Thursday, 8th January, 2015
By Andrew Robertson
A “fortuitous” deal struck between junior explorer Havilah Resources and local businessman Steve Radford will see a job-creating gold mine come into operation next year.
Havilah yesterday announced it had secured a mining contractor for its wholly-owned Portia gold deposit which sits about 100km northwest of Broken Hill, in South Australia.
The small open cut mine is expected to yield some 50,000 ounces of gold over its 18 month life, delivering an estimated $80 million in revenue.
But in what Havilah’s managing director Chris Giles has described as a “very unconventional” model, the contractor, Consolidated Mining and Civil (CMC), will mine the deposit in return for an equal share of the profits.
“It’s great for us because the truth is we’re a tiny little company, we’ve got a very small gold deposit (and) no-one wants to know about you at the moment, especially banks,” Dr Giles told the BDT yesterday.
“It’s a testament to CMC that they’re prepared to take on the risk of doing all the mining there, shifting the overburden in exchange for a share in the profits.”
The deal means Havilah will not have to embark on a capital raising to bring the mine into production.
Dr Giles said once the gold ore at Portia was brought to the surface Havilah, through its subsidiary Benagerie Gold, would be responsible for the smelting and producing ingots, which will be done on site.
CMC, which is owned and operated by local businessman Steve Radford, is also stumping up almost $2 million for a rehabilitation bond, a condition of the mining approval.
The company plans to start digging in early March, according to Dr Giles, who said it would take about 12 months to reach the gold which was under about 60 metres of Namba clay overburden.
“So March (or) June quarter next year they should start delivering the ore to the surface which will then be processed.”
Dr Giles said it would then only take about six months to mine all of the gold.
“But there’s a good possibility that we could find more gold underneath in the bedrock, in which case we’d be spending a bit more time there.”
About 50 people are expected to be employed; the bulk of them by CMC, which already has mining contracts with local mineral sands miner Cristal.
Dr Giles described the partnership with CMC as “fortuitous”.
“He (Steve Radford) was introducing someone else with regard to one of our other projects ... and I just happened to say ... we have this Portia gold mine and we’d really like to develop it and maybe you might like to look at the opportunity of a profit sharing arrangement.
“They looked at it very seriously from all different angles and assessed the risks and decided it was a good business proposition for them to be involved and we’re very glad they did.
“We were really in a difficult spot as a junior company trying to develop a small gold mine, so we’re actually very grateful. CMC were prepared to see the opportunity and take the risk to help us get the thing developed.”
Dr Giles said the new gold mine, which will be the first in the area since White Dam, was also good for Broken Hill.
“It is a bit of unknown territory; there’s probably going to be challenges ... but CMC have had a lot of experience mining this sort of material so it doesn’t frighten them.”