A $100 million expansion of Australia’s deepest gold mine is nearing completion, as the precious metal continues to trade at record levels.
- The Gwalia mine was originally established in 1897 by Herbert Hoover, who later became the 31st President of the United States.
- St Barbara restarted mining at Gwalia in 2008 and has produced more than two million ounces of gold
- Mining at Gwalia is planned to reach a depth of 2,300 metres below the surface by 2031
The project to extend the life of the Gwalia underground mine in Western Australia’s northern Goldfields has been ongoing since 2017.
Kilometres of new ventilation have been installed by sinking large new shafts to send chilled air from the surface to the miners working below.
Craig Jetson, managing director of Melbourne-based gold miner St Barbara, said the final ventilation shaft should be completed next month.
The shaft has reached a depth of 480 metres and has another 37 metres to go.
Mr Jetson said the investment in Gwalia’s future would more than pay for itself over the next decade.
“We will certainly look to have very, very strong margins for a long period of time and a stable operation,” Mr Jetson told analysts and media while unveiling the miner’s quarterly results.
“Instead of up and down, and for a poor choice of words, boom or bust.”
Gwalia produced 171,156 ounces of gold in the 2019-20 financial year, which is expected to increase to close to 190,000 ounces once the expansion project is complete.
Production is forecast to range between 190,000 and 200,000 ounces a year for the two years to June 2023.
An innovative aspect of the Gwalia extension project was construction of a $20-million plant to crush waste rock underground, mix it with cement and backfill into old workings so trucks no longer carry waste to the surface.
It currently takes truck drivers about two hours to make their way to the surface to dump their load and head back down the mine.
Pandemic drives gold to record highs
Meanwhile, St Barbara will pay back $200 million in corporate bank debt it borrowed as a precaution to ride out the coronavirus storm.
Mining analysts said the pandemic is the most likely explanation for a surge in gold prices.
This week, the US dollar gold price went above $1,950 an ounce for the first time, smashing the previous record set in 2011.
At the current exchange rate, Australian gold miners are enjoying a boom with local prices above $2,700 an ounce.
Dr Sandra Close, from Surbiton Associates, said gold had traditionally been a safe haven for investors in times of global turmoil.
“That’s certainly part of it,” she said.
Old gold mines to get a second life
Dr Close said old mines, which were unviable in lower gold price environments, would be dusted off and new mines will be brought into production, if prices remain strong for an extended period.
Among the mines most likely to make a comeback is the historic Central Norseman gold operations in WA’s Goldfields.
Central Norseman was once Australia’s longest continuously-running gold mine, producing about six million ounces from 1935 until its closure in 2014.
Paul Cmrlec, managing director of gold miner Pantoro, said feasibility studies into a potential restart were only weeks away from completion.
“It’s certainly a fantastic time for the industry,” Mr Cmrlec told the ABC.
“I think the key thing for Norseman is the bulk of that infrastructure that’s required for a new project is there and generally it’s in good useable condition.”