KalNorth Gold Mines commences mining operations
OUT AND ABOUT: KalNorth Gold Mines recently commenced mining activities at the Lindsay’s gold mine, which is part of the company’s KalNorth Gold Field located 65 kilometres form the historic gold mining town of Kalgoorlie in Western Australia.
The mine is the first of four, including Kurnalpi, Kalpinin and Mt Jewell for a combined resource of 1.2 million ounces of gold; KalNorth intends to bring on over the next few years.
The 1,235 square kilometres of KalNorth Gold Field tenements are all 100 per cent-owned by the company.
The company’s strategy for mining its tenements could be viewed as either one of impatience or impudence, however either way it is proving effective.
Instead of putting itself through the usual protracted approach of constructing its own processing plant favoured by many of its contemporaries, KalNorth has decided it is best to just start mining.
That decision has its merits considering the mine’s proximity to the Carosue Dam processing facility of Saracen Resources.
KalNorth started mining the Parrot Feathers open put at Lindsay’s, which it anticipates to operate for 18 months delivering 440,000 tonnes of ore for 40,000 ounces of gold.
The company is to sell the mined ore at the mine gate to its neighbour Saracen, which will then process the material at the Carosue facility.
Loading the first truckload of ore bound for Carosue Dam
KalNorth has also contracted the mining and transport aspects of the operation, which it says leaves it with a predictable and fixed cost base for the entire operation while outlaying limited capital expenditure and without incurring any debt.
The seemingly rapid start-up of the Lindsay’s gold mine has been at least eight years’ in the making when the company was operating under its former name of Carrick Gold.
The company had conducted a great deal of drilling over, what is now known as, the KalNorth Gold Field during that time.
Just over two and half years ago company chairman Laurence Freedman joined the board, bringing with him a determination to get things moving.
“We decided the first thing to do was to reassess every hole that had been drilled,” Freedman told The Resources Roadhouse.
“We appointed John McKinstry as managing director and he set about that massive task.”
The reassessment of the historic drilling left the company in no doubt it had one gold mine, which quickly grew to three mines.
KalNorth then acquired the Mt Jewell project, which it considers to be a future large low-grade mining operation.
KalNorth had now identified four potential mines and had reached the point of how it was going to bring them into operation.
Freedman said he approached Mckinstry with the idea of deciding on a mine and then doing everything possible to bring it on stream.
“He said we’re going to have to raise $60 million for the mill and other infrastructure,” Freedman explained.
“I didn’t want to be calling on shareholders every six months to raise money to keep us going.
“Then it came to me that there is a better way to do it in our circumstances, and that was effectively, to rent everything.
“So we have now contracted the mining and contracted a separate group for the transport and then Saracen for the milling.”
Having the big toys in such a situation means the company processing the ore, in this case Saracen Mineral Holdings, gets to enjoy a healthy slice of the royalty pie.
However, Freedman said his company was still able to bring home a healthy wedge.
“[With the gold price] at $1600 an ounce we are making around $400 an ounce, Freedman said.
“We will, within 18 months mine and produce 40,000 ounces of gold from the Lindsay’s open pit.
“If the gold price goes to $1650…we make an extra $4 million in that 18 months.”
Freedman indicated the company was in good shape financially with around $5 million in the bank.
He said what he expects the company to do this year is to be aggressive in increasing both resources and reserves at on the KalNorth Field.
Freedman intimated the company was also close to naming which of its other three mines would be the next to be developed.
“The deal with Saracen Minerals is to process ore from Kurnalpi, Kalpini and Lindsay’s, so it will be either Kurnalpi or Kalpini.”
Disclaimer: the Roadhouse travelled to Kalgoorlie as a guest of KalNorth Gold Mines.