ASX-listed gold junior, Vantage Goldfields, is showcasing its flexible business structure, temporarily adjusting its growth strategy and validating a cost effective BIOX-alternative refractory ore process writesLaura Cornish.
Like its neighbour Pan African Resources, Vantage Goldfields continues to deliver quality ounces from one of South Africa’s oldest goldfields: the Barberton Greenstone Belt. Its two primary assets, Lily andBarbrook, hold sufficient resources to see the company reach its mid-term growth target of 100 000 ozpa (35 000 ozpa from Lily and 65 000 ozpa from Barbrook).
“We are, however, currently contending with the sudden drop in the gold price. This means tightening our belts slightly and holding back on our growth strategy, for now,” says the CEO, Mike McChesney. “We will focus exclusively on driving costs down and generating as much cash flow as possible by maximising on gold production from our operations.” As such, Vantage Goldfields expects to deliver between 40 000 and 45 000 ozpa for the time being.
McChesney is not surprised to see a correction in the gold price but is surprised by the magnitude. The weakening of the rand, however, means that Vantage Goldfields can, in fact, deliver on its budgeted targets. “Our business is sustainable if the market stays like this,” he adds.
Lily
McChesney says that, although the company ended 2012 on a high, the start to 2013 was not as fortunate. “We suffered an underground pillar collapse in the first quarter, which has been quite a set-back to operations. Lily currently contributes 80% of our total gold production. The rock failure in a primary stope was due to localised faulted ground, which we managed to mine through satisfactorily on other levels. Despite our care in mining the weak area, the pillar still collapsed. Fortunately, we did not have any injuries, only the loss of a remote loader.”
After a three-month period of reduced production due to the loss of the stope, McChesney says Lily is making a good recovery and production levels are, again, climbing steadily. “We should achieve between 25 000 and 30 000 oz from Lily this year, not quite at her full production capabilities (about 35 000 ozpa), but nearly.”
Lily is a shallow mine – only 200 m below surface at present, which will extend to 300 m over the next year and ultimately to 500 m. It has a wide ore body and, at full production, will be a relatively low cost operation with an expected 11-year lifespan remaining.
Barbrook
The real long-term expansion and growth for Vantage Goldfields lies in the Barbrook Mines Complex(BMC).
The BMC’s ore bodies are collectively deemed to be of sufficiently high grade and contain a substantial gold resource to provide the driving force for Vantage’s production expansion. The total JORC-compliant mineral resources (measured, indicated and inferred) for the known ore bodies is 14.52 Mt at 4.6 g/t. This implies total contained gold in the BMC’s mineral resources of just over 2.1 Moz. Small-scale production from the Taylors ore body within the BMC was initiated in May 2011. This is only the first stage of the company’s longer term production growth plans. The existing ore reserves at Taylors deliver between 7 000 and 10 000 ozpa of gold, which will be depleted at the end of 2013.
The proposed Barbrook Stage 2 expansion entails pushing the mine’s production over the 50 000 ozpa mark. This includes upgrading the status of mineral resources to ore reserves below the current 10 Level access adit at Taylors and determining the most viable processing option. “For now, we are cutting back on the Stage 2 bankable feasibility study to help preserve cash flow. It has, however, delivered great results thus far.”
The underground BFS diamond drilling programme, designed to upgrade existing JORC mineral resources in the Taylors ore body below the adit on Level 10, is however not stopping all together. The drilling is targeting depth extensions of known mineralisation in an area where no previous mining has taken place.
Historical and current mining of the Taylors ore body has been confined to operations above 10 Level. The drilling is taking place from the adit on 10 Level, which is the main production haulage for the mining currently taking place in the Taylors mine (Barbrook Phase 1). Three underground diamond drill rigs have been used to date in this programme.
At the end of May 2013, a total of 5 837 m had been drilled from a planned 8 000 m programme. The drilling into existing indicated and inferred resources to a vertical depth of 200 m below 10 Level is to provide greater confidence in the ore body modelling in order to support the envisaged mine plan for the Barbrook Stage 2 expansion.
The company is encouraged by the better than expected grades and widths exposed in the recently drilled primary and secondary deflection holes. In keeping with the company’s recently introduced plans to lower costs, the rate of BFS drilling is being reduced by utilising one rig, instead of three. This will result in the drilling programme taking slightly longer to complete.
Although the Barbrook ore bodies are recognised for their ‘double refractory’ nature, Vantage Goldfields has revealed that it may be able to leach the gold successfully without using the costlyBIOX process. “This does not mean we are excluding the BIOX option, but are evaluating and testing other options as well,” McChesney points out.
The company has been evaluating process options ever since it terminated its off-take agreement to sell a high grade gold concentrate from Taylors to minerals trader, Mine2Market.
McChesney reveals that treating the concentrate through a direct carbon-in-leach (CIL) process is delivering satisfactory grade recoveries. Upfront laboratory test work confirmed that it can successfully achieve recoveries of about 60% through direct leaching of lower grade ores and as much as 75% on high grade ores. “Based on this, we have re-commissioned five redundant 20 m³ CIL tanks, which will leach the Taylors ore as an entirely separate circuit. June represents our first month of CIL production, which if as successful as we predict will possibly mark a major milestone in Barbrook’sfuture and possibly also the future of refractory ore processing.”
In addition to this breakthrough, McChesney believes there are options available that could improve leached recovery grades further. A Gold Fields licenced technology known as HiTECC (high temperature caustic conditioning) – designed to strip gold from natural carbonaceous components in the ore before it is discarded as tails – was incorporated post bio-oxidation testing. This saw overall grades recovered in test work increase from 80% to 90%.
If further test work on the leaching process confirms that HiTECC can significantly increase overall recoveries at Barbrook, it is possible that the Stage 2 expansion could proceed without the need to introduce a BIOX pre-oxidation step in the metallurgical circuit. This would offer a significantly lower capital cost option for expansion and a potentially simpler flow sheet.
“Considering the current status of minerals regulations in South Africa, which is making it extremely difficult for a company of our size to raise money for its expansion projects, the benefits of such an option is multi-tiered.”
Labour relations
Vantage Goldfields has escaped the illegal strikes that have plagued the industry recently. “We dealt with this issue about three years ago and have developed a strong relationship with AMCU, which represents 90% of our workforce,” McChesney reveals.
Vantage Goldfields has already signed its wage agreement for this year, which will be implemented from July, and does not anticipate any labour problems. The company employs about 600 people and approximately 200 contractors. Most of its workforce is drawn from the local community.
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