Until recently, Millennium Minerals (ASX:MOY) was producing about 75,000-80,000oz a year from the shallow, easy-to-treat oxide resources at its Nullagine gold project in Western Australia.

But Millennium has been working to bring its big, but deeper and difficult-to-treat, sulphide resources into production.

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These operational transitions can often be tough. For Millennium, there have been delays to the ramp-up of underground mining and commissioning of the new Stage 1 processing plant.

This saw the company revise 2019 production guidance from between 90,000-100,000oz to 80,000-90,000oz at a higher all-in sustaining cost of between $1370/oz-$1450/oz.

(Which at current prices above $2000/oz, still gives Millennium at least $550/oz clear profit.)

But still, these issues saw the share price drop from about 23c in February to a touch over 5.5c by mid-June.

Today, some good news; the plant expansion has now delivered first gold from sulphide ore. Everything is going great guns, the company says.

Concentrator and mill area during final stages of construction.

The company says the underground mine and expanded sulphide circuit was performing “in line with or exceeding feasibility expectations”.

This is expected to underpin a strong boost to gold production and grades in the second half of the year, as the mine schedule shifts towards high-grade sulphide deposits.

This milestone saw the share price jump almost 30 per cent in morning trade on Wednesday.

Millennium chief executive Peter Cash says the past 14 months had been a very capital-intensive period for the company, which impacted production and cashflow – but that’s about to change.

“We are now moving into a period where we expect to see both production and cash flow increase strongly, with an expected return to positive cash flow by the end of July,” he says.

This processing plant upgrade is also expected to have a positive impact on how much gold is recovered from both sulphide and oxide ore sources.

“To date, the Stage 1 upgrade has enabled us to recover up to 30 per cent of the residual gold from our lower grade tailings, with the uplift likely to be much greater from the higher-grade sulphide ores,” says Cash.

“We are also seeing a positive impact on recoveries from our traditional oxide ore feed.”

And a large percentage of the company’s gold hedging contracts – which are great when prices are falling, not so much when they’re going up – will be closed out by the end of this month.

“This will reduce the company’s hedge book to just 39,000oz at an average price of $1,796 per ounce, meaning it can take further advantage of the current high spot bullion price,” says Cash.


In other ASX gold news today:

Freshly minted producer Laneway Resources (ASX:LNY) is now making cash from its Agate Creek project “aided by continuing high prices for AUD denominated gold”, it says. Laneway produced 3,493oz from the small but high-grade Agate Creek gold mine in May, but the company is using third party processing facilities, which means its share was 1766oz worth about $3.23 million.

The cash will help the miner fund a planned resource expansion at Agate Creek, it says. This mining campaign will only continue for another 7-8 weeks, but planning is “well advanced” for further drilling programs at Agate Creek with an objective of adding to the existing resource.

Laneway’s share price was down 10 per cent in morning trade – but over the last 12 months it has increased over 400 per cent.