Ramelius Resources is to commence underground mining at the Edna May gold mine near Westonia, Western Australia in early 2019.
As part of the original deal, the company purchased Edna May from Evolution Mining in September last year for $40 million in cash and up to a further $50 million in cash, shares and/or royalties, subject to certain conditions.
Originally, Ramelius planned to develop a stage three open pit as part of the project that would see them receive a further $20 million in cash or Ramelius shares (or a combination of the two), but this plan has since been replaced with the announced underground mine.
Edna May was first mined over 100 years ago, with modern mining operations commencing from the mid 1980s under ACM, which then switched to Catalpa Mining in 2010. Catalpa Mining then merged with Conquest Mining in 2011 to become Evolution. Under Evolution’s tenure, the mine produced over 500,000oz of gold with an annual production of 66,000–99,000oz/y.
Ramelius has decided to open an underground mine for several reasons, citing lower economic risk, capex savings of up to $100 million, immediacy of ore access and scheduling flexibility relating to the company’s Marda gold project.
Ramelius managing director Mark Zeptner said that the decision was not taken lightly.
“After extensive studies and considering our future options around other potential ore sources in the area, we believe this is a prudent decision that will lead to exceptional future outcomes for our shareholders,” he said.
“The considerable savings in group capital expenditure and the use of conservative geological assumptions gives the company added flexibility in considering other future strategic options for Ramelius as we look to further increase group production and profits in the years ahead.”