Eric Gourley reveals how one of Australia’s top gold producers has relied on aggressive exploration, a contractor mentality and a productive new fleet of underground trucks to rejuvenate an ageing mine
The sun won’t rise for another hour as 40 miners file into a classroom at the Plutonic gold mine for the morning’s pre-start. The meeting is quick yet thorough – hallmarks of seemingly everything Northern Star Resources does.
Colleagues listen attentively as one miner identifies a hazard to be rectified. The shift boss leads a discussion on the day’s safety focus, details scheduled maintenance and delivers production statistics from the overnight shift. Less than 15 minutes later, operators are filling blue two-and-a-half-litre insulated jugs with ice and water and climbing into the underground trucks and loaders they’ll use to move ore underground for the next 10 hours.
Northern Star prides itself on this sort of efficiency, from these pre-starts to daily production to turning around ageing Australian mines. In 2013 the company produced 88,000 ounces of gold from its only asset. Today, Northern Star operates five mines and emerged as Australia’s second-largest gold producer in 2015.
“When Northern Star started five years ago, we were a very small company in very tough times, ultimately with a bigger picture planned to look to acquire more assets and grow,” says Craig Jones, who previously served as general manager at two of the mines now in Northern Star’s portfolio and currently leads the company’s business development efforts. “We’ve put a lot of hard work in over the years to get to that point where we are now, and it’s been good to be a part of it.”
From a 1 million Australian dollar shell company in 2010 to a market capitalisation of AU$1.7 billion today, Northern Star grew through acquisition but has been shifting its focus to exploration and organic production growth. The miner tripled its exploration budget to AU$50 million during the 2015 financial year, adding 2.7 million ounces of gold resources at a discovery cost of around AU$19 per ounce to increase Northern Star’s total resource base to 8.9 million ounces.
Since a series of high-grade, low-cost acquisitions in 2014, Northern Star has invested heavily in near-mine and in-mine exploration to grow its resource bases. That was the formula for success at Paulsens, the company’s first purchase in 2010. The sellers forecast the mine to be 50,000 ounces away from final depletion, but Northern Star produced more than 80,000 ounces there during its first year, all while cutting costs by 13% and extending the mine life through exploration drilling. Paulsens has since produced more than 400,000 ounces.
Northern Star is replicating the Paulsens turnaround at Plutonic, a mine several of its executives were already very familiar with after having held senior positions there during previous careers.
Historically, Plutonic has produced more than 5.4 million ounces of gold over two decades of mining and when Northern Star acquired it from Barrick Gold for AU$25 million in February 2014 its resources were 1.75 million ounces at 10.8 grams per tonne.
In addition to identifying four new resource areas to be developed around Plutonic through 120,000m of diamond drilling last year – including the Hermes open pit deposit the company hopes to bring online during 2015 – Northern Star has produced more than 150,000 ounces from remnant mining at Plutonic over the past two years, all with fewer people and a smaller fleet of mobile equipment.
Soon after taking over Plutonic, Northern Star replaced five ageing underground trucks with three new 63-tonne Sandvik TH663 trucks. The new fleet immediately improved productivity, hauling more ore than the five they replaced while burning fewer litres of fuel and costing significantly less to operate.
Plutonic project manager Craig Bolton quantifies the value of the new fleet in tonne-kilometres (TKMs), a measurement of the overall capacity of a truck to move a certain amount of ore over a certain distance and a strong indicator of a mine’s overall productivity.
“These trucks are only costing us AU$35 per hour to operate and we’re getting astonishing TKMs,” Bolton says. “We’re averaging between 120,000 and 140,000 TKMs per month. We recently got 143,000 TKMs out of one truck. We couldn’t ask for any more than that.”
With the impressive TKM statistics come monthly operating hour marks as high as 550 hours – above average for a contractor and virtually unheard of for an owner-miner such as Northern Star.
Paid to produce
Nobody depends on the productivity of the new fleet more than operators like Andrew Best. Northern Star’s miners don’t receive a salary for showing up or a bonus for exceeding production targets. They’re paid for the rock they drill, load and haul, creating a culture of ownership.
Fundamental to the company’s efficiency at Plutonic and its other mines is this in-house mining services division, which harnesses the cost conscious mentality of a contractor, but without any margin.
“We call it the ‘we are here to work’ model,” Jones says. “The opportunity and flexibility that comes with controlling your own costs is empowering. There is a constant focus on all levels for this to succeed as everyone is tied to the success.”
Best sits comfortably behind the wheel of a Sandvik TH663. At 11.58m (38ft) from end to end, the truck is almost exactly the same length as the Allan Payne design yacht he grew up on as an adolescent before he eventually settled in Perth and started work in the mining industry. Best and many of his colleagues fly to Plutonic the Western Australia capital for a week of 12-hour shifts, sleeping in an accommodation village 2kms from Plutonic’s 3Mtpa processing plant.
“These new trucks definitely help pay the bills,” Best says. “They’re a lot faster and a lot more comfortable to drive. The gearing systems are a lot easier to work with.”
Craig Jones says the new fleet of trucks has helped Northern Star increase productivity at Plutonic by 30 to 40%.“The introduction of the new trucks at Plutonic has seen a marked improvement in efficiency and operator comfort,” Jones says. “I would expect Sandvik to remain at the forefront of mobile mining equipment and continue to supply the industry with machinery that can deliver in the harsh environments we operate.”
Plutonic gold mine
Located 180km north-east of outback town Meekatharra ('place of little water' in Aboriginal language Yamatji), Plutonic began production in 1990 as an open pit operation. Underground mining commenced in 1995, and all gold has been produced from underground workings since 2005. Northern Star acquired Plutonic from Barrick Gold in February 2014. Historically, Plutonic has produced more than 5.4 million ounces of gold.
Northern Star Resources
Northern Star Resources has rapidly grown from a 100,000-ounce-per-year, single-mine operator in 2010 to emerge as Australia’s second-largest gold producer in 2015. The company now operates five Western Australia gold mines – Plutonic, Paulsens, Kanowna Belle, Kundana and Jundee – with total annual production of 500,000-600,000 ounces. Since its series of 2014 acquisitions, Northern Star has invested heavily in near-mine and in-mine exploration to grow its resource bases. The company expects to produce between 535,000 and 570,000 ounces in 2016 and is targeting annual production of 700,000 ounces by 2018 from its current assets.
Eric Gourley is with Sandvik.