine life.
Endeavour currently has an operating rate of 720,000 tonnes per annum, producing about 44,000t of zinc metal in concentrate and 24,000t of lead metal in concentrate annually.
The majority of CBH’s material is shipped to Tokyo Stock Exchange-listed Toho. The exception is lead concentrate from Endeavour, which is railed to smelters in Port Pirie, South Australia. CBH managing director and chief executive Stephen Dennis anticipated that production would continue at the current rate for the next few years before gradually declining “as [the mine] heads to the back end of its life”.
“Endeavour is obviously not a new mine: there’s probably somewhere between seven and eight years of mine life left,” Mr Dennis said. “It’s a very mature operation so our objective is to maintain constant production from the mine in its remaining years of life.”
Meanwhile, CBH hopes that an active exploration program being undertaken around the Endeavour mine will discover new ore bodies to sustain the plant.
“We have brought our exploration focus very much back towards areas in the immediate vicinity of the mine and also in the regional areas near the mine because, firstly, the potential of those areas is very good from an exploration perspective, and also we have the plant [at Endeavour] and anything that we can find near the plant gives us an obvious advantage,” Mr Dennis said.
Following the acquisition of CBH by Toho, the development of the Rasp mine became a priority. CBH is now focussed on ramping up production at the newly-constructed mine.
“I think getting Rasp established, from the point of view of getting it approved by the NSW Government and then getting the project built, on time and very close to being on budget, was, without a doubt, our biggest achievement in 2011,” Mr Dennis said.
The anticipated production rate for the mine is 650,000tpa, from which 34,000t of zinc metal in concentrate, 28,000t of lead metal in concentrate and 1 million ounces of silver in concentrate will be produced, all of which will be shipped to Asia.
“We are heading in the right direction. We would like to think by the final quarter of this calendar year we will be at full production,” Mr Dennis said.
Rasp is expected to have a mine life of about 15 years, but continual exploration around the project may see this figure increase.
A drilling program is already under
way and, as with Endeavour, CBH hopes to find additional resources near the Rasp plant in order to further utilise existing infrastructure.
“We are working in some cases on our own, but more often than not we are working with joint venture partners with whom we have a relationship to explore those areas around the Broken Hill district,” Mr Dennis said.
The company’s shiploader facility at the Port of Newcastle, which is in the centre of the resource-rich Hunter Valley region, has the capacity to handle 500,000tpa of product.
In addition to the concentrates produced at Rasp and Endeavour, Newcastle Shiploader (trading as ConPorts) also exports copper concentrate produced from Glencore International’s CSA mine in Cobar and Straits Resources’ Tritton mine in Nyngan, about 130km from Cobar.
While CBH is not looking to increase throughput at the shiploader in the short term, Mr Dennis said that it wasn’t out of the question. “In time we may look to expand the facility, but that will require a considerable amount of capital,” he said.
“If we expanded the facility we might be able to accommodate some more throughput tonnage. “It’s a very important strategic facility and there is no shortage of concentrate to go through it, but it’s more the capacity issue, and we are at capacity now.”
Earlier this year, CBH signed a farm-in agreement with Peel Mining for the right to earn up to 50 per cent interest in the latter’s polymetallic prospective Mallee Bull project, 100km south of Cobar.
This will be achieved through staged expenditure on exploration and a contribution towards previous exploration costs incurred by Peel.
Initial drilling at the tenement, which is adjacent to Peel’s wholly-owned May Day deposit intersected significant silver-lead-zinc mineralisation in April 2011.
Follow-up drilling in August that same year intersected sulfides containing strong copper-lead-zincsilver gold-cobalt mineralisation.
Mr Dennis said those early promising results encouraged CBH to invest in the project.
“Peel Mining has announced some very good early grades and we were attracted to those announcements,” he said.
“And because Mallee Bull is in the Cobar district, we quite aggressively pursued involvement.” As part of the three-year agreement, CBH has contributed $1.5 million towards exploration. This is being used to fund a 4000m diamond drilling program currently underway.
“This program is very important and our objective is to see if we can discover some kind of resource there,” Mr Dennis said.
“Exploration is at the very early stages but we are quite excited about this prospect and we are hopeful for a continuation of the results that we have already seen there.”
Mr Dennis remained optimistic about commodity prices, which had taken a turn for the worse in recent times, and anticipated reasonable zinc and lead prices in the future.
He said that rather than focussing on short-term prices, “which are a little down at the present time”, CBH was looking at the bigger picture.
“We are obviously disadvantaged by the relatively high Australian dollar exchange rate but we’ve got longer-term projects so we are looking at longer-term prices,” he said.
“So from that perspective there is nothing that we are seeing that has discouraged us from pursuing our objectives.”
For the duration of 2012, CBH will focus on maintaining steady production at Endeavour, ramping up production at Rasp and continuing exploration.
“We used to have an extensive exploration portfolio throughout Australia but we’ve brought it back to focus on the two areas around our existing operations: Broken Hill and Cobar,” Mr Dennis said.
“Of course there is no guarantee with exploration but we’ve certainly got ourselves positioned in some good ground.”
Mr Dennis said that adding another project to the company’s portfolio was also on the agenda.
“We will quietly look at opportunities as they arise and we will do that in conjunction with our Japanese parent company,” he said.
“In the long term, our objective is quite simple: turn ourselves into a quality resources house.”