Heron Resources has finally cut the red ribbon on its Woodlawn zinc-copper mine in New South Wales with the official start of production.
With ore processing at the project now underway, Heron’s focus has shifted to a ramp up program with the goal of increasing throughput to Woodlawn’s nameplate capacity of 1.5 million tonnes per year.
Woodlawn is expected to produce three concentrates at an average annual rate of 40,000 tonnes of zinc, 10,000 tonnes of copper, 12,000 tonnes of lead, 900,000 ounces of silver and 4,000 ounces of gold over an initial 9.3 year mine life. Heron also believes there is “significant potential” for the mine life to be extended through further exploration and underground resource conversion.
“We are excited to have now achieved this significant milestone in the transition from explorer to producer with the processing of the first reclaimed tailing through the Woodlawn plant,” Heron Managing Director and CEO Wayne Taylor said in a statement.
“Commencing operations is timely, and we look forward to taking advantage of continuing favorable conditions in base metals markets as we ramp up our operations.”
The start of production comes after months of drama and delays, as Woodlawn had been originally docketed to start output in Q1 2019. Heron had collaborated with CIMIC Group (ASX:CIM) subsidiary Sedgman on developing the mine, which saw its fair share of disputes over the last few months.
In February, the contractor lodged a AU$49.9 million claim against Heron for additional costs related to the project’s construction. However, the Australian miner wouldn’t go down without a fight and argued that the extra fees surpassed a previously agreed guaranteed maximum price of AU$109 million for the work contract Sedgman has at Woodlawn.
The contract superintendent later rejected the claim from Sedgman, leaving Heron to only pay AU$223,057 in fees for some agreed contract work. The contractual theatrics restarted in early March when Sedgman came at Heron again with additional costs of AU$53 million, which included the previously mentioned AU$49.9 million claim.
Once again, the claim was shot down by the contract superintendent, minus a payment of AU$76,082 from Heron to Sedgman for work requested by the former.
Heron’s share price got an 11.71 percent boost on Wednesday (May 8), closing the day at AU$0.62.
As of Tuesday (May 7), zinc was trading at US$2,834 per tonne on the London Metal Exchange; meanwhile, copper reached US$6,172 per tonne.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.