FOCUS Minerals is on track to become one of Australia’s top gold producers following the successful completion of its off-market takeover of Crescent Gold.
Last October, the now fifth-largest primary ASX-listed Australian gold producer finalised a deal which saw it acquire 81.57 per cent of Crescent, a WA mining, development and exploration company whose flagship project was the Laverton gold mine.
The acquisition doubled Focus’s mineral resources to 4.3 million ounces and tripled its ore reserves to 623,000oz overnight, and will see the company’s projected annual output increase to 200,000oz of gold this year.
Focus now operates four mines across Laverton and Coolgardie in WA – Australia’s two largest gold producing regions – and has completed the first full year of ore processing at its 1.2 million tonnes per annum Three Mile Hill plant in Coolgardie. The Laverton operations are expected to boost the March quarter’s gold production to 47,500oz, following an impressive 34,211oz of
gold being mined in the December quarter.
Adding to Focus’s growth, exploration is expected to ramp up throughout the Greater Coolgardie region, at Treasure Island in the Eastern Goldfields and at Laverton. This is set to be an exciting year for Focus and, based on full production at the Laverton mine, the company expects revenue to reach $250 million in 2012. Operations Laverton The 1200 square kilometre Laverton project
consists of multiple large-scale open pit operations generating an annual production rate of 100,000oz. Current resources in Laverton stand at 2moz with 381,000oz of reserves. More than 28moz of gold has been produced from the region to date.
Since its takeover of Crescent, Focus has continued to ramp up production at Laverton: taking the operations from a 1.5-year mine life to three years after investing $10 million to recapitalise the project and building three new production centres.
In the December quarter, a record 36,229oz of gold was produced from a number of pits, including the high-grade Fish pit and the Apollo pit, which have reserves of 33,000oz and 64,000oz respectively.
Revenue is driven by an ore purchase agreement with Barrick Gold that involves processing at its nearby Granny Smith mill, and the project is on track to realise a consistent quarterly production of 25,000oz.
“The acquisition of Crescent has brought us fantastic exploration potential in Laverton,” Focus chief executive officer Campbell Baird said.
“With the amount of resource and reserves at the mine, it has a long life ahead.” Coolgardie During the last few years, Focus has built up an enviable portfolio of projects in Coolgardie, successfully reviving the historic goldfields. During the December quarter, the Coolgardie operations – which include underground and open pits at Tindals Mining Centre and an underground mine at The Mount – produced 21,432oz of gold: the second best quarter on record. The sites delivered a combined revenue of $33.3 million from gold sales of 19.922oz at an average price of $1670 per ounce.
Focus is currently the largest landholder in the Coolgardie region, with more than 200,000sqkm of tenements including its Three Mile Hill processing plant. After Focus spent $3.9 million to expand the tailings dam, the plant delivered a solid quarter by processing 298,876t at an average gold recovery of 95.4 per cent.
In 2011, Focus completed expansions at Tindals Mining Centre with the addition of new open pits 35km west of Coolgardie. The mine commenced production at three pits in late June, targeting 30,000t per month. In the December quarter, 3967oz of gold was mined. The Tindals open pit operation currently has a five-year mine life, with more than 100,000oz in reserve and 1.4moz in resource.
“Production at the open pits at Tindals Mining Centre has been going strongly for about six months now,” Mr Baird said. “It’s been a very strong ramp up and growth into production, which has been very pleasing.”
Production is also accelerating at Tindals Mining Centre’s underground operations, with Focus’s 28 per cent increase in production during the December quarter resulting in 13,449oz of gold being mined. Since Focus recommissioned the Tindals underground site in April 2008, the mine has produced more than 200,000oz of gold.
The underground operation comprises five main ore bodies – Tindals, Cyanide, Perseverance, Empress and Countess – which produce a combined 45,000tpa at 3.5g/t.
Recently, production has centred on stoping at the Countess ore body, which continued throughout the March quarter. The Mount, a narrow vein, high-grade underground mine 85km south of the Three Mile Hill plant, is another new addition to Focus’s Coolgardie operations. It entered full production in March last year, and produced 6047oz in the December quarter: a 29 per cent increase on the September quarter and its best quarter since beginning production. The mine comprises about 15 parallel sub-vertical lodes across a 300m by 600m area that is open at all
directions and at depth.
“The Mount is taking a bit longer to ramp up, but that’s the difference between underground and open pits,” Mr Baird said. “It’s not as easy to see what’s going on sometimes, but we are very focussed on making it work this year.” Exploration Focus is committed to exploration across all of its tenements throughout Laverton, Coolgardie and Treasure Island, with exploration expenditure totalling $4.25 million last quarter.
Laverton contains numerous exploration opportunities including extensions to existing open pit resources, high-grade underground targets and conceptual large-scale bulk mining targets.
According to Mr Baird, the Laverton operations have shown significant potential for the discovery of further deposits in the area.
“When we visited the site last year, we could see how much the place had grown, even with the limited amount of exploration work that Crescent had been able to do,” he said.
A reverse circulation (RC) drilling program was completed last year and diamond holes were drilled into a number of deposits. Four excavator fleets mined a total of 3.7mt across three project areas during the December quarter, and a digging fleet at the Apollo deposit in the Chatterbox shear zone set the Laverton operations up for consistent production. The tenements along
the Chatterbox shear zone are expected to be a major source of production in 2012. An ongoing drilling campaign commenced in early January. Mine infrastructure sterilisation RC drilling and down dip extension RC drilling is also planned, with future exploration targeting mineralisation at depth and along the well-established structural corridors that host known deposits. Mr Baird said that with an exploration budget of $8 million, the long-term plan for Laverton was focussed on immediate resource growth and locating other deposits. “There are large gaps in between some
of the deposits so there’s huge potential that we’ve identified for immediate resource growth,” he said.
“Multimillion-dollar projects like Sunrise Dam, Wallaby and Granny Smith aren’t the only ones in the area.” Greater Coolgardie also remains a key exploration region for the company. Focus
believes the region is underexplored and a number of high-grade deposits remain undiscovered.
Mr Baird said a year-long drilling program throughout Greater Coolgardie area that began early this year focussed first on a number of recently recognised anomalies. Recent in-house technical work continues to confirm the potential for numerous substantial ore bodies within a 10sqkm area that already hosts some of Focus’s key deposits, including the Lindsays open pit and Bayleys underground mine.
Exploration during the December quarter revealed numerous targets in the southern half of the Coolgardie tenement, including two sub-parallel mineralisation zones that were identified at Focus’s Norris project.
The Norris project area has resource of 1.9mt grading 2.1g/t of gold for 124,000oz and comprises a number of open pits mined in the 1980s.
The next phase of exploration will involve a detailed assessment of the impact of the recent drilling, with follow-up drilling to occur if the project looks robust. “Gold mining in a belt like Coolgardie is one of those things that you can never really define the life [of]. You just know it’s going to be there,” Mr Baird said.
“It’s still very early days for exploration in the field.”
Exploration is also progressing well at Focus’s highly-prospective 95sqkm Treasure Island project near Kambalda in the Eastern Goldfields.
The gold deposit at Treasure Island sits at the southern end of the Boulder-Lefroy fault zone that hosts the Kalgoorlie Super Pit and St Ives gold camp. It has been the main gold-producing system in the Kalgoorlie region, with 100moz mined from the system. In November 2010, gold grades of up to 55g/t were recovered from rock chip sampling of substantial quartz veining at the Treasure
Island project, and mapping has further identified multiple high-grade veins carrying visible gold.
Focus commenced drilling at Treasure Island in March 2011 after acquiring 100 per cent of the project, and two gold systems running through the project were identified. One is thought to extend for 4km, showing strong similarities to St Ives, north of the project, where 15moz of gold has been defined. During the December quarter, a total of 8741m of air core drilling was completed and the results are looking very promising. Based on a detailed aeromagnetic survey, geological mapping and rock chip sampling, Focus believes the Treasure Island project offers immense potential to yield a number of significantly-sized gold deposits. Future Mr Baird said the company’s focus this year was on delivering continuous stable gold production from both the Coolgardie and
Laverton operations. “Our focus this year is about producing gold, and producing it profitably,” he said. “We have very good cash costs in Coolgardie and we are now focussing on driving our cash costs down at Laverton.
“But it’s about how we will get our cash costs down, and getting that certainty and stability of production from the operations.” Mr Baird said it wasn’t a concern that gold prices had dropped slightly in the last few weeks. He expected to see $2000 per ounce sometime in the second half of this year. “I’m very bullish on the gold price,” he said. “I have every expectation [that prices will reach $2000] but I am surprised we haven’t got there yet.
“There are always going to be short-term blitzes along the way.”
By Helena Bogle