DESPITE the tough economic conditions of the past year, Independence Group has ended 2012 on a high, and will continue to transform itself from a junior explorer to a successful multi-commodity producer in the coming year.
Company highlights during 2012 have included the announcement of record production levels at the flagship Long Nickel mine; significant construction headway at the Tropicana gold project; and completion of a $115.5 million equity raising.
Furthermore, the company expects to more than double its revenue – which was $216.6 million for the 2011 to 2012 financial year – once production begins at Tropicana, 330km northeast of Kalgoorlie, towards the end of next year.
In the company’s 2012 annual report, Independence Group chairman Peter Bilbe said 2013 was shaping up to be an exciting year for the company as it focussed on completing Tropicana, progressing its other developing projects, and continuing its innovative exploration activities.
Long Nickel mine
Independence Group’s subsidiary Lightning Nickel acquired the Long Nickel mine from WMC Resources, now BHP Billiton Nickel West, in September 2002 for $15 million.
The mine, near Kambalda in WA, was successfully commissioned a month later, and reserves currently stand at 41,900t of nickel with 76,600t of nickel resource.
The company has continued to operate the mine above expectations: in the 2011 to 2012 financial year, Long Nickel produced a record 9995t of contained nickel (up from 9753t in 2011) sourced from the Long, Victor South, McLeay and Moran ore bodies.
The Moran deposit remains open to the southeast while both the McLeay and Long North ore bodies remain open along strike.
Mining methods at Long Nickel range from long-hole stoping with mullock or paste backfill and mechanised jumbo flat-back stoping to hand-held mining, which is used to extract blocks in narrow stopes not suitable for mechanisation. Wherever
necessary, non-entry mechanised mining methods are employed for safety reasons.
Exploration potential at Long Nickel remains high, and during the next 12 months Independence Group will spend $7.3 million on drilling programs at Moran, Long North and McLeay.
The company will also continue to test for new deposits and extensions to existing mines in the tenement area. For the 2012 to 2013 financial year,
Independence Group reported that it anticipated that between 260,000t and 280,000t of ore containing 9200t to 9600t of contained nickel would be produced from the Long Nickel mine. Jaguar/Bentley project
In the June quarter of 2011, Independence Group acquired the Jaguar/Bentley copper-zinc-silver operation, 60km north of Leonora in WA, via an off-market takeover of Jabiru Metals.
The project comprises the Jaguar and Bentley underground mines and processing infrastructure.
The Jaguar concentrator produces copper and zinc concentrates that are transported to Geraldton Port for export.
In the 2011 to 2012 financial year, the Jaguar/Bentley operation produced 7257t of contained copper metal, 16,569t of contained zinc metal and 577,726oz of contained silver metal sourced from both underground mines.
Exploration at Jaguar/Bentley during the year concentrated on the discovery of further deposits along a 50km-long zone.
To date, three high-grade copperzinc- silver-gold deposits have been discovered and mined in the project area, and the integration of geological, geochemical and spectral data has defined a number of high-priority targets.
Drilling during the next 12 months will explore for high-grade massive copper-zinc sulphides.
Given current low metals prices and the strong Australian dollar, a new selective mining plan was developed at the operation to maximise profits.
The plan will see the company focus on a lower targeted mining rate of about 450,000t per annum in lieu of the previous target of 600,000tpa. Independence Group recently announced a resource and reserve upgrade at Jaguar/Bentley: they now
stand at 5 million tonnes and 2.4mt respectively. Throughout the 2012 to 2013 financial year, the company forecast that between 430,000t and 450,000t of ore would be mined.
Tropicana gold joint venture
The Tropicana gold project is a joint venture between AngloGold Ashanti Australia (70 per cent) and Independence Group (30 per cent). AngloGold Ashanti discovered the Tropicana, Havana and Boston Shaker gold deposits within the 13,000 square kilometre project area in 2005, 2006 and 2009 respectively, and a bankable feasibility study (BFS) has since been completed.
Construction of the Tropicana open-cut mine began in early 2011,
and first gold production is expectedin the December quarter of 2013 During the first three years of production, the BFS anticipated that the project would produce between 470,000oz and 490,000oz of gold per annum (on a 100 per cent project
basis) with cash costs of between $580 and $600 per ounce.
Resources at Tropicana currently stand at 6.41 million ounces of contained gold, with Independence Group’s share totalling 1.9moz.
The equity raising, completed in January through a placement and share purchase plan, added to Independence Group’s cash reserves for Tropicana construction costs.
Milestones at Tropicana during the 2011 to 2012 financial year included completion of both the 220km access road to the site and its airstrip, as well as commencement of the treatment plant and supporting infrastructure.
In October, the company announcedinitial significant high-grade mineralisation results from a drilling program currently being completed at the Havana deposit. Results included 18m grading 5.4 grams per tonne of gold and 24m grading 2.4g/t of gold.
Further underground potential exists beneath the Boston Shaker, Tropicana and Havana South open-cut mines, and drilling is planned to test these targets with the aim to increase resources and reserves.
These programs will be funded as part of a $13 million brownfield exploration budget.
Pit design optimisations will continue throughout the year, with a pre-feasibility study assessing the possibility of an underground mine expected to be completed in 2013.
Stockman project
The Stockman project encompasses two copper-lead-silver-gold deposits, 300km northeast of Melbourne, which were discovered in 1978 by Western Mining and acquired by Jabiru – now a wholly-owned subsidiary of Independence Group – in 2006.
The project involves concurrent development of two underground mines – Wilga and Currawong – to feed a central 1 million tonnes per annum processing plant that could potentially produce about 150,000tpa of copper and zinc concentrates
during an eight-year project life.
Resources at the Currawong deposit currently total 10mt grading 2 per cent copper, 4 per cent zinc, 40g/t of silver and 1.1g/t of gold, while resources at the Wilga deposit total 3.6mt grading 2.3 per cent copper, 4.9 per cent zinc, 32g/t of silver and 0.5g/t of gold.
A feasibility study is currently under way for both deposits, in conjunction with state and federal approval processes.
Independence is continuing exploration near the Currawong and Wilga deposits, and regionally across 130sqkm of its tenements.
Karlawinda gold project
At the Karlawinda gold project, 65km southeast of Newman in WA, a scoping study is examining the concept of a relatively large but low-grade open pit mine based at the Bibra deposit, supplying between 2mtpa and 3mtpa of ore.
Once the scoping study is completed, Independence Group will assess whether to advance to a pre-feasibility study.
During the year, a reverse circulation and diamond drilling program was completed to further define the resource at Bibra, which now stands at 674,300oz of contained gold.
The company also plans to test potential extensions to the Bibra gold resource and new gold targets within the Karlawinda project area during the next 12 months.
During the 2011 to 2012 financial year, Independence Group spent $57.2 million on exploration, concentrating on drill testing at the Stockman project and upgrading resources at the Tropicana and Karlawinda projects.
The company also explored targets generated from the De Beers data base: a non-diamond specific exploration record that was established by De Beers Australia Exploration and represents more than 30 years of exploration.
To date, six wholly-owned gold-silvercopper- zinc-vanadium and tin projects, and numerous targets, have been generated from the De Beers database.
Review and analysis of the sample library continues to produce new goals and opportunities for follow up.
The key assets of the database are the 292,000 surface geochemical samples and associated analytical results covering many mineral prospective regions throughout Australia.
Independence Group has allocated a combined budget of $17.7 million for exploration programs throughout 2013, excluding Tropicana exploration contributions and the company’s in-mine programs.