Evolution approves Cowal life extension project

PERTH (miningweekly.com) – Gold miner Evolution Mining has approved developments at its Cowal mine, in New South Wales, which will increase the mine life by eight years to 2032.

The expansion project earlier this month received New South Wales regulatory approvals.

The mine life extension project will see production increasing by 1.2-million ounces, with the dual leach project to entail implementation of an additional leaching circuit designed to recover gold from the flotation tailings stream.

Evolution noted that detailed metallurgical testwork has verified that overall plant recovery can be increased by 4% to 6%, which could increase gold production by between 10 000 oz/y and 14 000 oz/y.

Between A$35-million and A$40-million will be spent over 2018 and 2019, with commissioning of the project expected in early 2019.

“Securing the mine life of this high-quality cornerstone asset for at least 15 years provides a strong platform to continue to grow our business,” said Evolution executive chairperson Jake Klein.

“Cowal has generated a net mine cash flow of A$253-million, representing 36% of the A$703-million purchase price, in the six quarters since Evolution acquired it in July 2015. Over that period, ore reserves have also increased by 2.28-million gold ounces, or 145%.”

The ore reserve is currently estimated at 116.7-million tonnes, at 0.85 g/t gold for 3.2-million ounces, while the resource is estimated at 177.6-million tonnes, at 0.88 g/t gold for just over five-million ounces.

The implementation of the dual leach project will also enable the incremental cotreatment of existing stockpiles of high-grade oxide ore reserves.

While studies are ongoing, this has the potential to bring forward an additional 10 000 oz/y to 12 000 oz/y of gold production from 2020 onward. However, a further modification to the mining permit will be required before this can be implemented.

Further, throughput improvements from the current 7.5-million-tonne-a-year to 9.5-million-tonne-a-year are also being assessed as an opportunity to deliver economies of scale, bring forward the treatment of low-grade stockpiles and reduce ore rehandling. Klein said this would involve the introduction of a secondary crusher to the plant.

This project was currently in the scoping phase and would also require a modification of the current mining permit.

Meanwhile, Evolution on Thursday reported a 26% increase in underlying net profit for the six months to December 31, compared with the previous corresponding period, with record underlying net profit recorded at A$136.3-million.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) were also up by 21% to A$345.3-million, while revenue increased by 17% to A$711.2-million.

During the interim period, group gold production increased by 12% to 423 120 oz, while average C1 cash costs were reported at A$667/oz, compared with the A$700/oz reported in the previous corresponding period.

Gold production during the period under review increased on the back of the acquisition of the Ernest Henry mine, in Queensland, which delivered 14 257 oz of gold in the December quarter.

“The record half-year underlying net profit and an Ebitda margin of 50% is a clear reflection of the quality of Evolution’s asset portfolio and consistent operational performance,” Klein said on Thursday.

“With Ernest Henry only contributing for two months of the [six months to] December, we expect further improvement once the full impact of this asset on group costs and cash flow becomes evident.”