Precious Mettle - Part 5: Continuous Improvement
The Value of High-Grade Mining CFOs
Our five-part blog series, Precious Mettle – The value of high-grade mining CFOs, looks at the qualities proactive mining CFOs deploy to drive greater business returns. This series shares observations from more than 75 years’ combined experience in senior mining finance roles, across multiple commodities, by Andrew Bantock, Steven Michael and Martin Nicholson of FTI Consulting’s Australian Mining Advisory Practice.
The Macraes gold mine in New Zealand is a great example of continuous business improvement. Developed in 1990 on the site of century-old historic gold workings, the Macraes operation struggled at first, mining a relatively low-grade (around 1.5 grams of gold per tonne), high-strip ratio (around 8 tonnes of waste for every tonne of ore) and metallurgically difficult (around 70 per cent gold recoveries) orebody. Add in the low gold prices of the mid to late 1990-early 2000s, and the management team faced a serious challenge just keeping the doors open.
Through hard work, innovative thinking, a relentless focus on costs and astute capital investment, the mine was kept in business over its first decade and even began to make money. Investment in new ore processing technologies and a move from outsourced to in-house mining progressively improved gold recoveries and reduced the cost base, while ongoing step-out drilling added years to the mine life. These improvements have seen Macraes continue on to produce more than 5 million ounces of gold over its 30 year operating life, including more than 140,000 ounces in 2020.
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