Open-pit mining at Tomingley Gold Operations (TGO) will be shut down in about a year.
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Alkane Resources’ $120 million gold mine became operational in January 2014.
This week it reported that the mine only ever had a short “open-pit life”.
Currently, the company is drilling under one of the mine’s four deposits with a view to launching an underground operation.
Managing director Ian Chalmers said there was a “reasonable probability” of proceeding to underground mining at the deposit called Wyoming One.
“This also will depend on the gold price and that the feasibility stacks up at the end of the year,” he said.
“The base case for the Wyoming One deposit is about 2.5 years, but I also believe that if we can get up and running the life could well extend for several more years.”
Alkane Resources is also exploring for gold “around Tomingley and down to Peak Hill”.
“Any minable ore would be transported to TGO for processing,” Mr Chalmers said.
“We are also looking at the possibility of going underground at Peak Hill and transporting any ore from there to TGO.”
Mr Chalmers confirmed open-pit mining would end in the third quarter of 2018.
“At start-up we stated that TGO had a 4.5 year open-pit life, and this is exactly what it will be,” he said.
“If the gold price was higher and the highway was not where it is, we may have been able to extend open- pit mining.”
The managing director expects the TGO’s open-cut mining phase to recover the capital cost of the mine. “The final result will improve if we are able to do the underground,” he said.
“On a non-financial basis, TGO has been very worthwhile for Alkane to set up all the internal systems for the operation – personnel, environmental management, accounting and operating credibility. The latter is very important when we are talking to international companies about starting the Dubbo Project.”
TGO, about 50 kilometres south-west of Dubbo, produces between 50,000 and 70,000 ounces of gold per year and currently employs 169 people “including casuals”.