FOR emerging gold producer Millennium Minerals, 2012 has been a momentous year: the company completed construction and commissioning of its flagship Nullagine gold project, and officially transition to the status of producer when it poured first gold from the project on September 30.
The Nullagine project centres on a 1.33 million ounce gold resource contained within a series of deposits — Golden Eagle, Bartons, Shearers, Otways, All Nations, Little Wonder, Golden Gate, Falcon, Condor, Harrier, Crow and G-Reef —that are subject to granted mining leases.
Golden Eagle is the largest deposit: about 10km south of the township of Nullagine, it contains 62 per cent of the Nullagine project’s total mineral resource inventory.
A bright future
Millennium acquired a significant package of tenements in the Nullagine area in May 2001, which were the subjects of various forms of exploration including aeromagnetic surveying, mapping, and rock chip sampling.
In March 2011 the company advised the market that it had executed a $35 million project finance agreement with BNP Paribas and National Australia Bank.
“Drawdown of funds is subject to a number of conditions including spending the necessary equity on mine development and construction,” Millennium reported at the time.
Permitting and design work for a carbon in leach (CIL) processing facility and associated infrastructure for the Golden Eagle mining lease was completed prior to the finalisation of the funding arrangement, and once funding was finalised Millennium began work on developing the project.
Shortly after the announcement of its funding arrangement, Millennium reported that a drilling program had increased the project’s ore reserves by 25 per cent – boosting the company’s initial production forecast by 25 per cent.
In May 2011, Millennium announced that it had secured an addition $10 million lease finance facility through National Australia Bank, taking its total available project finance to $45 million.
“The additional facility announced today will support the expanded scope of the Nullagine gold project following the company’s successful drilling program,” the company said in a statement.
“The confirmation of the project finance facility follows the recent rights issue which raised $23.2 million and will provide for the leasing of transportable buildings, mobile equipment and light vehicles and other elements associated with the construction and development of the Nullagine gold project.
In the same statement, Millennium announced that it had ordered long lead items for the project’s construction, including accommodation camp facilities; offices and other administration buildings; workshop and stores; and semi-autogenous (SAG)
“These items define the critical path for the construction phase of the project and the timing of the orders will ensure the 14-month development period is achievable as planned,” the company stated.
Development on site accelerated rapidly, with the structural, mechanical and plate work reaching practical completion in late July this year, along with pre-commissioning of the primary crusher facility and load out conveyor.
The project’s mining fleet was also mobilised and operational by July, with Millennium’s mining team delivering ore to the run of mine pad from the Golden Eagle pit.
In August it was reported that construction of the processing plant and infrastructure had reached an advanced stage, allowing commissioning to begin.
At the time, Millennium reported that commissioning and ore feed to the plant remained on schedule for completion the following month, and capital construction costs remained within the estimate of $87.6 million.
As expected, construction was completed on schedule, with construction crews officially transferring the process plant to Millennium’s operations team, and first ore fed into the SAG mill, on September 15.
The glow of success
On September 30, Millennium poured its maiden gold from the Nullagine project, marking the successful completion of the commissioning of the project’s processing facilities and the company’s transition to producer status.
“The commissioning phase has progressed extremely well considering first ore was fed to the SAG mill 15 days ago, with no indications as yet of any particular deficiency in design or installation that might materially affect performance going forward,” the company reported.
“The mining operation and the processing plant are now on an operational footing with the focus on settling all elements of the project into a consistent 24-hour operation at nameplate capacity.
“The primary crushing facility has been run well above design throughput levels which augers well for any future plans to increase production levels.
The SAG mill and CIL circuit are running at design throughput levels… [and] the construction crews have been demobilising and completing final clean up.”
Following the pour, Millennium chief executive Brian Rear acknowledged the momentous nature of the company’s transition to producer, attributing the success to the workers involved with the Nullagine project’s development.
“I would like to thank our dedicated employees and our contractors who have delivered a functioning mine and production facility in less than 12 months site activity to budget and on time — an exceptional effort,” he said.
“We are now focused on maintaining continuous operation of the plant and achieving our planned production objectives from October onwards.”
In its September quarterly report, Millennium stated that its focus for October was on testing all components of the Nullagine project’s mining and processing operations at their designed production levels, ahead of achieving planned production in November.
On November 6 Millennium announced that full production had been reached successfully, reporting that operations throughout October indicated that the project’s plant worked at its full designed capacity without any difficulty.
“The SAG mill ran at the design throughput rate of 189 tonnes per hour and appears capable of processing ore at a higher rate as net power draw is approximately 55 per cent of design,” the company reported.
“Gold losses to tailings remain at expected levels with indicated recoveries above 90 per cent.
“The production objectives for the two remaining months [of 2012] are based on the design criteria for the process plant and would see gold production of approximately 6000 ounces monthly, depending on the head grade milled, at
a design throughput of 125,000 tonnes per month.
“Ore supply will be sourced entirely from the Golden Eagle pit during the period. Reconciliation between the
Ore reserve block model and grade control drilling of ore blocks mined has validated both ore tonnage and grade expectations. Planned mill grade is 1.72 grams per tonne.”
Millennium reported that it expected that the “true” capacity of the Nullagine project’s processing plant would be tested leading up to December, to establish a case for possible expansion.
“The company is targeting a stage one expansion from design throughput of 1.5 million tonnes per annum to at least 1.7mtpa treated for [the 2013 financial year],” it stated.
“The studies will look at requirements to further expand production above that level. The optimal level will most likely be determined by the throughput that requires minimal capital (if any) and fully utilises the mining fleet and process equipment currently available to the operation without adding materially to current manning levels.”
Looking to the future, Millennium reported that a significant drilling program in 2013 would target increased resources and reserves at Golden Eagle, central pits including Shearers, and deposits such as Golden Gate.
“Extensive mapping during 2012 in and around these locations has yielded numerous new gold exploration targets that will be followed up to unlock the considerable geological potential of the Nullagine Goldfield,” Millennium stated.
“The programme for 2013 will also include the start of exploration on the Golden Eagle south west corridor which includes [a] joint venture with the Creasy Group where Millennium is earning a 70 per cent interest in the gold rights.
“The south west corridor project shows anomalous gold values extending two kilometres from the Golden Eagle deposit to the company’s western tenement boundary and a further five kilometres into tenements belonging to the Creasy Group. Potential for further joint venture and resource acquisition deals exist and that potential will be explored as and when the opportunity arises.”