The Tropicana joint venture has cemented the Western Australian gold mine’s future by approving the Boston Shaker underground development.
JV partners AngloGold Ashanti and Independence Group (IGO) will launch the $105.7 million project in the June quarter. They have scheduled first gold for the September quarter next year.
The underground development is expected to contribute an annual average of 100,000 ounces to Tropicana’s production profile from the 2021 financial year.
It will allow the JV to maintain Tropicana’s production at between 450,000-500,000 ounces per annum over the next five years, with the average annual output over this period expected to be 480,000 ounces.
A feasibility study on the Boston Shaker development has confirmed that underground mining is technically and financially viable. The cost estimate is, however, higher than the $95 million forecast in the December 2018 project pre-feasibility study.
Macmahon Holdings has been awarded a five-year, $170 million mining services contract for the underground mine. The work adds to Macmahon’s existing agreement at Tropicana, which is already the site of the company’s largest mining contract in Australia.
AngloGold Ashanti’s international chief operating officer Ludwig Eybers said underground mining at Boston Shaker would leverage further value from the operation, achieving pay-back in just over three years.
“An ongoing focus on operational excellence has enabled Tropicana to consistently exceed expectations, and I am sure this world-class performance will extend into the underground operation,” Eybers said.
The JV expects the expanded ore production from the mine to capitalise on investments made in the Tropicana processing plant, including the second ball mill, which was commissioned last November and increases annual throughput to 8.1 million tonnes.
AngloGold and Independence also plan to continue to test high-grade extensions to the mineral resource beneath the Tropicana and Havana pits to assess the opportunity for further underground mining operations.
IGO managing director Peter Bradford described the underground development as an important step in the continuing value enhancement at Tropicana, one of the lowest cost gold operations of scale in Australia.
“Although Tropicana is not aligned with IGO’s strategic focus on metals that are critical to clean energy, it is a high quality asset delivering strong free cash flow with significant opportunity for further value enhancement that remains a core part of the IGO portfolio,” Bradford said.
“This is an exciting opportunity, with the Boston Shaker underground expected to deliver improved grades and production profile at Tropicana from financial year 2021 for a modest capital investment.”
The Boston Shaker ore reserve is estimated at 2.8 million tonnes at grades of 3.84 grams a tonne for 317,000 ounces of gold.
Macmahon, which has been contracted at Tropicana since 2012, will operate both the open pit and underground mines at the site under its expanded agreement.
The mining services company expects to start work on the latest Tropicana contract in May 2019, with the capital expenditure for the underground works forecast to be about $30 million.
Macmahon chief executive officer Michael Finnergan commented: “The contract win is a major step towards our strategic goal of growing our underground business and capitalising on the increased level of underground opportunities with existing and potential new clients.”
Tropicana is 70 per cent owned and managed by AngloGold, with IGO holding the remaining 30 per cent share.