Phoenix Gold will wrap up mining at its Kintore West project this month and suspend upcoming small mining projects to save money, as it shifts focus to developing its Castle Hill project near Kalgoorlie with joint venture partner Norton Gold Fields.
In a statement today, Phoenix said the joint venture would begin development of Stage 1 at Castle Hill in the coming months, which involves developing the Mick Adams and Wadi open pit projects, and progress project financing discussions for its proposed heap leach operation.
Phoenix said mining at Kintore West would be finished this month, while milling would continue into the June quarter.
“The selective mining of high-grade vein sets within a lower grade stockwork system more amendable to bulk mining has led to lower mined grades than anticipated,” the company said.
“Drill and blast performance was poor, increasing mining dilution, which has compounded the issue.”
Phoenix said future small mining projects would be suspended to conserve cash, with plans to mine additional projects such as Burgundy, Red Dam and Nazzaris to remain under review, pending the outcome of the Norton joint venture and cash flow from the Mick Adams and Wadi developments.
“Phoenix has issued a termination notice with respect to its toll mining agreement with FMR Investments that comes into effect at the end of the current milling campaign,” it said.
Phoenix and Norton have been working to complete and execute a final licence to mine and ore sale agreement for Castle Hill Stage 1.
Under the agreement, Norton will fund upfront capital, mining, haulage and milling, with Phoenix to receive 50 per cent of the cumulative cash surplus.
Managing director Jonathan Price said Phoenix’s core business had always been the development of Mick Adams and Wadi with Norton, which had the potential to deliver significant cash flow and the heap leach with a current net present value of $41 million.
“While the grade at Kintore has been lower than expected, we remain focused on improved grade performance to the completion of the mine in April and milling in the June quarter,” Mr Price said.
A feasibility study has been completed for the heap leach project, with project financing under way.
The company said it expects to complete a financing package in the June quarter.
Phoenix shares were 10.1 per cent lower to 8 cents per share at 11:30am.
