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RNC Minerals says HGO acquisition is reducing milling costs at Beta Hunt gold mine by 25%.

RNC Minerals Corp (TSE:RNX) said the benefits expected from buying the Higginsville Gold Operations (HGO) in Australia were now being realized, including a 25% reduction in milling costs for its Beta Hunt mine.

As reported last month, the mill was set to significantly reduce processing costs, while HGO also includes a 367,000 ounce historical reserve within a 1.2 million ounce historical measured and indicated (M&I) gold resource on a 386 sq km land package in the Kalgoorlie gold region.

READ: RNC Minerals closes deal for Higginsville gold operation

Processing costs for Beta Hunt ore are now around 25% per tonne lower than under previous third-party tolling arrangements thanks to the mill, the miner noted.

By way of example, the company said that during the week of July 15 this year, it processed 21,000 tonnes of previously stockpiled ore through the mill, eliminating third-party tolling fees of A$45 per dry metric tonne, which resulted in additional revenue of A$0.9 million.

Meanwhile, gold recoveries at Beta Hunt - processed at HGO and third-party facilities - improved to 93% in the second quarter this year, compared to 91% in the same period last year.

"I am pleased with progress to-date toward a fully integrated Beta Hunt-Higginsville gold operation. The combination of the Higginsville mill with the production potential of our Beta Hunt mine is expected to provide significant processing flexibility and synergies, including a 25% cost saving per tonne (or in excess of US$100/oz) compared to prior toll milling arrangements," said Paul Andre Huet, chairman and CEO at RNC.

"While gold production during the second quarter of 2019 remained lower as we continue to ramp up production following the temporary shutdown of mining activities at Beta Hunt, we are also on track to maintain a production rate of 40-45 kt per month in the third quarter of 2019 while at the same time increasing capital development to prepare the next generation of stope production areas."

"This combined with our new milling cost savings and expanded resource base announced during the second quarter, positions RNC for a stronger second half of 2019," he added.

RNC also said that development at the Baloo Stage I open pit at the HGO was continuing with completion of the haul road and progress on overburden stripping.

The Baloo Stage I pit is expected to provide the HGO plant with a further 30,000 tonnes per month from start-up until year end.

The firm said as well that production at Beta Hunt has been progressively ramping up, reaching 40 to 45,000 tonnes per month.

Work to convert the recently reported Western Flanks resource into a mineable reserve is expected to be completed by mid-September, the firm added.

Beta Hunt 2Q production

In terms of second quarter production details at Beta Hunt, the firm said 89,000 tonnes of material was milled at an average grade of 3.17 grammes per ton to produce 9,100 ounces of gold, a 23% decrease from the second quarter of 2018.

Milling grades were 2% lower compared to the second quarter of 2019 as lower grade stockpiled material from the HGO operation was processed during the quarter.

RNC owns 100% of the producing Beta Hunt gold mine in Western Australia where a significant high-grade gold discovery - "Father's Day Vein" - was made.

The resource potential is underpinned by multiple gold shears with gold intersections across a 4 km strike length which remain open in multiple directions adjacent to an existing 5 km ramp network.

Shares were unchanged in Toronto at C$0.52 each.

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Publication:Mining Capital
Date:Jul 30, 2019
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