With gold hovering at $1300 per ounce and a consistently high Kiwi dollar, Montego Investments has pulled the plug on its Earnscleugh alluvial gold mine near Alexandra. Geoff Loudon who is the sole director of Mintago Investments admits there is still gold to be mined at the site but the operation is currently unprofitable.
The closure of the mine is a major blow to the region as the mine employed 35 people in its 24-hour-per-day operation. Mintago estimates it operations were worth $10 million to the local economy. About $3 million of that was spent in start-up costs. The project began in 2009 with a planned projection of mining for seven years.
The mining operation was mining about 750 ounces per month and represented one of the largest alluvial gold operations in the country.
While the mine ceased operations last week, Mintago Investments will still be on site for about six months undertaking the task of restoring the 150 hectares it had leased in 2008. This is fulfilling one of the 132 conditions imposed by Otago Regional Council and Central Otago District Council on the resource consents, which required Mintago Investments to restore the land to agricultural grassland.
Ironically, Geoff Loudon says the costs of stripping the overburden at Earnscleugh had been one of the major reasons for closing the mine.
He says the mining company had been breaking even when it was processing 0.3 grams of gold per tonne of alluvial gravels. However, it has become obvious that the mine would have to be excavated much deeper to extract gold, and that the extra costs of doing this made further operations uneconomic, given the costs of stripping the extra overburden and the low price of gold. The restoration of this land to pasture grade would take about six months and in the meantime, the dredge operated at Earnscleugh in the gold mining operation will be sold.
Meantime, another of his companies, Nautilus Minerals, is about to be engaged in the operation of seafloor mining in the Pacific. Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits and was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of Papua New Guinea. It will be the world’s first deep-sea mining project. The deposit is a high grade copper-gold resource and deposits the world’s first seafloor massive sulphide (SMS) resource. The company plans to grow its tenement holdings in the exclusive economic zones and territorial waters of Papua New Guinea, Fiji, Tonga, and the Solomon Islands, Vanuatu and New Zealand as well as other areas outside the Western Pacific.
After an arbitration hearing and award, the Papua New Guinea Government has contributed 15 percent of the equity required for the Solwara operation. This amounts to $143 million and Nautilus has already spent US$400 million on the project.