Ramelius to head underground

Gold producer Ramelius Resources has announced plans to begin underground mining at its Edna May operation near Southern Cross early next year.

The miner, which acquired the mine from Evolution Mining last year, said it expected ore production to start in the 2020 financial year, with an initial life of 2.5 years.

A pre-feasibility study has forecast a capital cost of $5.9 million for the underground mining, and the company said the savings on capital expenditure compared with an open pit totalled about $100 million

“The decision to move down the underground path at Edna May is not one that has been taken lightly,” managing director Mark Zeptner said.

“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.

“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.”

Ramelius said Evolution spent about $20 million on a mine portal inside the current open pit, providing the company with access to high-grade ore without the normal large capital development and timing costs.

Shares in Ramelius were up 4.4 per cent at 48 cents each at 1.40pm AEDT.