CBH Resources Ltd (owners and operators of Cobar’s Endeavor Mine) have reported mixed results for the financial quarter ending June 30.
The mid-tier base-metal company reported substantial increases in zinc and lead production from its Endeavor operations but also announced major corporate restructuring including on-site reduction of 220 contractors and a smaller number of staff personnel, cut-backs in exploration expenditure and a group pre-tax loss estimated at $26m.
The company’s Rasp zinc, lead and silver mine at Broken Hill has been placed on care and maintenance pending a review of the proposed, but now terminated, corporate merger with Perilya.
Development plans for the Hera gold and base metal project at Nymagee have also been delayed pending economic assessment whilst scoping study into the co-production of pyrite concentrates in addition to zinc and copper is being undertaken at the Panorama project in Western Australia.
Highlights for the June quarter include significant improvement in operational performance at Endeavor with the recent $90m capital upgrade delivering positive results, the Rasp mine decline developed to 2400 metres reaching first production levels and the spin-off of pre-development projects at Mineral Hill, Sorby Hills and Constance Range approved by shareholders.
CBH’s shiploading facility at Newcastle Port also continued to operate efficiently with 72,225 tonnes loaded during the quarter.
In his company’s quarterly report, managing director Stephen Dennis advised the appraisal of a new mine plan for Endeavor to provide improved performance and reduce cost structure.
The plan also includes the evaluation of open cut operations at the site to deliver high margin tonnages from the extraction of an initial ore reserve.
“In conjunction with the completion of the $90m capital works program in 2008-09, a major operational restructure was undertaken at Endeavor to deliver improved performance and reduce the cost structure,” Mr Dennis said.
(This restructure resulted in reductions of total personnel on-site and some 220 contractors plus Endeavor personnel).
“In light of current metal prices and to ensure Endeavor is well positioned on the cost curve, the company is currently reviewing mining out of grades with the objective of minimising the amount of lower grade material extracted - this review is expected to be completed by mid August.
“It is anticipated these changes will significantly change the current mine plan and mining reserve at Endeavor by delivering increased metal grades at a significantly lower tonnage throughput. Further cost reductions will be implemented to reflect the lower mine throughput.
“This higher grade mining operation will also result in improved stope wall stability, a reduction of external dilution, a decrease in future backfilling requirements, better control of mining grades and higher mill recoveries.
“As and when zinc and lead prices improve, the option to ramp up production to utilise recently installed milling capacity remains available.
“An open cut is also at an advanced stage of evaluation that is designed to deliver high margin tonnages to the Endeavor operation.
“The plan is for an open cut to a depth of 150 metres to extract an initial ore reserve of 560,000 tonnes at 6.9 per cent zinc, 5 per cent lead and 300 g/t silver with a total of 1 million tonnes targeted for recovery.
“The longer term plan for Endeavor is to supplement higher grade tonnages from underground with ore sourced from the Endeavor open cut and Hera.”
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