Slowly Newcrest Mining is moving towards returning its most important asset – the huge Cadia gold and copper mine in central western NSW – back to something approaching full production.
At Easter 2017 parts of the mine were damaged in an earthquake which took months to repair.
Then on March 9 of this year part of the wall at the main tailings dam at Cadia collapsed, forcing production to be halted, and then slowing resumed.
Yesterday Newcrest told the ASX that it will use its old Cadia Hill open pit as a tailings storage dam, thereby sacrificing remaining gold and copper reserves to help it return to full production.
Newcrest said using its old Cadia open pit as a long-term tailings storage facility is the best possible economic outcome despite the move meaning it will forego ore reserves of approximately 1.5 million ounces of gold and 130,000 tonnes of copper.
“Newcrest has determined that the value of Cadia Hill as a long-term tailings storage solution is much greater than the economic value of the remaining ore reserves and mineral resources of the Cadia Hill open pit," the company said in a statement.
Newcrest will use the first 200 metres of the old mine as a tailing storage area which will give it 16 months of output.
"In this period, Newcrest will look to define and commence the optimal repair solution for the Northern Tailings Facility while simultaneously working on permitting the remaining 300m of the Cadia Hill open pit for tailings storage.” the company said yesterday.
Gold production for the six months to December 31 was already down eight 8% to 1.14 million ounces and that was before Newcrest was forced to stop production at its biggest and lowest-cost mine, after the breach in the wall of its northern tailings dam on March 9.
Newcrest said the permit to use the Cadia pit from the NSW Department of Planning and Environment will provide enough storage for the Cadia mine to progressively return to full production and operate for approximately 16 months.
The old mine will be ready in the first week of next month, with an updated guidance for Cadia to be released on Thursday with the March quarter production report.
Newcrest said it still does not know the cause of the tailings dam breach and that a ban on using the northern tailings dam remains in place.
There were two small ground quakes reported a day before the dam wall failed. Newcrest shares ended up 2.8% to $20.55.