May/June 2013 - The ASIA Miner

Mining Success Stories
Matthew Gill says, “In 2008/09 Castlemaine
Goldfields was one of hundreds of
junior mining companies competing for equity
funding but complicated by an historic
perception among some investors and analysts
that successful gold mining in the
modern era will never work in Central Victoria.
This was partly environmental (‘green
tape’) but primarily due to the narrow vein,
nuggetty geology, which presents difficulties
in drilling out to JORC standard due to the
large amount of drilling needed as well as
the volatility and variability of quartz mineralization
and grades. History backs up the
perception with Bendigo starting and stopping
several times while the Ballarat operation
took 20 years of gestation and lots of
money to get anywhere near production
and then it was sold to Lihir Gold which put
more into the project but didn’t proceed.”
Enter Lihir Gold
“The company Ballarat Goldfields was floated
in the 1980s, consolidated the entire goldfield
under one owner and tried putting in shafts
to access the ore but ran into technical issues
which consumed a lot of time and money,”
he says. “They finally put in a decline but got
to a point in 2007 where funding to develop
further was beyond its capacity. Then Lihir
entered the story. It was a successful company,
annually producing 800,000 ounces on
Lihir Island in Papua New Guinea and looking
to diversify. Lihir paid around $350 million
for the asset in a share swap arrangement
and then spent $400 million from 2007 to
2009, building a large office complex, 500 vehicle
car park, twin declines, a 600,000
tonne/annum capacity mill and tailings dam,
and buying equipment, but then realized it
wasn’t going to deliver the 200,000 ounces
of gold/annum ‘tier one’ asset it hoped for.
“Lihir bought a vision that it was a 200,000
ounce/annum, 20-year mine life ore body
with a JORC inferred resource of 1.5 million
ounces and took two years developing it,
spending accordingly. The geology was more
complex and in my opinion it was always
going to be a challenge as a large-scale mining
operation.
“The old adage that grade is king is true
here and the cost to move a tonne of rock in
this environment is expensive, particularly if
there is no gold in it. The Ballarat goldfields’
average historical yield is around 8 or 9
grams/tonne and in 2012 Castlemaine’s yield
from Ballarat was around 7.4 grams/tonne
Drilling and mining operations are taking place about 600 metres below Ballarat and about four blocks from the centre of the city.
The mill is processing 200,000 tonnes annually for about 50,000 ounces of gold, and has plenty of spare capacity.
LionGold’s group chief operating officer Matthew Gill and non-executive independent director Gary Scanlan at
the Ballarat mine’s first gold pour in September 2011.
May/June 2013 | ASIA Miner | 5