Saracen Mineral Holdings Ltd.'s Thunderbox growth project is shaping up as a key chess piece in the future strategy to optimize the Western Australian gold asset hubs of its proposed A$16 billion merger with Northern Star Resources Ltd.
Saracen said Oct. 22 in its report for the first quarter of fiscal 2021 that it is on track to meet full-year guidance of 600,000 to 640,000 gold ounces at an all-in sustaining cost of A$1,300 per ounce to A$1,400/oz. Overall, the company produced 154,388 ounces at A$1,169/oz in the quarter, with Thunderbox the lowest-cost operation at A$790/oz with 44,211 ounces produced.
However, Saracen COO Simon Jessop said on an Oct. 22 analyst call that Thunderbox's all-in sustaining costs would start to rise as more of the stockpiles from Kailis and C Zone are depleted.
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| The Kalgoorlie Super Pit, 50/50 owned by Star Resources and Saracen Mineral Holdings. |
Of Saracen's other operations, its 50% stake in KCGM produced 55,190 ounces at an all in sustaining cost of A$1,423/oz.
Carosue Dam, for which UBS also sees potential for significant synergies, produced a record 54,987 ounces at an all-in sustaining cost of A$1,262/oz for the period.
Saracen sold 152,790 ounces of gold in the quarter at an average price of A$2,352/oz for sales receipts of A$359 million, with 70,800 ounces delivered into the hedge book at A$1,977/oz.
KCGM, the ex-KCGM Kalgoorlie deposits and Carosue Dam comprise the consolidated Kalgoorlie hub of the proposed merged entity, temporarily called MergeCo. Jundee, Bronzewing and Thunderbox make up the consolidated Yandal hub, while the North America hub revolves around Pogo in Alaska.
When probed during the call on MergeCo balancing potential capital and operational expenditure trade-offs in the Yandal and Kalgoorlie hubs, particularly in relation to potential benefits of trucking ore to different plants in the area, Saracen Managing Director Raleigh Finlayson singled out Thunderbox as key to any expansion in the region.
While MergeCo will look to optimize all the geological belts across its North American and Western Australian hubs, Finlayson told the call that Kalgoorlie and Yandal "stand out the most with so much optionality," adding that "it's not lost on both sides [of MergeCo] that Thunderbox is a highly efficient plant" and one of the state's lowest-unit-cost processing plants.
"So any expansion we put into there is going to have an order of magnitude of benefits," Finlayson said. "That's the obvious one that stands out as an optionality around the KCGM plant, which has been designed for Fimiston ore, so refractory ore."
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"So again, there's optionality around that to be able to maybe introduce free milling ore into that large-scale plant. So they are the two obvious high-priority targets for us," Finlayson said, also noting that the KCGM plant "has never had one stone of material" processed in its 30-year history that that did not come from Mt Charlotte.
Jessop said Saracen would discuss with Northern Star whether Bronzewing ore heads north to Jundee or south to an expanded scenario at Thunderbox and said the companies are looking at a crushing circuit upgrade for the Thunderbox mill expansion, "but it could be a crushing circuit and milling upgrades."
This work will help understand the optimum milling capacity or scenario for the Yandal district, Jessop said.
Saracen also announced that the C-zone pit at Thunderbox was finished on time and budget during the quarter and that the D Zone open pit mining ramped up while underground stoping successfully began in the underground mine the company is now calling Thunderground, which will continue to be ramped up over the next three years.
"We're also continuing our progress on the Thunderbox mill expansion but will now also consider the appropriate size of Thunderbox comes into the handle production center" after the merger, Finlayson said.
Northern Star Executive Chairman Bill Beament said in an Oct. 6 merger call that with two sulfide plants and a number of free milling circuits and 19 million tonnes of installed capacity in the region, Carosue Dam offers a flexibility option as a "very low-cost plant [with] great recoveries," though the current 83% rate "should be" in the mid-90s.