Evolution Mining executives want to see a better performance out of its Red Lake gold operation before it’s willing to invest on a processing mill expansion.
In a recent webcall, Evolution’s CEO Lawrie Conway said when Red Lake consistently mines at a 1.1-million-tonne per year run rate, the Australian company will consider further spending to boost capacity at its milling facilities.
“Red Lake’s gotta earn the right to get the upgrade,” said Conway in an April 20 webcall with analysts to discuss Evolution’s March 2023 quarterly results.
Company management, ultimately, wants to hit the 1.8-million tonne mark per year. They think that's achievable but first they need to consistently hit the 1.1-million tonne mark to deliver on their cash projections for the operation.
It’s just taken time to get things in place.
When Evolution acquired the Red Lake gold complex from Newmont in 2020, they stated they were prepared to spend a lot of money on development and equipment to get the three-mine complex back to a premier cash-generating mining asset.
Back in December, Evolution said Red Lake was not meeting expectations. Progress at the complex was impeded by “higher than expected absenteeism,” an inability to mine enough ore to fill the mill, and increased “dilution,” meaning higher amounts of waste rock were being sent to the processing plant.
Development of the Upper Campbell Mine, Red Lake’s next big high-grade ore body, was also slower than expected.
It resulted in a shakeup among management and operations staff. COO Bob Fulker spent five months at Red Lake to straighten things out. The search for a new head of operations has started.
The company was happy with the results in its March (third) quarter results, which showed a 13 per cent increase in ounces produced (28,178 ounces) compared to its December( second) quarter. They expect this improvement to continue with gold production expected to hit 35,000 ounces by the fourth quarter.
Moving into its next fiscal year, Evolution forecasts Red Lake will further improve to 40,000 to 45,000 ounces per quarter or 160,000 to 180,000 ounces produced.
Management is convinced they’ve put in the building blocks in place for sustained success.
According to Conway, there's been a combination of reorganizing the site and a continued effort in working on “culture and behaviours.”
Fulker added they’re focusing on permanent solutions rather than Band-Aid ones, such as buying new drill rigs to get better and more cost effective production.
“It’s making sure we focus on the right things,” said Fulker. “The guys on site, they wanna work well, they want to actually develop and produce, we just need to put the systems in place to allow them to do it.”
Two new jumbos – machines used in drilling and blasting – arrived in early January and are operating at the Cochenour and Upper Campbell mines, along with full mechanical bolting at both sites. A new ore pass at the Cochenour and Balmer mines has improved performance as well as improved drilling and blasting practices.
Evolution’s running a process optimization study for Red Lake to elevate gold production to the 300,000-ounce per year mark by its 2027 fiscal year.
But the company emphasized there’s plenty of internal competition for capital at its other mines. Any further investment in boosting the mill capacity is predicated on Red Lake improving its mining and processing rate, and delivering adequate cash flows.
The executives maintained in the webcall that they haven't lost faith in Red Lake and remain excited its gold potential.
The upside they see at Red Lake is the ramp up of mine development in the Upper Campbell where Evolution expects to see an increase in mining rates and higher grade material being processed.
The Red Lake complex includes the Campbell, Red Lake and Cochenour mines along with other mine projects under developments.
Red Lake is Evolution’s only mine outside of Australia. They operate two gold mines in Queensland, one in New South Wales and another in Western Australia.