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Gold production grinds to a halt at White River mine

Silver Lake Resources shuttering operations to 'reset' mine plan and figure out the area geology
Sugar Zone MIne aerial (Harte Gold)
Sugar Zone Mine (Company photo)

The Australian owners of the Sugar Zone Mine at White River said it’s halting mining operations and hitting the “reset” button.

In its quarterly activities report, Silver Lake Resources announced the mine will be shuttered for the current 2024 fiscal year in order to get a better handle on the geology, to fix a raft of inefficiencies, and come up with a new operating model. The company’s fiscal 2024 year ends next June 30. 

Silver Lake said suspending operations gives them time to come up with an improved mine plan, put ample gold resources in place, and implement a better system of mechanized work for when mining activities resume.

The Sugar Zone Mine is 30 kilometres north of White River. The company made no mention of any layoff notices or its near or long-term plans for its workforce.

Silver Lake took control of the mine from Harte Gold in early 2022 following a CCAA sales process. It is the Perth-headquartered company’s only operation outside of Western Australia.

Further exacerbating problems at Sugar Zone is an “aged” and unreliable mining fleet, the company reported, which is stalling the rate of underground development. It’s caused scheduling problems and has had downstream consequences that impacted gold production for fiscal 2023.

The mine produced 8,155 ounces for the fourth quarter and 38,976 ounces for the year.

Gold production at Sugar Zone dropped off during the fourth quarter as forest fires damaged the power line into the site and suspended mining operations in May and June for three weeks. Mining finally resumed June 15.

But the company maintains it's not lost confidence in the mine. 

Throughout this stoppage, Silver Lake said it will still be making promised capital improvements at Sugar Zone with $35 million (Australian dollars) to be spent on exploration and infrastructure upgrades to keep the operation in a ready state. 

No date of resumption was provided but the company said the mine will restart in stages with a focus on establishing multiple mining fronts.

The focus of activity on the site this year is on exploration in and around the mine.

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Silver Lake has budgeted $28 million for exploration to gain greater knowledge of the ore body and other promising prospects across its 81,000-hectare property.

A 93,000-metre program of both underground and surface drilling is being queued up to launch an exploration drive on three fronts and into areas with underperforming gold production.

Special emphasis is being placed on grade control, which means drilling holes in close proximity to check the quality and grade of the ore ahead of certain areas being mined.

The company said the new operating model should deliver higher margins and generate more cash to sustain a long-term operation with “step change” in productivity along with a new mining fleet waiting in the wings.

An inquiry to Silver Lake Resources on the impact to its workforce went unanswered.

Some additional tough news for White River is that Silver Lake is moving its worker accommodations camp from the town, up Highway 631, to the mine site. The company said it will reduce travel time and increase productivity by 20 per cent while helping with worker recruitment and retention.

White River Mayor Tara Hart declined an interview request, emailing: "At this time, we don't have any specific information, just a general overview stating that they are focusing on the drill operations for the foreseeable future." 

Silver Lake’s share price has plunged on the Australian exchange by more than 20 per cent in the last week after posting a less than glowing production forecast across its three mine assets for fiscal 2024. The company expects to sell 210,000 to 230,000 ounces of gold for 2024, down from a record 260,372 ounces in the fiscal 2023.