Special Report: Wiluna Mining’s turnaround strategy continues to bear fruit with the company ramping up production while slashing costs.

Production for the September quarter rose 18 per cent over the previous quarter to 13,360z of gold while all-in sustaining costs (AISC) dove 38 per cent to a more comfortable $2012/oz.

And there are more improvements to come.

Wiluna Mining (ASX:WMX) noted that AISC is expected to continue dropping in the current quarter as operations continued to improve in the September quarter. Strong production of 5,205oz in September was achieved at an AISC of just $1,833/oz.

This production improvement is expected to flow into the December quarter with several months of high-grade stockpiles available for processing and continuing to build up.

The company noted the ongoing production of about 5,000oz of gold per month should provide consistent cash flow of about $4m per month for the remainder of the financial year.

Open pit mining has been completed at the Matilda and Wiluna subsidiary pits, leaving the Williamson pit as the main free milling ore source.

This pit will continue to be mined at low strip ratios with the lower cost base to be maintained for the financial year.

Wiluna Mining's Williamson Pit
Wiluna Mining’s Williamson Pit. Pic: Supplied

Additionally, underground operations are returning to targeted mining rates and grade profile while further plant upgrades undertaken during the quarter are expected to benefit current operations along with future sulphide production.

Executive chairman Milan Jerkovic said the production and cost improvements are positive steps towards securing strong transitional cash flows to support sulphide development and commissioning of concentrate production by October 2021.

“We are pretty well locked in at a steady state cost operating cash flow of about $4m a month by getting that stockpile of high-grade built up, getting mining costs down because we did that all the stripping of the pits and accelerating more ore from the underground mine, which is near the concentrator,” he told Stockhead.

“That gives us a fairly solid platform to now focus on building the concentrator, expanding the underground sulphide mine, and transitioning in the second-half next year to concentrate production with still some gold being produced.”

Wiluna is also progressing its goal of becoming a tier 1 producer in a tier 1 jurisdiction.  Jerkovic added that the company continued to achieve exceptional drilling results in high priority target areas at the Wiluna Mining Centre while the updated resource confirmed its geological significance.

wiluna mining staged mining production plan
Wiluna’s staged mining production plan. Pic: Supplied


Wiluna gold operations

During the quarter, production improved on the back of higher processed head grades of 1.2 grams per tonne gold, up from 0.9g/t in the June quarter, and improvements in overall metallurgical recovery of 83 per cent.

Additionally, higher-grade stockpiles grew to about 250,000t at 1.5g/t as ore from the Williamson mine replaces material from the Matilda and Wiluna subsidiary pits.

This is expected to build further as mining at Williamson continues at very low strip ratios.

A new secondary crusher was installed during the September quarter, which will improve the availability of fine ore stocks.

Wiluna noted that for the remainder of the 2021 financial year, mill throughput is expected to decrease while grades will increase as harder Williamson fresh ore becomes the highest proportion of mill feed.

Production from the Golden Age underground mine has also improved with 22,032t mined for 2,731oz of contained gold, well above the June quarter production of 19,662t for 1,908 contained ounces.

Utilisation and efficiency of the underground mining equipment and personnel has also improved with both Golden Age and Lennon expected to provide material contributions to transitional cash flows and beyond the commissioning of sulphide concentrate production.

The company has maintained its production guidance for the current financial year 62,000oz of gold at an AISC of $1,950/oz.

Looking beyond that, Jerkovic told Stockhead that once the company starts commissioning of sulphide concentrate production, it would require a six month period to ramp up to the targeted production of between 100,000oz and 120,000oz per annum.

“But we certainly expect to continue to generate positive cash flow for operations and improve this,” he added.

“On every other front, we are compliant with getting the company stabilised, getting its best asset capitalised and long dating its cash flow, and I think we are achieving that and are pretty pleased with the results.”

This article was developed in collaboration with Wiluna Mining, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.