All images: Aurelia Metals
BY: JESSICA CUMMINS
A transformational deal with Canadian miner New Gold expands Aurelia Metal’s footprint in the Cobar region and further diversifies the company’s portfolio. The Australian Mining Review speaks with managing director and chief executive Jim Simpson on his outlook for the remaining of the year.
IN June Australian miner Aurelia Metals made a watershed deal with Toronto-listed miner New Gold to acquire its Peak Mines gold, copper and lead project. The tier 1 mining operation has averaged over 100,000oz of gold and 8.6 million pounds of copper production per year since commissioning in 1992.
Aurelia Metals bought the mine and 750,000tpa processing plant in the Cobar region of central NSW, 75km north of its producing Hera mine, for $US58 million.
The purchase also boosted the company’s exploration land package in the Cobar region to 1385sqkm.
Aurelia chief executive Jim Simpson told The Australian Mining Review that the deal had surpassed the company’s expectations.
“Initially we didn’t think that we could buy it for the price we paid – but it was always on our radar. I have been trying to put the assets together since 2004 when I was running Peak,” he said.
“The two assets always made sense due to the address and similar ore types.”
At the time of acquisition Aurelia Metals set target production for 35,000oz to 45,000oz from Peak Mines for the six month period to June FY2018; however this quickly increased to between 55,000oz and 65,000oz in May.
Aurelia Metals chief executive Jim Simspon.
Mr Simpson said the company knew there was a lot of value in the high grade chronos orebody, but it was performing better than predicted.
“What makes Peak Mines a valued asset to the company is its extensive inventory with multiple orebodies, which has provided a life of over 25 years,” he said.
“Peak was arguably the best operation I worked at before Hera. There are still many areas to be explored, both greenfields and historic workings.
“Most of these targets are untested, and Aurelia has never really been in a position to conduct serious greenfields exploration due to the focus on Nymagee and Hera.”
After the purchase of Peak it is expected Aurelia’s resources and reserves will grow to more than 21.8mt (from 11mt) and 4.2Mt (from 1.47mt), respectively.
Mr Simpson said FY2019 targets for Peak focused on converting resources to reserves, as well as extending its current three year mine life. In a presentation to investors Mr Simpson also reported that opportunities have been identified to reduce operating costs with improved productivity.
The miner plans to accelerate processing of high grade lead from the small but high grade Chronos zone, which is accessible through existing mine development.
While Peak Mines’ forecast production is expected to more than double the company’s fiscal 2019 output and cash generation, Mr Simpson said the company’s focus for the remainder of the year was on its development and ongoing exploration of the Hera-Nymagee Project; which includes the high grade gold and base metal Hera deposit and the emerging high-grade copper discovery at Nymagee.
Hera process plant.
Hera-Nymagee
The Hera-Nymagee Project, 100kms south east of the Cobar Basin in western NSW, has potential as a high-grade, long life mining operation.
FY18 Hera production was a record at 59,822oz at all in sustaining costs (AISC) of $430/oz, compared to the prior year of 45,679oz at AISC of $968/oz.
Stoping of the North Pod is expected to commence in the September 2018 quarter, with two production levels completed in preparation.
Aurelia released a Scoping Study on the potential for mining the Nymagee copper-lead-zinc resource, about 5km north of Hera in May last year. Mr Simpson said Nymagee is the next major project for the company, which it has compared to the neighbouring world-class CSA copper system.
“We are currently drilling to complete full metallurgical assessment for the PFS due mid next year,” he said.
“Deep drilling indicates a deep system of mineralisation, which suggests that when the project is started, depth extensions will become evident and [hence] the opportunity for continued LOM extensions.
“As evident from mines like CSA, Endeavour, Peak and Tritton these mines just continue to produce at depth.”
CSA, for example, currently extends to more than 2km depth. The Nymagee system remains open at depth, with most recent results discovering two new copper lenses.
The mine is being developed in two stages, with the first focusing on construction of an underground mine as well as a processing plant to enable production of gold and silver dore bars, as well as zinc and lead concentrate.
The second stage will see the development of the Nymagee copper deposit making use of the infrastructure already established at Hera.
The future
When asked if the miner would consider expanding operations outside of Cobar, Mr Simpson said the company is prepared to look at any accretive opportunities, however it still sees the potential for growth in the region.
“Our initial focus is locally, as the Cobar Basin mineralisation is complex with gold, silver, copper, lead and tin,” he said.
“There are barriers of entry to operate in this district including polymetallic processing and polymetallic expertise – Aurelia Metals has both.”
