Ground problems plague Mt. Charlotte gold mine

Ground movement at the Mt. Charlotte gold mine in Western Australia has prompted a revision to the mining plan.

Joint owners Homestake Mining (HM-N) and Normandy Mining (NDY-T) report that the changes, designed to ensure safety, affect chiefly the underground portion of the mine, which is adjacent to the so-called Super Pit.

In late June, a blast in the Mt. Charlotte Deeps deposit triggered a seismic event that measured more than 3 on the Richter scale. It is believed the event was partly caused by a recent increase in bulk mining, which had nearly doubled daily capacity to more than 5,000 tons.

Rock mechanics experts now say mining can continue provided activity is restricted to low-risk areas. Accordingly, production will continue at the slightly reduced rate of 1.5 million tons over the next 12 months, after which time Homestake and Normandy will assess the economic viability of further production.

As a consequence of the reduced mining level, nearly half of Mt. Charlotte’s employees will lose their jobs. Homestake expects to write down a US$25-million charge against third-quarter earnings for severance, unrecovered capital and other costs.

To offset the loss of ore from underground, Homestake and Normandy plan to increase production at the Super Pit. Processing capacity can be increased by modifying the sulphide mills at both operations.

During the first six months of 1998, the combined operation cranked out 397,800 oz. gold at a cash cost of US$239 per oz. Mt. Charlotte chipped in with 69,600 oz. at a cash cost of US$277 per oz.