Gold mine takeover
Wednesday, 15th November, 2017
By Andrew Robertson
Havilah Resources is to give full control of the Portia gold mine to partner Consolidated Mining and Civil (CMC), which says it could prolong the life of the operation.
The two companies have reached agreement to restructure the mining and processing agreement that was struck in 2015, which saw them join forces to develop the small open pit mine in South Australia.
Havilah says the change, which will take effect tomorrow, would allow it to focus on progressing other projects in its pipeline, including the nearby Kalkaroo copper-gold deposit.
Under the current deal, CMC carries out the mining work and Havilah contributes towards the cost of processing the material, with revenue split equally.
The new agreement will see CMC receive 85 per cent of all revenue from the sale of gold and cover all mining, processing and capital expenses.
Havilah, which will retain ownership of the processing plant and continue to offer specialised technical assistance, will receive 15 per cent of all revenue.
Production at Portia has fallen significantly this year. It virtually halved in July and was down 18 per cent for the previous three months.
Havilah’s managing director Chris Giles blamed the fall on the inconsistent nature of the deposit which he described as “very fickle”.
Handing over the day-to-day control of the mine to CMC would allow it to respond more quickly to variations in ore grade and potentially extract more ounces of gold from the mine, according to Havilah.
“CMC have proven themselves to be very competent mine and plant operators and we have no hesitation in leaving the day to day operations in their capable hands,” managing director Chris Giles said.
“Being in full control we expect CMC will be able to recover the remaining oxidised gold ore more efficiently from the Portia open pit as well as from the tailings, once permitted, for the benefit of both parties.
“As a consequence, we expect to receive a steady gold revenue stream from Portia potentially for the next twelve months and beyond, with no risk of outgoing cash flow exposure.
“For us it also means that we can now focus on executing of our Copper Growth Strategy, which represents the next important development phase for Havilah,” he said.
Dr Giles said the new arrangement was a “logical progression” from the original revenue sharing arrangement.
CMC’s managing director Steve Radford said his company also had the potential to now reduce and consolidate operating costs at the mine.
“This means that we have the prospect of not only planning and mining the Portia pit to a much deeper and larger profile, but it will give us opportunity to potentially process already mined previously un-economical lower grade ore as well as re-processing the tailings, subject to permitting, which have been kept separate,” he said.
The company planned to re-design the process plant and make modifications to accommodate the re-treatment of the Portia tailings and the same process could be applied to concentrate from the adjacent North Portia deposit, when it comes online.
“We look forward to the prospect of further opportunities with Havilah as it continues to grow its business,” Mr Radford said.
“CMC is committed to Portia and also to the development of North Portia with Havilah.”