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Mining
Everyone knows the Seinfeld episode The Dealership, one of the few iconic instalments from its tired and leggy final season, where Jerry’s eccentric neighbour Kramer test drives a car to see how long it can survive below the red empty line.
It’s a universal experience of the poor, thrifty and daring, and an accidental metaphor for the legendary show’s sputtering end.
Over in WA’s Great Sandy Desert, Newcrest’s (ASX:NCM) Telfer gold and copper mine’s own journey below the red E line continues, with a new $214 million cutback to extend its life out to early FY2025.
The West Dome Stage 8 cutback is located next to the Stage 2 and Stage 5 pits, with first ore expected this quarter, with the development capex also including mine operating costs and $73m of production stripping.
These incremental expansions have been ticked off for years, sustaining the life of the operations which have at times been extremely marginal.
Located in the Paterson Province, the ageing and low grade mine was the epicentre of the gold industry’s successful lobbying campaign to rebuke WA’s McGowan Government’s attempt to claw a few hundred million from the then resurgent sector via a 2017 royalty hike.
It has also been a source of fascination.
The deposit, discovered in the 1970s, was the focus of a dispute between Newmont Mining and mercurial French prospector Jean-Paul Turcaud, who died in his homeland two years ago without official recognition of his claim.
Now it is the beachhead for a new gold and copper district in the Paterson province, with the proposed development of the Havieron mine utilising its existing processing infrastructure.
Telfer had a decent run in FY22, generating 407,550oz of gold and 13,904t of copper at US$1388/oz costs, a margin of US$409/oz. But its September quarter was weak, delivering 84,372oz Au and 2962t Cu at US$1895/oz, a negative margins of US$197/oz.
But smoothing that path to producing at Havieron — 45km east of Telfer and one of two major gold-copper finds in the Paterson in recent years alongside Rio Tinto’s (ASX:RIO) Winu — is critical.
Newcrest MD Sandeep Biswas said a number of other expansion options exist at the massive project as well.
“We are delighted to further extend the life of our Telfer operation, highlighting our ability to maximise the full potential of our assets through our strong technical expertise,” he said.
“Telfer is strategically positioned in the highly prospective Paterson Province and we are continuing to progress several potential options to expand the resource base in the open pits and underground to unlock additional value.”
Telfer is expected to deliver 355-405,000oz in FY23. The Havieron (70-30 owned with London-listed junior Greatland Gold) feasibility study has been delayed beyond the end of 2022.
But a 2021 PFS previously outlined a low cost operation at 160,000ozpa and all in sustaining costs of US$743/oz over an initial 9 year mine life.
The feasibility study is expected to assess whether its processing rate can be upped from 2Mtpa to 3Mtpa and beyond.
The initial wave of excitement from rumours of China winding back its hardline Covid restrictions has dies down overnight, with base metals trending lower, though at US$86.20/t, Singapore 62% Fe iron ore futures are looking more palatable.
Materials stocks are down 0.2% with the iron ore majors tripping into the red.
But lithium stocks are again holding the torch, with Mineral Resources (ASX:MIN) (currently at a record high), Pilbara Minerals (ASX:PLS), IGO (ASX:IGO) and Allkem (ASX:AKE) all among the top performers.
Mid-cap battery metals plays also saw support, with Core Lithium (ASX:CXO), Nickel Industries (ASX:NIC), Liontown Resources (ASX:LTR) and Vulcan Energy (ASX:VUL) higher.
Northern Star (ASX:NST) gained with gold prices steady overnight, currently buying US$1673/oz ($2585/oz).
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