Silver Lake has withdrawn its sales guidance for FY22, saying the March quarter results from its Western Australian operations reflect the implications of the State Government response to COVID.
The ASX-listed intermediate gold producer, which owns and runs the Deflector and Mount Monger camps, said “a combination of supply chain constraints, related definitions and treatment protocols had adversely impacted the availability of appropriately skilled professional, operational and maintenance personnel”, resulting in unavoidable disruptions to operations, an inflationary cost environment and heightened operational risk.
While Silver Lake’s year-to-date operating performance had it positioned to meet FY22 group guidance, the severe disruption of COVID-related labour shortages in March and April exacerbated the already tight labour market and supply chain constraints.
“Accordingly, with the continuation of restrictions and isolation requirements on labour during Q4 FY22 and continued supply chain constraints, Silver Lake is withdrawing FY22 sales guidance as it cannot predict Q4 operating performance with an acceptable level of confidence for stakeholders to rely on,” the company stated.
“As a result of the prolonged and continued uncertainty regarding Western Australian’s response to COVID and the implementation of a proportionate response to any future variants, Silver Lake believes it is unlikely to see an influx of international and interstate skilled workers returning to the Western Australian mining sector in the foreseeable future in preference to employment opportunities closer to home.
“Should these conditions and associated uncertainty continue, it will impact Silver Lake’s ability to provide robust guidance based on first principles assumptions and planning with an acceptable level of risk for stakeholders to rely on.
“Silver Lake will adapt to the prevailing conditions by focusing on its highest margin operations, minimising its exposure to the skills shortages and supply chains to preserve the value of its ore bodies and deploying capital where return on investment achieves the greatest return.”
As such, Silver Lake will amend its operating strategy at Mount Monger to allow the site’s existing skills base to be deployed effectively, and minimise exposure to prevailing operating conditions, whilst retaining optionality over mineral resources and established infrastructure.
Group production for the quarter was 55,052 ounces gold equivalent, with sales of 55,390 ounces gold and 246 tonnes copper at a gold sales price of $2493 per ounce and AISC of $1634 per ounce.