Pantoro targets higher grades from underground mines to boost gold production at Norseman to 200,000oz pa

Norseman’s golden giant has reawakened, stretched its limbs, checked it’s got everything it needs — and is now powering towards a more productive future. The historic WA gold field which produced almost 6Moz of gold from 1934 until 2014 has since 2019 been the focus of the energies of a company called Pantoro. First gold was poured in October 2022, but early production was modest as various COVID-related equipment and labour issues had to be worked through. However, output has risen in each of the past six quarters — with Pantoro producing 71,370oz in the last financial year, targeting 100,000oz this financial year, and aiming to boost it to 200,000oz in the next two years. Pantoro is working with a large, high-grade mineral resource of 44.9 million tonnes at 3.3g/tonne for 4.7Moz of gold. Managing director Paul Cmrlec, who took the Kalgoorlie Miner on a guided tour of the operation last week, said higher grades, rather than greater ore volumes, would be the key to realising its ambitions. “Our strategy really revolves around a large growth program that we have operating at the moment, which is targeted at starting at least an additional two underground mines over the next two years,” he said. “So our current mine at Scotia, we believe, has a really large expansion opportunity, and we have drilling going on there already. “We’re just in the process now of re-entering the Mainfield at Northern which has produced just over half of the 6Moz that the mine has produced historically. “We should be drilling down there by March 2025, and again we’d be looking at drilling over a . . . 12-month period, with the aim of then being ready to restart mining in the Mainfield. “And we also have some surface drilling going on at the Mainfield around the old Viking decline, which, again, we believe with the right amount of drilling will prove up adequate resources to restart that Viking decline and access three different ore bodies that we know line that area.” Mr Cmrlec said the plan was to replace lower-grade open-pit material with high-grade underground material. “And ultimately, we’d like to get to a slightly expanded processing plant at 1.5 million tonnes (per annum, up from the current 1Mtpa), all being filled from underground,” he said. “And when we do that, we should be well above that 200,000oz mark.” Pantoro is currently mining the high-grade OK underground mine just south-east of town, and ramping-up the new underground operation at Scotia, about 35km south of Norseman. Underground development at Scotia began in May, with open-pit mining ceasing there and at the nearby Green Lantern pit in October. Scotia will be ramped up to steady-state production by the next quarter and is expected to be the primary production source at Norseman for the foreseeable future, contributing 60,000-70,000ozpa. Mr Cmrlec said OK was being mined at above 6g/t, and expected Scotia to be about 5g/t. “So that 5-6g throughput rate is very realistic,” he said. “The Mainfield historically has produced at above 10g/tonne as a mined grade (but) the majority of it was hand-held mining. “So as we mechanise things, we will see slightly more dilution. “But, you know, we’ll be aiming for that 6g-plus, and hopefully more around . . . 7 and 8g. “Obviously, the drilling that we’re undertaking now will very much dictate what we carry.” Mr Cmrlec said Pantoro would continue with open-pit operations at Princess Royal north of the processing plant, with mining to begin in the next quarter and to last just under a year, before moving on to Gladstone to the east for a multi-year operation. “So we have that feed to keep the mill full through the entire period,” he said. “And like I said, we’ve got nearly 10 years of open pit reserves there. “And it’s really about how much of that can we replace with this additional high-grade material to see those increases in the production.” Mr Cmrlec said cost pressures had eased as the company got into its growth work. “So up until the start of 2024 we had a period . . . of 18 months to two years where we saw really heavy inflation,” he said. “Costs right across the board were up 20 and 30 per cent (and) we haven’t seen that sort of growth through this year. “And I think on the personnel front, yeah, it was a pretty unique situation in the early 2020s where gold was at a really strong price, but so was nickel. “Lithium was emerging. Iron ore was going well. “So it was one of those very rare times that basically every commodity that’s being mined in the State was being mined, and there was a real labour shortage.” He said the collapse of the nickel industry and its mines going into care and maintenance had transformed this situation, with some of those workers coming onboard at Pantoro, as their underground mining skills were directly applicable to the company’s gold operations. “They’re a very similar sort of scale, similar mining methods,” he said. “So we’ve seen a number of people come from from those areas.” Mr Cmrlec explained the company had also overcome early challenges with the 1Mtpa processing plant. “The plant as a whole has operated well from the outset,” he said. “But what we did see is a number of vendor packages . . . large units like mill motors, where it’s a 3.3MW motor . . . I think a lot of those packages that were built during the COVID years, when quality inspections were really difficult, I think that they had some sort of intrinsic problems that caused specific machine failures. “So, fortunately, we equipped the mine from the outset with a large spares inventory. “And so we’ve never had any big downtime. “In the last year the mill has run at very good utilisation rates, up in that sort of 98 per cent range, which is a really, really strong performance.” Pantoro raised $100 million in May, of which $45m went to pay off debt, Mr Cmrlec said, leaving the company with about $100m, which has been built on since then. “While we’ve got a $25m growth program planned . . . per annum over the next couple of years, our budget shows a positive cash flow well and truly above that level, certainly at these current gold prices,” he said. “So we expect that any developments that we undertake should be serviced from those cash reserves that we have now and that we’re continuing to build from the operation.” Mr Cmrlec said Pantoro had implemented some gold price protection in the form of “zero-cost collars”. “But a very small amount, sort of a quarter of our production for next year only,” he said. Otherwise, he said the company was fully exposed to the record high gold price, which was $4200/oz last week. “Our view is that we’ll continue to see that (gold price) growth over the next few years,” he said. “There’ll certainly be some ups and downs, but overall we expect that trend to be positive. “So, you know, while we’re in a position to be generating that cash, we’re in a very good position to keep that growth work moving, and setting ourselves up so that we have those additional mines established and profitable under any sort of process scenario in the future.” Pantoro at September 30 had cash and gold of $112.3m, and a market capitalisation on November 26 of $632m based on a share price of 9.8¢ (which was 9.2¢ as of Monday this week). Mr Cmrlec said there was plenty of potential for the share price to rise. “I think it has a long way to go,” he said. “I think when you measure it on most metrics, a doubling of that price from here is a very reasonable expectation, as we deliver and the market gets confidence that we’re staying in a cash-flow-positive position. “So certainly . . . I think from this point the results will really drive that price.”