ONE OFF THE WOOD: On the road at the RIU Syndney Resources Roundup, Integra Mining managing director Chris Cairns put aside a few minutes from his busy schedule to bring The Roadhouse up to speed on the company’s Randalls gold project.
Integra has recorded a couple of important milestones recently with the first being the production of the first ore from the Maxwells open pit. What can you tell us about that?
Maxwells is the second open pit at our Randalls gold project. It has undergone pre-stripping over the last couple of quarters and is now in full production.
Maxwells will be our main source of ore over the next two and a half years. Notwithstanding that we expect to have the Majestic open pit available and permitted and ready to mine in March.
So with the stockpile, combined with those two open pits we certainly don’t have any lack of material.
Now it’s a case of making sure we maximise our cash flow and maintain consistency of production.
You were able to bring on production at Maxwells a bit ahead of schedule, which is a big achievement in the language of any mining company. How were able to achieve that?
Maxwells was intended to be in production by June but full production was achieved in April. Really it was just that material movements were a little bit better than what we anticipated.
I think that is one of the strengths of the operation. We have had sufficiently strong cash flows that have enabled us to do a major pre-strip at Maxwells and at the same time build up a 1.8 million tonne stockpile. The invested mining cost of the stockpile alone is $60 million which could be considered foregone profit. If we stopped mining and just processed the stockpile, it would net us $100 million cash.
Is that a fair indication of the overall health of Integra’s operations at Randalls?
It is. Certainly in the context that we have strong margins and we are not existing hand to mouth in terms of just-in-time type management of delivering ore to the mill.
We have the capacity to mine the deposits quickly and more efficiently. The unit costs are commensurately lower because we are moving a lot of material within a short space of time.
But it does mean that we had to have a lot of money tied up in work early as it was always our objective to de-risk the operation.
We have 1.7 years of milling capacity sitting in front of the mill in a stockpile.
If, heaven forbid, we did experience a pit slippage or we encounter any issues that you do experience from time to time in mining, we have that very strategic buffer up our sleeve.
Let’s shift our gaze over to Cock-eyed Bob, where you recently encountered more mineralisation underground; you were aiming for it, you knew it was there, you went after it, and there it was?
The Banded Iron Formations that host the three high-grade deposits including Cock-eyed Bob have nice high grades, but are not so nicely behaved in that the grade is highly variable over short ranges so it meant we couldn’t drill them out as an underground reserve from surface.
So you had to wait until you reached them in order to do that?
It was a far more efficient and reliable proof of concept that the underground operation is viable to go in there, mine out a 50,000 tonne bulk sample put through it the mill and reconcile the amount of gold that we have got. We are confident this will result in a clear demonstration of the profitability of underground mining these deposits.
That’s not an unusual mode of operation for a gold mine?
No, particularly when you have a high proportion of coarse visible gold.
We anticipate those deposits will be producing 60 per cent plus gravity gold, just to give you an indication of how much coarse gold is in them.
There is going to be quite a lot of variation in grade and contained ounces from day to day or week to week, but over the longer term those variations should smooth out.
The underground deposits will only be providing about 10 to 20 per cent of our overall volume with the rest of the mill feed being open pit material that is more reliable in terms of grade so the overall variance is significantly muted.
The Randalls project has come a long way during the extended conversation we have had since you began working it up. That must provide a great sense of achievement?
There’s a great story behind the story as well. In 2005 we determined we needed to acquire projects to enhance the Aldiss project closer to Kalgoorlie.
We identified the Randalls assets, bought them and as we were executing the deal, at the last minute, the vendor said, ‘we have this other tenement off to the west, we’ll throw that in for free’.
We identified six possible targets and went to the market to raise $5 million. On the sixth of those six targets, drilling the fifth of five holes we hit Salt Creek, which subsequently evolved into a 400,000 ounce disseminated, dolerite-hosted gold deposit.
Without that we wouldn’t have been able to develop the project the way we have because that large volume of very reliable grade mixes so well with our much more variable high-grade deposits.
Fast forward to 2012 and drilling is still uncovering new discoveries for Integra – a case in point being the recent Imperial discovery?
It was while we were in construction at Salt Creek that we discovered the Majestic deposit, which looks like just over 100,000 ounces at just over two grams per tonne from a nice open pit.
In November last year in the vicinity of Majestic we were following up some additional targets where we started hitting some really special mineralisation and were being surprised by such intercepts as five metres at 44 grams per tonne gold and 4.5 per cent copper.
Overall my feeling is, as we know it today and we’re still drilling, it is looking anywhere around six to seven grams average grade, maybe 1.5 per cent copper.
We need to do some met-test work to ascertain whether the copper is going to affect the gold recoveries, but indications from Majestic, which does have some copper in it, are that it doesn’t have a material impact.
It seems the more you unwrap Randalls the more it keeps on being the gift that keeps giving?
People kept telling us we wouldn’t find much gold to the east of Kalgoorlie or any decent sized deposits out that way. We discovered Salt Creek.
As understanding of the area evolves we consider it to be highly prospective for some very sound and fundamental geo-scientific reasons.
You’re no longer in the position where you’re drilling the last hole on your last target using your last exploration dollar?
Now the operation has one year under its belt and is stabilising at around 1.2 million tonnes per annum, we have plenty of feed sitting in front of the mill and we’re almost debt free.
All the hard work is done; we have a strong cash flow that supports our aggressive exploration program from here on. Anything we add from here on in is pure profit with all the infrastructure in place and paid for.