Harmony may restart Mt Magnet

Allan Seccombe | Mon, 17 Aug 2009 14:42
[miningmx.com] -- HARMONY Gold may spend around A$45m to bring its Mount Magnet mine in Australia back into production if a buyer can’t be found, CEO Graham Briggs said on Monday.

A year ago, Harmony had to put its mothballed Mt Magnet mine back up for sale after a A$65m deal with Australian junior Monarch Gold collapsed after that company found itself in financial difficulties and placed itself under voluntary administration.

Mt Magnet has a resource of 2.7 million oz, a 2.7 million tonne processing plant as well as tenements covering 62,000 hectares and 166 exploration license blocks.

Harmony has still not found a buyer and had to make an accounting adjustment for the asset, moving it from held for sale to continuing operations in its books.

Harmony is conducting exploration on the project and could, if no buyer is found, restart operations there.

“I believe we could do a start up programme there. It would a short life-of-mine, about five years,” Briggs said, adding drilling was underway at the prospect.

The mine could generate between 100,000 and 150,000 oz of gold a year and it would need some A$45m to bring it into production if the numbers stack up that is.

Mt Magnet is not factored into Harmony’s plans to lift output to 2.2 million ounces by 2012 from internal projects.

Having the mine in production and having done further exploration work there will make it a more attractive target for potential buyers.

At the Hidden Valley project in Papua New Guinea, where the first gold has been poured as part of commissioning, management is looking at de-bottlenecking the operation to optimise output.

Briggs reckoned output could be increased by 10% from 280,000 oz/year of gold and four million oz/year of silver. The optimisation would come at a “negligible cost”, he said.

The limit on increased mining at Hidden Valley is the restriction on tailings deposits. Harmony and its joint venture partner, Australia’s Newcrest, have a 43 million tonne facility and investigations are underway into fresh deposition sites, Briggs said.

Meanwhile, at Rand Uranium, of which Harmony owns 40%, a definitive feasibility study is due for completion at the end of calendar 2009 for a two million pounds/year uranium project. The plan is for the project to draw heavily on the Cooke tailings dump, which used to belong to Harmony, and supplement that feed from underground.

Rand Uranium is currently producing around 220,000 oz of gold at a cash cost of R185,000/kg.

Harmony had 25 safety-related stoppages during its 2009 financial year, costing it three shifts per stop on average. Mines are temporarily halted for fatal and serious accidents.

Briggs declined to put a production figure to these stoppages. The few mines working on continuous operations find it nearly impossible to make up lost time, while the other operations put in extra work over the weekend to catch up output.